From Realtor Magazine Online, Daily Real Estate News May 29, 2009
As the biggest residential property market in the United States, California often serves as a bellwether for the nation's economic health. And new research from that state suggests that housing prices nationally could start to rebound relatively soon.
The latest data, including two consecutive monthly gains in the median price of existing homes, has some industry officials hopeful that the state housing market has finally reached a bottom and is poised to recover from a prolonged period of declining residential values.
In April, California's single-family median home price rose 1.4 percent to $256,700. While that is still off by more than 36 percent from April 2008, the 540,360 homes sales on a seasonally adjusted annual basis reflect an increase of almost 50 percent over the same period, according to the state’s REALTORS® group.
Source: Wall Street Journal, Jim Carlton (05/29/09)
Friday, May 29, 2009
HUD: Tax Credit Can Be Used on Closing Costs
From Realtor Magazine Online, Daily Real Estate News May 29, 2009
FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.
Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.
The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.
Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.
There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.
In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.
The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.
Learn more about the credit, including how to apply for it this year even if you've already filed your taxes, at REALTOR.org.
Source: Robert Freedman, REALTOR® Magazine Online
FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.
Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.
The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.
Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.
There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.
In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.
The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.
Learn more about the credit, including how to apply for it this year even if you've already filed your taxes, at REALTOR.org.
Source: Robert Freedman, REALTOR® Magazine Online
Thursday, May 28, 2009
Economists' Views Vary on Housing Market
From Realtor Magazine Online, Daily Real Estate News May 28, 2009
Economists at investment houses and banks have mixed reactions to the theory that home sales have hit bottom, but there's less uncertainty on prices, which most say have further to fall.
Here are some analysts' views:
Abiel Reinhart, J.P. Morgan: “While we believe sales will increase in the short run, the medium-term picture is more difficult to judge. With such a large share of market being distressed sales, any eventual fall in the supply of distressed properties could restrain total sales for a time.”
Richard F. Moody, Forward Capital: “Clearly, the lack of move-up buyers is hampering homes in the middle-to-higher end of the price range, and the difficulty in securing financing on properties with prices above the conforming loan limit is choking off the sales in the higher price ranges.”
Ian Shepherdson, High Frequency Economics: “Don’t be alarmed by the jump in months’ supply, up to 10.2 from 9.6; it’s all seasonal. We reckon the seasonally adjusted single-family home supply was unchanged at 9.2 months, and the slow downward trend continues. But there is a long way to go before prices stabilize.”
Millan L. B. Mulraine, TD Securities: “There is evidence that the perception of a housing market correction bottom may be somewhat premature. Indeed, despite the favorable affordability conditions, the weak economic backdrop facing U.S. households suggests that the correction in the U.S. housing market is likely to continue for some time, even though the pace of deterioration in the sector may ease in the coming months.”
Source: The Wall Street Journal, compiled by Phil Izzo (05/27/2009)
Economists at investment houses and banks have mixed reactions to the theory that home sales have hit bottom, but there's less uncertainty on prices, which most say have further to fall.
Here are some analysts' views:
Abiel Reinhart, J.P. Morgan: “While we believe sales will increase in the short run, the medium-term picture is more difficult to judge. With such a large share of market being distressed sales, any eventual fall in the supply of distressed properties could restrain total sales for a time.”
Richard F. Moody, Forward Capital: “Clearly, the lack of move-up buyers is hampering homes in the middle-to-higher end of the price range, and the difficulty in securing financing on properties with prices above the conforming loan limit is choking off the sales in the higher price ranges.”
Ian Shepherdson, High Frequency Economics: “Don’t be alarmed by the jump in months’ supply, up to 10.2 from 9.6; it’s all seasonal. We reckon the seasonally adjusted single-family home supply was unchanged at 9.2 months, and the slow downward trend continues. But there is a long way to go before prices stabilize.”
Millan L. B. Mulraine, TD Securities: “There is evidence that the perception of a housing market correction bottom may be somewhat premature. Indeed, despite the favorable affordability conditions, the weak economic backdrop facing U.S. households suggests that the correction in the U.S. housing market is likely to continue for some time, even though the pace of deterioration in the sector may ease in the coming months.”
Source: The Wall Street Journal, compiled by Phil Izzo (05/27/2009)
Rates Rise as Investors Tap Short-Term Gains
From Realtor Magazine Online, Daily Real Estate News May 28, 2009
Mortgage rates rose yesterday to a six-month high. This spike occurred after the gap between yields on two-year Treasury notes and 10-year notes, called the yield curve, widened to 2.75 percentage points, its highest ever.
To keep mortgage rates low, the U.S. Treasury has been buying mortgage-backed securities and Treasurys. But as short-term yields rose, the Treasury failed to intervene. The net effect is higher rates on short-term bonds that make mortgage-backed securities less attractive.
That drove the average 30-year mortgage rate up to 5.29 percent from 5.03 percent the previous day, according to HSH Associates, a mortgage-data publishing firm.
What’s next seems unclear. Marcus Huie, Treasury's strategist for Deutsche Bank AG, believes the government will intervene to keep mortgage rates low. "The market is testing the Fed to hold the current yield levels,” he says.
Source: The Wall Street Journal, Liz Rappaport (05/28/2009)
Mortgage rates rose yesterday to a six-month high. This spike occurred after the gap between yields on two-year Treasury notes and 10-year notes, called the yield curve, widened to 2.75 percentage points, its highest ever.
To keep mortgage rates low, the U.S. Treasury has been buying mortgage-backed securities and Treasurys. But as short-term yields rose, the Treasury failed to intervene. The net effect is higher rates on short-term bonds that make mortgage-backed securities less attractive.
That drove the average 30-year mortgage rate up to 5.29 percent from 5.03 percent the previous day, according to HSH Associates, a mortgage-data publishing firm.
What’s next seems unclear. Marcus Huie, Treasury's strategist for Deutsche Bank AG, believes the government will intervene to keep mortgage rates low. "The market is testing the Fed to hold the current yield levels,” he says.
Source: The Wall Street Journal, Liz Rappaport (05/28/2009)
Wednesday, May 27, 2009
Forecasters Say Recession Nearing End
From Realtor Magazine Online, Daily Real Estate News May 27, 2009
More than 90 percent of economists think the recession is nearing its end, but they don't expect the economy to soar anytime soon.
Nearly 75 percent of economists, surveyed by the National Association for Business Economics, say that the recession will end in the third quarter. Another 19 percent think the turnaround will come in the fourth quarter. The rest are betting on the first quarter of 2010.
Americans seem to believe that things are getting better too. The Conference Board's Consumer Confidence Index rose 14.1 points in May to 54.9, the second month in a row in which there have been an increase.
Forecasters say that home sales will bottom out in the second quarter, an important stabilizing factor.
Source: The Associated Press, Jeannine Aversa (05/27/2009)
More than 90 percent of economists think the recession is nearing its end, but they don't expect the economy to soar anytime soon.
Nearly 75 percent of economists, surveyed by the National Association for Business Economics, say that the recession will end in the third quarter. Another 19 percent think the turnaround will come in the fourth quarter. The rest are betting on the first quarter of 2010.
Americans seem to believe that things are getting better too. The Conference Board's Consumer Confidence Index rose 14.1 points in May to 54.9, the second month in a row in which there have been an increase.
Forecasters say that home sales will bottom out in the second quarter, an important stabilizing factor.
Source: The Associated Press, Jeannine Aversa (05/27/2009)
NAR: Existing-Home Sales Jump
From Realtor Magazine Online, Daily Real Estate News May 27, 2009
Existing-home sales rose in April with strong buyer activity in lower price ranges, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March. Yet, home sales were 3.5 percent below the 4.85 million-unit level in April 2008, according to NAR.
Lawrence Yun, NAR chief economist, says first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers.
“Most of the sales are taking place in lower price ranges and activity is beginning to pickup in the midprice ranges, but high-end home sales remain sluggish,” he says. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”
Buyers Once Again Emerge
An NAR practitioner survey in April showed first-time buyers declined to 40 percent of transactions, implying more repeat buyers are entering the traditional spring home-buying season. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago.
“This is consistent with our forecast for home sales in the latter part of the year to be 10 to 20 percent higher than the second half of 2008,” Yun says.
"It's critical that distressed homes be quickly cleared from the market," Yun says.
“Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida — this will set the stage for healthy market conditions going forward,” Yun says.
NAR President Charles McMillan says conditions are optimal for buyers with good jobs and long-term plans.
“We have record low mortgage interest rates, a wide selection of homes and affordable prices in most areas,” he says. “When you add the $8,000 first-time buyer tax credit, it’s hard to imagine a better time to make an investment in your future through homeownership.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.81 percent in April from 5.00 percent in March; the rate was 5.92 percent in April 2008; data collection began in 1971.
A Closer Look at the Numbers
National median existing-home price: for all housing types, was $170,200 in April, which is 15.4 percent below 2008. Distressed properties, which accounted for 45 percent of all sales in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Total housing inventory: at the end of April, rose 8.8 percent to 3.97 million existing homes available for sale, which represents a 10.2-month supply at the current sales pace, compared with a 9.6-month supply in March. “The gain in inventory is largely seasonal from sellers entering the spring market," Yun says. "Even with the rise, inventory over the past few months has remained consistently lower in comparison with a year earlier."
Single-family home sales: rose 2.5 percent to a seasonally adjusted annual rate of 4.18 million in April from a level of 4.08 million in March, but are 2.8 percent below the 4.30 million-unit pace in March 2008. The median existing single-family home price was $169,800 in April, which is 14.9 percent below a year ago.
Existing condominium and co-op sales: increased 6.4 percent to a seasonally adjusted annual rate of 500,000 units in April from 470,000 in March, but are 9.4 percent lower than the 552,000-unit pace a year ago. The median existing condo price was $173,900 in April, down 18.5 percent from April 2008.
By Region
NAR reported the following with existing-home sales across the country:
* Northeast: jumped 11.6 percent to an annual pace of 770,000 in April, but are 10.5 percent below April 2008. Median price: $237,400, which is 9.6 percent lower than a year ago.
* Midwest: slipped 2 percent in April to a level of 1.00 million and are 9.9 percent lower than a year ago. Median price: $138,800, down 11.7 percent from April 2008.
* South: increased 1.8 percent to an annual pace of 1.74 million in April but are 8.9 percent lower than April 2008. Median price: $148,000, which is 12.8 percent below a year ago.
* West: rose 3.5 percent to an annual rate of 1.17 million in April and are 19.4 percent higher than a year ago. Median price: $222,600, down 21.8 percent from April 2008.
Source: NAR
Existing-home sales rose in April with strong buyer activity in lower price ranges, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March. Yet, home sales were 3.5 percent below the 4.85 million-unit level in April 2008, according to NAR.
Lawrence Yun, NAR chief economist, says first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers.
“Most of the sales are taking place in lower price ranges and activity is beginning to pickup in the midprice ranges, but high-end home sales remain sluggish,” he says. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”
Buyers Once Again Emerge
An NAR practitioner survey in April showed first-time buyers declined to 40 percent of transactions, implying more repeat buyers are entering the traditional spring home-buying season. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago.
“This is consistent with our forecast for home sales in the latter part of the year to be 10 to 20 percent higher than the second half of 2008,” Yun says.
"It's critical that distressed homes be quickly cleared from the market," Yun says.
“Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida — this will set the stage for healthy market conditions going forward,” Yun says.
NAR President Charles McMillan says conditions are optimal for buyers with good jobs and long-term plans.
“We have record low mortgage interest rates, a wide selection of homes and affordable prices in most areas,” he says. “When you add the $8,000 first-time buyer tax credit, it’s hard to imagine a better time to make an investment in your future through homeownership.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.81 percent in April from 5.00 percent in March; the rate was 5.92 percent in April 2008; data collection began in 1971.
A Closer Look at the Numbers
National median existing-home price: for all housing types, was $170,200 in April, which is 15.4 percent below 2008. Distressed properties, which accounted for 45 percent of all sales in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Total housing inventory: at the end of April, rose 8.8 percent to 3.97 million existing homes available for sale, which represents a 10.2-month supply at the current sales pace, compared with a 9.6-month supply in March. “The gain in inventory is largely seasonal from sellers entering the spring market," Yun says. "Even with the rise, inventory over the past few months has remained consistently lower in comparison with a year earlier."
Single-family home sales: rose 2.5 percent to a seasonally adjusted annual rate of 4.18 million in April from a level of 4.08 million in March, but are 2.8 percent below the 4.30 million-unit pace in March 2008. The median existing single-family home price was $169,800 in April, which is 14.9 percent below a year ago.
Existing condominium and co-op sales: increased 6.4 percent to a seasonally adjusted annual rate of 500,000 units in April from 470,000 in March, but are 9.4 percent lower than the 552,000-unit pace a year ago. The median existing condo price was $173,900 in April, down 18.5 percent from April 2008.
By Region
NAR reported the following with existing-home sales across the country:
* Northeast: jumped 11.6 percent to an annual pace of 770,000 in April, but are 10.5 percent below April 2008. Median price: $237,400, which is 9.6 percent lower than a year ago.
* Midwest: slipped 2 percent in April to a level of 1.00 million and are 9.9 percent lower than a year ago. Median price: $138,800, down 11.7 percent from April 2008.
* South: increased 1.8 percent to an annual pace of 1.74 million in April but are 8.9 percent lower than April 2008. Median price: $148,000, which is 12.8 percent below a year ago.
* West: rose 3.5 percent to an annual rate of 1.17 million in April and are 19.4 percent higher than a year ago. Median price: $222,600, down 21.8 percent from April 2008.
Source: NAR
Tuesday, May 26, 2009
Investors Watch for Signs of Recovery
From Realtor Magazine Online, Daily Real Estate News May 26, 2009
As the spring selling season moves into full gear, investors and economists will be watching the housing market closely for signs that the worst is over.
“We can't right this ship if we don't run off that inventory," says Tommy Williams, president of Williams Financial Advisors in Shreveport, La.
Stocks rose more than 3 percent on May 4 following increases in pending home sales and construction spending. But a high inventory of unsold homes and increasing foreclosures are reducing demand, and that makes it hard for prices to stabilize.
"We are getting to the point of the year where we are getting into the peak home sales season," said Kevin Shacknofsky, co-portfolio manager of the Alpine Dynamic Dividend Fund. "The numbers now will be far more important ... it's summer time."
Source: The Associated Press (05/24/2009)
As the spring selling season moves into full gear, investors and economists will be watching the housing market closely for signs that the worst is over.
“We can't right this ship if we don't run off that inventory," says Tommy Williams, president of Williams Financial Advisors in Shreveport, La.
Stocks rose more than 3 percent on May 4 following increases in pending home sales and construction spending. But a high inventory of unsold homes and increasing foreclosures are reducing demand, and that makes it hard for prices to stabilize.
"We are getting to the point of the year where we are getting into the peak home sales season," said Kevin Shacknofsky, co-portfolio manager of the Alpine Dynamic Dividend Fund. "The numbers now will be far more important ... it's summer time."
Source: The Associated Press (05/24/2009)
State Existing Home Sales and Metro-Area Home Prices in First Quarter 2009
From National Assn. of Realtors, Realtor.org
The good news: close to 455,000 buyers purchased their first home during the first quarter of 2009. First-time home buyers are taking advantage of improved affordability, as well as lower prices of existing homes in foreclosure and short sales. But distressed sales – foreclosures and short sales – accounted for nearly half of all transactions in the first quarter of 2009. That contributed to a decline in the median home prices in most of the metropolitan area markets monitored by NAR.
The latest NAR quarterly survey of metropolitan area home prices showed the majority of markets -- 134 out of 152 metropolitan statistical areas – experiencing declines in home prices compared to the first quarter of 2008. Eighteen metro areas showed price gains over the same period. The national median existing single-family price was $169,000, 13.8 percent below that registered in the first quarter of 2008. Metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
State Sales Activity
Total state existing-home sales (single-family and condominiums) posted a seasonally adjusted annual rate of 4.59 million units in the first quarter of 2009. That is 3.2 percent off the sales pace in the fourth quarter of last year, and 6.8 percent below the pace in the first quarter of 2008.
There were some bright spots. Seventeen states experienced sales increases from the fourth quarter, and six states posted higher sales than a year ago. The largest sales gain from a year ago was in Nevada, up 116.8 percent, followed by California where sales rose 80.6 percent, Arizona, up 50.2 percent, and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases. It should be noted that sales in the first quarter do not reflect the impact from the recently enacted first-time home buyer tax credit. That impact will be felt going forward into the second quarter and the spring and summer seasons. In fact, the latest pending home sales index for March which monitors contract (not sales) activity registered an increase.
Metro Prices
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The largest single-family home price increase in the first quarter was seen in the Cumberland area of Maryland and West Virginia; the median price rose 21.1 percent from a year ago to $114,900. The Davenport-Moline-Rock Island area of Iowa and Illinois posted a median price of $100,300, up 13.8 percent from the first quarter of 2008. The median price of a single-family home in Columbia MO rose 6.0 percent to $152,600.
For existing condominiums, metro area prices ranged from $75,200 in Las Vegas-Paradise NV to $345,900 in San Francisco-Oakland-Fremont CA. The strongest condo price increase was in Portland-South Portland-Biddeford ME, where the median price rose 11.2 percent from a year ago to $196,900. Wichita KS experienced an increase of 6.8 percent in the median price of an existing condominium (to $113,900) and condo prices in Bismarck ND, rose 6.0 percent to $132,400.
Behind the Numbers
NAR analysts report that this is a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In areas with the biggest price declines, there are much higher levels of distressed sales. Distressed homes typically are selling for 20 percent less than traditional homes and thus are skewing median prices downward.
But for those who own homes in good condition, their properties have held their value much better than distressed properties. Consequently, most sellers can still expect a good return if they’ve been in their home for a normal period of homeownership and haven’t tapped into their home equity too excessively.
Still, it is a buyer’s market. Low interest rates, favorable affordability conditions in many markets, and the home buying incentives will continue to attract first-time home purchasers. Indeed, housing affordability conditions are at record high levels. Look for a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.
The good news: close to 455,000 buyers purchased their first home during the first quarter of 2009. First-time home buyers are taking advantage of improved affordability, as well as lower prices of existing homes in foreclosure and short sales. But distressed sales – foreclosures and short sales – accounted for nearly half of all transactions in the first quarter of 2009. That contributed to a decline in the median home prices in most of the metropolitan area markets monitored by NAR.
The latest NAR quarterly survey of metropolitan area home prices showed the majority of markets -- 134 out of 152 metropolitan statistical areas – experiencing declines in home prices compared to the first quarter of 2008. Eighteen metro areas showed price gains over the same period. The national median existing single-family price was $169,000, 13.8 percent below that registered in the first quarter of 2008. Metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
State Sales Activity
Total state existing-home sales (single-family and condominiums) posted a seasonally adjusted annual rate of 4.59 million units in the first quarter of 2009. That is 3.2 percent off the sales pace in the fourth quarter of last year, and 6.8 percent below the pace in the first quarter of 2008.
There were some bright spots. Seventeen states experienced sales increases from the fourth quarter, and six states posted higher sales than a year ago. The largest sales gain from a year ago was in Nevada, up 116.8 percent, followed by California where sales rose 80.6 percent, Arizona, up 50.2 percent, and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases. It should be noted that sales in the first quarter do not reflect the impact from the recently enacted first-time home buyer tax credit. That impact will be felt going forward into the second quarter and the spring and summer seasons. In fact, the latest pending home sales index for March which monitors contract (not sales) activity registered an increase.
Metro Prices
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The largest single-family home price increase in the first quarter was seen in the Cumberland area of Maryland and West Virginia; the median price rose 21.1 percent from a year ago to $114,900. The Davenport-Moline-Rock Island area of Iowa and Illinois posted a median price of $100,300, up 13.8 percent from the first quarter of 2008. The median price of a single-family home in Columbia MO rose 6.0 percent to $152,600.
For existing condominiums, metro area prices ranged from $75,200 in Las Vegas-Paradise NV to $345,900 in San Francisco-Oakland-Fremont CA. The strongest condo price increase was in Portland-South Portland-Biddeford ME, where the median price rose 11.2 percent from a year ago to $196,900. Wichita KS experienced an increase of 6.8 percent in the median price of an existing condominium (to $113,900) and condo prices in Bismarck ND, rose 6.0 percent to $132,400.
Behind the Numbers
NAR analysts report that this is a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In areas with the biggest price declines, there are much higher levels of distressed sales. Distressed homes typically are selling for 20 percent less than traditional homes and thus are skewing median prices downward.
But for those who own homes in good condition, their properties have held their value much better than distressed properties. Consequently, most sellers can still expect a good return if they’ve been in their home for a normal period of homeownership and haven’t tapped into their home equity too excessively.
Still, it is a buyer’s market. Low interest rates, favorable affordability conditions in many markets, and the home buying incentives will continue to attract first-time home purchasers. Indeed, housing affordability conditions are at record high levels. Look for a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.
Friday, May 22, 2009
Mortgage Rates Continue to Fall
From Realtor Magazine Online, Daily Real Estate News May 22, 2009
Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.82 percent during the week ended May 21 from 4.86 percent the prior week. Meanwhile, the 15-year fixed mortgage rate dipped to 4.5 percent.
The Federal Reserve is working to hold down rates by purchasing upwards of $1.25 trillion in mortgage-backed securities and $300 billion in Treasuries. Mortgage rate premiums have declined substantially over the last couple of months even as Treasury yields climbed.
Source: Investor's Business Daily (05/22/09)
Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.82 percent during the week ended May 21 from 4.86 percent the prior week. Meanwhile, the 15-year fixed mortgage rate dipped to 4.5 percent.
The Federal Reserve is working to hold down rates by purchasing upwards of $1.25 trillion in mortgage-backed securities and $300 billion in Treasuries. Mortgage rate premiums have declined substantially over the last couple of months even as Treasury yields climbed.
Source: Investor's Business Daily (05/22/09)
Wednesday, May 20, 2009
Investor Buying Fuels Home Sales
From Realtor Magazine Online, Daily Real Estate News May 20, 2009
One of the reasons home sales have risen this year is the spike in investor groups in troubled markets that are buying up clusters of foreclosed houses from banks.
In many cases, investors are prevailing over first-time home buyers and other owner-occupants because they bring cash to the table.
For instance, in Phoenix where 38 percent of April sales of single-family homes were all-cash deals, Mark Allen, a former division president at D.R. Horton, the nation’s largest home builder, is working with Gorilla Capital, which specializes in foreclosures, to buy dozens of properties at courthouse auctions.
Barclays Capital estimates that banks and loan investors owned 765,500 foreclosed homes as of April 1, up from 629,100 last year. By 2010, Barclays expects them to have acquired about 1.3 million homes. When the market improves, these owners will try to sell.
"All this investor buying isn't depleting supply, it's only shifting it around," Allen says.
Source: The Wall Street Journal, Michael Corkery (05/20/2009)
One of the reasons home sales have risen this year is the spike in investor groups in troubled markets that are buying up clusters of foreclosed houses from banks.
In many cases, investors are prevailing over first-time home buyers and other owner-occupants because they bring cash to the table.
For instance, in Phoenix where 38 percent of April sales of single-family homes were all-cash deals, Mark Allen, a former division president at D.R. Horton, the nation’s largest home builder, is working with Gorilla Capital, which specializes in foreclosures, to buy dozens of properties at courthouse auctions.
Barclays Capital estimates that banks and loan investors owned 765,500 foreclosed homes as of April 1, up from 629,100 last year. By 2010, Barclays expects them to have acquired about 1.3 million homes. When the market improves, these owners will try to sell.
"All this investor buying isn't depleting supply, it's only shifting it around," Allen says.
Source: The Wall Street Journal, Michael Corkery (05/20/2009)
Colleges Snap Up Bargain Properties
From Realtor Magazine Online, Daily Real Estate News May 20, 2009
Colleges are taking advantage of the down real estate market to buy property, often at bargain rates, including apartments and other commercial sites.
Higher-education institutions aren’t stymied by the frozen credit markets, says Pete Culliney, director of research for Real Capital Analytics, because they either have endowments to spend, or, in the case of public institutions, can rely on bond sales.
Among the recent deals involving a college was the sale of an unused Hewlett-Packard Co. eight-building campus totaling 1.2 million square feet for $42.2 million to the Lone Star College System, a Texas community college.
Based on square footage, the deal was the second-largest office transaction in the U.S. so far this year. The $35-a-square-foot price was a deep discount from the $145 per-square-foot suburban average in the first quarter of 2008.
Source: The Wall Street Journal, Maura Webber Sadovi (05/20/2009)
Colleges are taking advantage of the down real estate market to buy property, often at bargain rates, including apartments and other commercial sites.
Higher-education institutions aren’t stymied by the frozen credit markets, says Pete Culliney, director of research for Real Capital Analytics, because they either have endowments to spend, or, in the case of public institutions, can rely on bond sales.
Among the recent deals involving a college was the sale of an unused Hewlett-Packard Co. eight-building campus totaling 1.2 million square feet for $42.2 million to the Lone Star College System, a Texas community college.
Based on square footage, the deal was the second-largest office transaction in the U.S. so far this year. The $35-a-square-foot price was a deep discount from the $145 per-square-foot suburban average in the first quarter of 2008.
Source: The Wall Street Journal, Maura Webber Sadovi (05/20/2009)
Mortgage Volume Up, Driven by Refinancing
From Realtor Magazine Online, Daily Real Estate News May 20, 2009
Mortgage applications increased last week, driven by refinances, according to the Mortgage Bankers Association weekly mortgage application survey.
On a seasonally adjusted basis, the index rose 2.3 percent last week to 915.9 from 895.6 the previous week. On an unadjusted basis, the index increased 2 percent compared with the previous week and was up 42 percent from the same week a year ago.
The refinance index increased 4.5 percent, while the seasonally adjusted purchase index decreased 4.4 percent. The refinance share of mortgage activity increased to 73.6 percent of total applications from 71.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.4 percent from 2.3 percent of total applications from the previous week.
Different categories of mortgage rates continued to decline:
* 30-year fixed-rate mortgages decreased to 4.69 percent 6.41 percent.
* 15-year fixed-rate mortgages decreased to 4.44 percent from 4.50 percent.
* 1-year ARMs decreased to 6.38 percent from 6.41 percent.
Source: Mortgage Bankers Association (05/20/2009)
Mortgage applications increased last week, driven by refinances, according to the Mortgage Bankers Association weekly mortgage application survey.
On a seasonally adjusted basis, the index rose 2.3 percent last week to 915.9 from 895.6 the previous week. On an unadjusted basis, the index increased 2 percent compared with the previous week and was up 42 percent from the same week a year ago.
The refinance index increased 4.5 percent, while the seasonally adjusted purchase index decreased 4.4 percent. The refinance share of mortgage activity increased to 73.6 percent of total applications from 71.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.4 percent from 2.3 percent of total applications from the previous week.
Different categories of mortgage rates continued to decline:
* 30-year fixed-rate mortgages decreased to 4.69 percent 6.41 percent.
* 15-year fixed-rate mortgages decreased to 4.44 percent from 4.50 percent.
* 1-year ARMs decreased to 6.38 percent from 6.41 percent.
Source: Mortgage Bankers Association (05/20/2009)
Housing Starts Hit Record Low in April
From Realtor Magazine Online, Daily Real Estate News May 20, 2009
Housing starts hit a record low in April, the U.S. Commerce Department reported, but the news wasn't all bad as single-family construction rose 2.8 percent, the second straight month of gains in that sector.
Overall, housing starts fell 13 percent to an annual rate of 458,000, driven by the decline in construction of apartment buildings and condominiums. Building permits, an indicator of future construction, fell 3.3 percent to a record low of 494,000.
Here's a look at housing starts at the regional level:
● Northeast: fell 31 percent
● Midwest: dropped 21 percent
● South: declined 21 percent
● West: rose 43 percent
Analysts believe that while joblessness will keep some people from starting new households, increased demand for more housing is inevitable.
“Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from,” Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, wrote in a note to clients. “This will undoubtedly be a game changer for inventories and prices.”
Source: Bloomberg, Bob Willis (05/19/2009)
Housing starts hit a record low in April, the U.S. Commerce Department reported, but the news wasn't all bad as single-family construction rose 2.8 percent, the second straight month of gains in that sector.
Overall, housing starts fell 13 percent to an annual rate of 458,000, driven by the decline in construction of apartment buildings and condominiums. Building permits, an indicator of future construction, fell 3.3 percent to a record low of 494,000.
Here's a look at housing starts at the regional level:
● Northeast: fell 31 percent
● Midwest: dropped 21 percent
● South: declined 21 percent
● West: rose 43 percent
Analysts believe that while joblessness will keep some people from starting new households, increased demand for more housing is inevitable.
“Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from,” Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, wrote in a note to clients. “This will undoubtedly be a game changer for inventories and prices.”
Source: Bloomberg, Bob Willis (05/19/2009)
Tuesday, May 19, 2009
Practitioners Say Homes Prices Have Hit Bottom
From Realtor Magazine Online, Daily Real Estate News May 19, 2009
Real estate professionals are optimistic that home prices will hit bottom in the next six months, according to a survey from listing and home-pricing site HomeGain.com.
About half of practitioners surveyed expect home prices to stay the same in the next six months, 29 percent expect them to drop, and 22 percent believe they will increase.
More than 84 percent of practitioners believe their clients’ homes lost value in the last year, while 12 percent say values had stayed the same. Only 3 percent believe homes had gained value.
Meanwhile, sellers were skeptical of their real estate professional’s analysis, with 69 percent believing their homes were worth more than the practitioner recommended. About 35 percent of home sellers thought their home was worth 10 percent to 20 percent more, and 10 percent thought their home was worth at least 21 percent more than their real estate professional suggested.
Source: Inman News (05/18/2009)
Real estate professionals are optimistic that home prices will hit bottom in the next six months, according to a survey from listing and home-pricing site HomeGain.com.
About half of practitioners surveyed expect home prices to stay the same in the next six months, 29 percent expect them to drop, and 22 percent believe they will increase.
More than 84 percent of practitioners believe their clients’ homes lost value in the last year, while 12 percent say values had stayed the same. Only 3 percent believe homes had gained value.
Meanwhile, sellers were skeptical of their real estate professional’s analysis, with 69 percent believing their homes were worth more than the practitioner recommended. About 35 percent of home sellers thought their home was worth 10 percent to 20 percent more, and 10 percent thought their home was worth at least 21 percent more than their real estate professional suggested.
Source: Inman News (05/18/2009)
Builders' Confidence on the Rise
From Realtor Magazine Online, Daily Real Estate News May 19, 2009
Builders’confidence improved in May for the third month in a row, reaching 16 points, up from 14 in April and nine in March.
May is the highest Wells Fargo-National Association of Home Builders’ Housing Market Index number has been since September 2008, although any measure below 50 is considered a negative with most home builders viewing the market as negative.
NAHB Chief Economist David Crowe said the rise in the index "indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."
Source: The Wall Street Journal, Jeff Bater (05/18/2009)
Builders’confidence improved in May for the third month in a row, reaching 16 points, up from 14 in April and nine in March.
May is the highest Wells Fargo-National Association of Home Builders’ Housing Market Index number has been since September 2008, although any measure below 50 is considered a negative with most home builders viewing the market as negative.
NAHB Chief Economist David Crowe said the rise in the index "indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."
Source: The Wall Street Journal, Jeff Bater (05/18/2009)
Home Affordability Hits 18-Year High
From Realtor Magazine Online, Daily Real Estate News May 19, 2009
Housing affordability is reaching record levels with nearly 73 percent of all homes sold in the first three months of 2009 considered affordable.
That’s the highest percentage ever reported by the 18-year-old, quarterly Housing Opportunity Index, compiled by the National Association of Home Builders and Wells Fargo Bank.
To be considered affordable, a family making the national median household income of $64,000 must be able to devote no more than 28 percent of their income toward housing costs.
The most affordable major metropolitan areas and their median home prices are:
1. Indianapolis: $98,000
2. Youngstown, Ohio: $67,000
3. Akron, Ohio: $78,000
4. Grand Rapids, Mich.: $97,000
5. Syracuse, N.Y.: $85,000
6. Warren, Mich.: $119,000
7. Cleveland: $86,000
8. Buffalo, N.Y.: $90,000
9. Toledo, Ohio: $78,000
10. Dayton, Ohio: $85,000
The 10 least affordable metropolitan areas are:
1. New York City: $418,000
2. San Francisco: $525,000
3. Los Angeles: $288,000
4. Nassau-Suffolk, N.Y.: $375,000
5. Honolulu: $360,000
6. Santa Ana: Calif., $360,000
7. Newark, N.J.: $315,000
8. Miami: $185,000
9. McAllen, Tex.: $106,000
10. El Paso, Tex.: $127,000
Source: CNNMoney, Les Christie (05/19/2009)
Housing affordability is reaching record levels with nearly 73 percent of all homes sold in the first three months of 2009 considered affordable.
That’s the highest percentage ever reported by the 18-year-old, quarterly Housing Opportunity Index, compiled by the National Association of Home Builders and Wells Fargo Bank.
To be considered affordable, a family making the national median household income of $64,000 must be able to devote no more than 28 percent of their income toward housing costs.
The most affordable major metropolitan areas and their median home prices are:
1. Indianapolis: $98,000
2. Youngstown, Ohio: $67,000
3. Akron, Ohio: $78,000
4. Grand Rapids, Mich.: $97,000
5. Syracuse, N.Y.: $85,000
6. Warren, Mich.: $119,000
7. Cleveland: $86,000
8. Buffalo, N.Y.: $90,000
9. Toledo, Ohio: $78,000
10. Dayton, Ohio: $85,000
The 10 least affordable metropolitan areas are:
1. New York City: $418,000
2. San Francisco: $525,000
3. Los Angeles: $288,000
4. Nassau-Suffolk, N.Y.: $375,000
5. Honolulu: $360,000
6. Santa Ana: Calif., $360,000
7. Newark, N.J.: $315,000
8. Miami: $185,000
9. McAllen, Tex.: $106,000
10. El Paso, Tex.: $127,000
Source: CNNMoney, Les Christie (05/19/2009)
Monday, May 18, 2009
Buyer Tax Credit Loan Guidance Coming Soon
From Realtor Magazine Online, Daily Real Estate News May 18, 2009
Detailed guidance on the federal government's plan to provide short-term loans to borrowers using the First-Time Homebuyer Tax Credit is expected to be out shortly, but a spokesperson from the U.S. Department of Housing and Urban Development, which is writing the guidance, couldn't give a firm release date.
HUD policy staff are "still working out the details on it," HUD spokesperson Lamar Wooley told REALTOR® Magazine today. "So we expect it to be published shortly."
The short-term loan program, which would effectively monetize the first-time homebuyer tax credit by permitting eligible lenders to make bridge loans collateralized by the borrower's expected tax credit, was announced by HUD Secretary Shaun Donovan at the Real Estate Summit NAR hosted on the opening day of its 2009 Midyear Legislative Meetings in Washington last week.
At the summit, Donovan said the loans would enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash could be used as a downpayment.
"FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to 'monetize' the tax credit through short-term bridge loans," Donovan said. "We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.
"It's unclear at this point what shape the guidance will take and whether authorization for the loans will be available across the board or only in states in which the state housing finance agency already has a tax credit bridge-loan program in place.
There are 10 states today that have such a loan program, according to the National Council of State Housing Agencies: Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
You can access details of these loan programs on the NCSHA's Web site, "First-Time Homebuyer Tax Credit Loan Programs."
When it's released, the guidance is expected to be issued as a HUD Mortgagee Letter and will likely discuss which federal, state, and local governmental agencies and nonprofit organizations will be permitted to make the loans, and whether lenders such as FHA-approved mortgagees will be permitted to make the loans.
The guidance could also cover how loan amounts will be limited, what happens if repayment problems occur, and what repayment terms would look like.
REALTOR® Magazine will be checking with HUD regularly on the status of the guidance and will report its availability as soon as it's issued.
—By Robert Freedman for REALTOR® Magazine
Detailed guidance on the federal government's plan to provide short-term loans to borrowers using the First-Time Homebuyer Tax Credit is expected to be out shortly, but a spokesperson from the U.S. Department of Housing and Urban Development, which is writing the guidance, couldn't give a firm release date.
HUD policy staff are "still working out the details on it," HUD spokesperson Lamar Wooley told REALTOR® Magazine today. "So we expect it to be published shortly."
The short-term loan program, which would effectively monetize the first-time homebuyer tax credit by permitting eligible lenders to make bridge loans collateralized by the borrower's expected tax credit, was announced by HUD Secretary Shaun Donovan at the Real Estate Summit NAR hosted on the opening day of its 2009 Midyear Legislative Meetings in Washington last week.
At the summit, Donovan said the loans would enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash could be used as a downpayment.
"FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to 'monetize' the tax credit through short-term bridge loans," Donovan said. "We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.
"It's unclear at this point what shape the guidance will take and whether authorization for the loans will be available across the board or only in states in which the state housing finance agency already has a tax credit bridge-loan program in place.
There are 10 states today that have such a loan program, according to the National Council of State Housing Agencies: Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
You can access details of these loan programs on the NCSHA's Web site, "First-Time Homebuyer Tax Credit Loan Programs."
When it's released, the guidance is expected to be issued as a HUD Mortgagee Letter and will likely discuss which federal, state, and local governmental agencies and nonprofit organizations will be permitted to make the loans, and whether lenders such as FHA-approved mortgagees will be permitted to make the loans.
The guidance could also cover how loan amounts will be limited, what happens if repayment problems occur, and what repayment terms would look like.
REALTOR® Magazine will be checking with HUD regularly on the status of the guidance and will report its availability as soon as it's issued.
—By Robert Freedman for REALTOR® Magazine
Friday, May 15, 2009
Rates Below 5% for Ninth Week Straight
From Realtor Magazine Online, Daily Real Estate News May 15, 2009
Freddie Mac reports a slight rise in the 30-year fixed mortgage rate to 4.86 percent during the week ended May 14 from 4.84 percent the previous week.
Rates have been below 5 percent for nine weeks in a row. Last year at this time, the average 30-year rate was 6.01 percent.
The 15-year fixed mortgage rate climbed to 4.52 percent from 4.51 percent. Meanwhile, the five-year adjustable mortgage rate slipped to 4.82 percent from 4.9 percent; and the one-year ARM fell to 4.71 percent from 4.78 percent.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.
Source: Freddie Mac
Freddie Mac reports a slight rise in the 30-year fixed mortgage rate to 4.86 percent during the week ended May 14 from 4.84 percent the previous week.
Rates have been below 5 percent for nine weeks in a row. Last year at this time, the average 30-year rate was 6.01 percent.
The 15-year fixed mortgage rate climbed to 4.52 percent from 4.51 percent. Meanwhile, the five-year adjustable mortgage rate slipped to 4.82 percent from 4.9 percent; and the one-year ARM fell to 4.71 percent from 4.78 percent.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.
Source: Freddie Mac
Uniform Short-Sales Guidelines in the Works
From Realtor Magazine Online, Daily Real Estate News May 15, 2009
Extensive delays in the short-sale process has caused many buyers to go elsewhere and have left would-be sellers with no option but foreclosure. But the picture is improving.
This week the U.S. Treasury announced that it would be providing incentives for borrowers and mortgage services to pursue short sales and other foreclosure alternatives. The program includes a standard short-sales process flow, minimum performance timeframes, and standard documentation, the U.S. Treasury says.
(More information is available on the Treasury Web site and in this PDF document posted at REALTOR.org.)
The incentives and process guidelines are part of a larger initiative called Making Home Affordable, which helps home owners refinance to avoid losing their home.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” NATIONAL ASSOCIATION OF REALTORS® President Charles McMillan said in a statement. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s home owners in challenging economy.”
More Collaboration Needed
A panel of experts at the 2009 REALTORS® Conference & Expo this week agreed with NAR's position on the issue, Representatives from Fannie Mae and Wells Fargo said collaboration between government, lenders, the real estate industry, and advocacy groups is necessary in creating short-sales standards.
“It’s hard to find the right person to talk to, you send in multiple forms multiple times, you’re not sure if the forms were received or processed correctly,” said Marcel Bryar, deputy general counsel and vice president at Fannie Mae.
Creating a streamlined system that all industries embrace will be a lot of work, but it would be worth it, said David Knight, head of the short sales division at Wells Fargo. “The process is going to take a while. Getting them all to understand what we can all live and deal with is not going to be easy, but that is exactly what’s going to have to happen.”
Panel participants applauded the Obama administration’s efforts to streamline the short sales process, and encouraged the real estate industry to get more involved in formulating this standard.
“It’s going to take some thorough intervention,” said Boyd Campbell, a Washington, D.C.-area REALTOR®. “That’s why I think it’s so important for RPAC to get involved and make sure NAR has the resources to go in and help resolve this problem. This doesn’t just impact us as practitioners. It also impacts all of our homes and communities.”
—Brian Summerfield, REALTOR® Magazine
Extensive delays in the short-sale process has caused many buyers to go elsewhere and have left would-be sellers with no option but foreclosure. But the picture is improving.
This week the U.S. Treasury announced that it would be providing incentives for borrowers and mortgage services to pursue short sales and other foreclosure alternatives. The program includes a standard short-sales process flow, minimum performance timeframes, and standard documentation, the U.S. Treasury says.
(More information is available on the Treasury Web site and in this PDF document posted at REALTOR.org.)
The incentives and process guidelines are part of a larger initiative called Making Home Affordable, which helps home owners refinance to avoid losing their home.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” NATIONAL ASSOCIATION OF REALTORS® President Charles McMillan said in a statement. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s home owners in challenging economy.”
More Collaboration Needed
A panel of experts at the 2009 REALTORS® Conference & Expo this week agreed with NAR's position on the issue, Representatives from Fannie Mae and Wells Fargo said collaboration between government, lenders, the real estate industry, and advocacy groups is necessary in creating short-sales standards.
“It’s hard to find the right person to talk to, you send in multiple forms multiple times, you’re not sure if the forms were received or processed correctly,” said Marcel Bryar, deputy general counsel and vice president at Fannie Mae.
Creating a streamlined system that all industries embrace will be a lot of work, but it would be worth it, said David Knight, head of the short sales division at Wells Fargo. “The process is going to take a while. Getting them all to understand what we can all live and deal with is not going to be easy, but that is exactly what’s going to have to happen.”
Panel participants applauded the Obama administration’s efforts to streamline the short sales process, and encouraged the real estate industry to get more involved in formulating this standard.
“It’s going to take some thorough intervention,” said Boyd Campbell, a Washington, D.C.-area REALTOR®. “That’s why I think it’s so important for RPAC to get involved and make sure NAR has the resources to go in and help resolve this problem. This doesn’t just impact us as practitioners. It also impacts all of our homes and communities.”
—Brian Summerfield, REALTOR® Magazine
Homes May Be Undervalued Today
From Realtor Magazine Online, Daily Real Estate News May 15, 2009
After dropping for two years, home prices appear to be bottoming out, and any further declines would be an overcorrection, NAR Chief Economist Lawrence Yun told thousands of practitioners at the REALTORS® Midyear Legislative Meetings in Washington, D.C., on Thursday.
The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today’s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.
Lender Policies Hinder Recovery
Distressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. “We’re only capturing transaction prices,” he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it’s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said.
The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners’ financial position and that, by extension, hurts the broader economy.
Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market.
Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750—the threshold for jumbo loans—face a 40-month supply.
Key Test
By summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery.
If sales don’t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.
Yun’s forecast reflects the brighter scenario: “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,” he said.
—Robert Freedman, REALTOR® Magazine
After dropping for two years, home prices appear to be bottoming out, and any further declines would be an overcorrection, NAR Chief Economist Lawrence Yun told thousands of practitioners at the REALTORS® Midyear Legislative Meetings in Washington, D.C., on Thursday.
The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today’s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.
Lender Policies Hinder Recovery
Distressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. “We’re only capturing transaction prices,” he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it’s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said.
The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners’ financial position and that, by extension, hurts the broader economy.
Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market.
Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750—the threshold for jumbo loans—face a 40-month supply.
Key Test
By summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery.
If sales don’t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.
Yun’s forecast reflects the brighter scenario: “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,” he said.
—Robert Freedman, REALTOR® Magazine
Wednesday, May 13, 2009
FIRPTA: Thumbs Up or Thumbs Down?
Generally speaking, the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) requires that a non-U.S. citizen have 10% of a real property transaction (typically based on selling price) withheld as a “deposit” for potential tax liability. Like most tax laws, there are defenders and detractors of FIRPTA. Recent declines in inbound foreign investment due to current market conditions has renewed the discussion on FIRPTA's pros and cons.
While NAR has no official position at this time, international property specialists need to be familiar with the law . Read NAR Treasurer Jim Helsel's recent blog on FIRPTA, and then download a 20-min. training module for use in a company sales meeting on working with foreign nonresidents who buy, sell or rent U.S. property.
While NAR has no official position at this time, international property specialists need to be familiar with the law . Read NAR Treasurer Jim Helsel's recent blog on FIRPTA, and then download a 20-min. training module for use in a company sales meeting on working with foreign nonresidents who buy, sell or rent U.S. property.
Tuesday, May 12, 2009
For-Sale Housing Inventory Getting Smaller
From Realtor Magazine Online, Daily Real Estate News May 12, 2009
The supply of properties on the market at the end of April declined 3.6 percent from the previous month, according to an analysis compiled by ZipRealty Inc.
ZipRealty looked at information from multiple listing services in 29 major markets.
Typically, the housing inventory rises in April an average of 4.8 percent, according to Zelman & Associates research firm.
The unknown factor that keeps this from being unquestionably good news is the number of foreclosures held by banks that aren’t listing them. For instance, Fannie Mae and Freddie Mac list only about 35 percent to 50 percent of the homes they hold.
Noted housing economist Thomas Lawler discounts the foreclosure concerns, saying that the decline in listings means "the bottom in home prices is much closer than many pundits believe."
Source: The Wall Street Journal, James R. Hagerty (05/12/2009)
The supply of properties on the market at the end of April declined 3.6 percent from the previous month, according to an analysis compiled by ZipRealty Inc.
ZipRealty looked at information from multiple listing services in 29 major markets.
Typically, the housing inventory rises in April an average of 4.8 percent, according to Zelman & Associates research firm.
The unknown factor that keeps this from being unquestionably good news is the number of foreclosures held by banks that aren’t listing them. For instance, Fannie Mae and Freddie Mac list only about 35 percent to 50 percent of the homes they hold.
Noted housing economist Thomas Lawler discounts the foreclosure concerns, saying that the decline in listings means "the bottom in home prices is much closer than many pundits believe."
Source: The Wall Street Journal, James R. Hagerty (05/12/2009)
Foreclosures, Short Sales Weigh Down Prices
From Realtor Magazine Online, Daily Real Estate News May 12, 2009
The median home price for U.S. metro areas posted a year-over-year decline in the first quarter of 2009, reflecting a high volume of foreclosures and short sales, which typically sell for 20 percent less than traditional homes, the NATIONAL ASSOCIATION OF REALTORS® reports.
The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal. Foreclosures and short sales accounted for nearly half of transactions in the first quarter.
NAR data shows that 134 out of 152 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are two levels of pricing in the current market.
“Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices," he said. "Most sellers can expect a good return if they’ve been in their home for a normal period of home ownership and haven’t excessively tapped their equity."
Existing-Home Sales Sluggish
Meanwhile, the sales pace remained slow overall. Total state existing-home sales, including single-family homes and condos, were at a seasonally adjusted annual rate of 4.59 million units in the first quarter, down 3.2 percent from 4.74 million units in the fourth quarter, and 6.8 percent below the 4.93 million-unit pace in the first quarter of 2008.
Seventeen states saw a sales increase from the fourth quarter, and six states were higher than a year ago; complete data for one state was not available. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.
Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. “Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased,” he said. “Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06 percent in the first quarter from 5.86 percent in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008.
Yun said some areas showed dramatic drops in home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” he said. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”
State, Local Bright Spots
The largest first-quarter sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent; Arizona, up 50.2 percent; and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.
The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago.
Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800. Other affordable markets include Akron, Ohio, at $50,100, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $51,200.
Condo Trends
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.
Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.
Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.
Regional Sales Volume, Prices
Regionally, existing-home sales in the Northeast fell 10.3 percent in the first quarter to a pace of 693,000 units and are 20.1 percent below a year ago.
The median existing single-family home price in the Northeast declined 15.9 percent to $235,500 in the first quarter from the same period in 2008. The best gain in the region was in Syracuse, N.Y., where the median price of $113,700 rose 3.1 percent from the first quarter of 2008, followed by Buffalo-Niagara Falls, N.Y., at $99,200, up 2.7 percent, and Binghamton, N.Y., where the median rose 0.5 percent to $110,300.
In the Midwest, existing-home sales slipped 2.2 percent in the first quarter to a pace of 1.04 million and are 13.1 percent below a year ago.
The median existing single-family home price in the Midwest was down 6.8 percent to $132,400 in the first quarter from the same period in 2008. After Davenport-Moline-Rock Island and Columbia, the next strongest metro price increase in the region was in Springfield, Ill., where the median price of $111,400 was 3.9 percent higher than a year ago, followed by Topeka, Kan., at $106,500, up 3.1 percent, and Bloomington-Normal, Ill., at $153,800, up 1.9 percent.
In the South, existing-home sales declined 2.5 percent in the first quarter to an annual rate of 1.70 million and are 12.7 percent lower than the same period in 2008.
The median existing single-family home price in the South was $146,600 in the first quarter, down 10.8 percent from a year earlier. After Cumberland, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with a 5.0 percent gain to $129,100, followed by Oklahoma City, at $129,900, up 4.0 percent, and Shreveport-Bossier City, La., at $136,000, up 3.4 percent.
Existing-home sales in the West slipped 0.9 percent in the first quarter to an annual rate of 1.16 million but are 24.3 percent above a year ago.
The median existing single-family home price in the West was $237,600 in the first quarter, which is 19.8 percent below the first quarter of 2008. The strongest price gain in the West was in the Salt Lake City area, where the median price of $230,100 rose 1.9 percent from a year earlier, followed by Farmington, N.M., at $191,200, up 0.7 percent.
Source: NAR
The median home price for U.S. metro areas posted a year-over-year decline in the first quarter of 2009, reflecting a high volume of foreclosures and short sales, which typically sell for 20 percent less than traditional homes, the NATIONAL ASSOCIATION OF REALTORS® reports.
The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal. Foreclosures and short sales accounted for nearly half of transactions in the first quarter.
NAR data shows that 134 out of 152 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are two levels of pricing in the current market.
“Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices," he said. "Most sellers can expect a good return if they’ve been in their home for a normal period of home ownership and haven’t excessively tapped their equity."
Existing-Home Sales Sluggish
Meanwhile, the sales pace remained slow overall. Total state existing-home sales, including single-family homes and condos, were at a seasonally adjusted annual rate of 4.59 million units in the first quarter, down 3.2 percent from 4.74 million units in the fourth quarter, and 6.8 percent below the 4.93 million-unit pace in the first quarter of 2008.
Seventeen states saw a sales increase from the fourth quarter, and six states were higher than a year ago; complete data for one state was not available. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.
Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. “Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased,” he said. “Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06 percent in the first quarter from 5.86 percent in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008.
Yun said some areas showed dramatic drops in home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” he said. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”
State, Local Bright Spots
The largest first-quarter sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent; Arizona, up 50.2 percent; and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.
The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago.
Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800. Other affordable markets include Akron, Ohio, at $50,100, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $51,200.
Condo Trends
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.
Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.
Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.
Regional Sales Volume, Prices
Regionally, existing-home sales in the Northeast fell 10.3 percent in the first quarter to a pace of 693,000 units and are 20.1 percent below a year ago.
The median existing single-family home price in the Northeast declined 15.9 percent to $235,500 in the first quarter from the same period in 2008. The best gain in the region was in Syracuse, N.Y., where the median price of $113,700 rose 3.1 percent from the first quarter of 2008, followed by Buffalo-Niagara Falls, N.Y., at $99,200, up 2.7 percent, and Binghamton, N.Y., where the median rose 0.5 percent to $110,300.
In the Midwest, existing-home sales slipped 2.2 percent in the first quarter to a pace of 1.04 million and are 13.1 percent below a year ago.
The median existing single-family home price in the Midwest was down 6.8 percent to $132,400 in the first quarter from the same period in 2008. After Davenport-Moline-Rock Island and Columbia, the next strongest metro price increase in the region was in Springfield, Ill., where the median price of $111,400 was 3.9 percent higher than a year ago, followed by Topeka, Kan., at $106,500, up 3.1 percent, and Bloomington-Normal, Ill., at $153,800, up 1.9 percent.
In the South, existing-home sales declined 2.5 percent in the first quarter to an annual rate of 1.70 million and are 12.7 percent lower than the same period in 2008.
The median existing single-family home price in the South was $146,600 in the first quarter, down 10.8 percent from a year earlier. After Cumberland, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with a 5.0 percent gain to $129,100, followed by Oklahoma City, at $129,900, up 4.0 percent, and Shreveport-Bossier City, La., at $136,000, up 3.4 percent.
Existing-home sales in the West slipped 0.9 percent in the first quarter to an annual rate of 1.16 million but are 24.3 percent above a year ago.
The median existing single-family home price in the West was $237,600 in the first quarter, which is 19.8 percent below the first quarter of 2008. The strongest price gain in the West was in the Salt Lake City area, where the median price of $230,100 rose 1.9 percent from a year earlier, followed by Farmington, N.M., at $191,200, up 0.7 percent.
Source: NAR
Tax Credit Can Be Used for Down Payment
From Realtor Magazine Online, Daily Real Estate News May 12, 2009
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C.
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Other Solutions for Today's Market
During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.
“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.
“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”
The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.
Source: NAR
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C.
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Other Solutions for Today's Market
During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.
“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.
“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”
The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.
Source: NAR
Monday, May 11, 2009
Putting Mortgages into 'Plain Language'
From Realtor Magazine Online, Daily Real Estate News May 11, 2009
Bank of America has debuted www.BankOfAmerica.com/HomeLoans, a new Web site for borrowers that includes a calculator that determines not just what size loan people can qualify for, but how much they can spend without being stretched too thin.
“We wanted to change the conversation to ‘How much house can I comfortably afford?’ rather than ‘What’s the maximum I can buy?’ ” said Aditya Bhasin, the product, pricing and strategy executive for Bank of America Home Loans.
The site was designed to be easy to read, spelling out a variety of contingencies, including the maximum payment that an adjustable rate mortgage could potentially cost.
The new site also offers what BofA calls Flat Fee Mortgage Plus, which has no application fee and a single closing fee that includes processing costs and fees for third-party services like appraisals.
It doesn’t include other standard costs like property taxes, homeowners’ insurance and prepaid interest.
Craig Focardi, a senior research director at the Tower Group, a financial consulting firm, said the idea for the plan is nothing new – it’s been tried by others. But the prominence of the programs could persuade competitors to adopt the features.
Source: The New York Times, Bob Tedeschi (05/08/2009)
Bank of America has debuted www.BankOfAmerica.com/HomeLoans, a new Web site for borrowers that includes a calculator that determines not just what size loan people can qualify for, but how much they can spend without being stretched too thin.
“We wanted to change the conversation to ‘How much house can I comfortably afford?’ rather than ‘What’s the maximum I can buy?’ ” said Aditya Bhasin, the product, pricing and strategy executive for Bank of America Home Loans.
The site was designed to be easy to read, spelling out a variety of contingencies, including the maximum payment that an adjustable rate mortgage could potentially cost.
The new site also offers what BofA calls Flat Fee Mortgage Plus, which has no application fee and a single closing fee that includes processing costs and fees for third-party services like appraisals.
It doesn’t include other standard costs like property taxes, homeowners’ insurance and prepaid interest.
Craig Focardi, a senior research director at the Tower Group, a financial consulting firm, said the idea for the plan is nothing new – it’s been tried by others. But the prominence of the programs could persuade competitors to adopt the features.
Source: The New York Times, Bob Tedeschi (05/08/2009)
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.
Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.
Friday, May 8, 2009
Real Estate Pros Push for Better Short Sales
From Realtor Magazine Online, Daily Real Estate News May 8, 2009
As anybody who has dealt with one knows, short sales should be renamed “long sales.” But that could be changing.
One of the real estate professionals leading the charge to revamp the short-sale process is George K. Wonica, owner of Wonica Real Estate & Appraisals on Long Island, N.Y., and chair of the NATIONAL ASSOCIATION OF REALTORS® Conventional Finance and Lending Committee.
Wonica already has met with 10 mortgage bankers and servicers in Florida to address the problem, and plans a similar meeting this summer in Las Vegas. He points to the uniform short-sale form developed by the California Association of REALTORS® as a good example of what the industry needs.
Short sales appear to be good for both banks and buyers. A study by Connecticut-based Clayton Holdings Inc. showed lenders from May to October 2008 lost an average 37 percent through short sales versus 56 percent on homes sold after foreclosure.
Lenders recognize this and are trying to speed up the process. David Knight, a senior vice president at Wells Fargo Home Mortgage, says, "We think (a) short sale is superior to foreclosure … A short sale is not a bad deal all around."
Additional liens are often the big holdup, but there could be progress on that front. In April, Bank of America, a major holder of second liens, announced that it would accept 5 percent of sale proceeds after real estate commissions and other costs on short sales. Previously, it had sought 10 percent.
Source: Inman News, Gilbert Mohtes-Chan (05/07/2009)
As anybody who has dealt with one knows, short sales should be renamed “long sales.” But that could be changing.
One of the real estate professionals leading the charge to revamp the short-sale process is George K. Wonica, owner of Wonica Real Estate & Appraisals on Long Island, N.Y., and chair of the NATIONAL ASSOCIATION OF REALTORS® Conventional Finance and Lending Committee.
Wonica already has met with 10 mortgage bankers and servicers in Florida to address the problem, and plans a similar meeting this summer in Las Vegas. He points to the uniform short-sale form developed by the California Association of REALTORS® as a good example of what the industry needs.
Short sales appear to be good for both banks and buyers. A study by Connecticut-based Clayton Holdings Inc. showed lenders from May to October 2008 lost an average 37 percent through short sales versus 56 percent on homes sold after foreclosure.
Lenders recognize this and are trying to speed up the process. David Knight, a senior vice president at Wells Fargo Home Mortgage, says, "We think (a) short sale is superior to foreclosure … A short sale is not a bad deal all around."
Additional liens are often the big holdup, but there could be progress on that front. In April, Bank of America, a major holder of second liens, announced that it would accept 5 percent of sale proceeds after real estate commissions and other costs on short sales. Previously, it had sought 10 percent.
Source: Inman News, Gilbert Mohtes-Chan (05/07/2009)
Thursday, May 7, 2009
Competitive Pricing Called Key to Timely Sales
From Realtor Magazine Online, Daily Real Estate News May 7, 2009
One of the hardest things for a home seller to do is to agree to drop the price, but in this tough market, realistic pricing is crucial, experts say.
Home sale price reports can be behind the curve because these reports are based on property closings that lag the market, says Gary Malin, president of Citi Habitats in New York City. He recommends monitoring current sale listings instead.
Mollie Carmichael, senior vice president of John Burns Real Estate Consulting in Irvine, Calif., says that setting the initial asking price 15 percent to 20 percent below other listings from the very beginning can get things moving and even trigger a bidding war.
"If you close fast and sell fast, you have a better opportunity to retain value," Carmichael says. "Premiums are very, very difficult to achieve in a market like the one we have today."
Source: Business Week, Prashant Gopal (05/06/2009)
One of the hardest things for a home seller to do is to agree to drop the price, but in this tough market, realistic pricing is crucial, experts say.
Home sale price reports can be behind the curve because these reports are based on property closings that lag the market, says Gary Malin, president of Citi Habitats in New York City. He recommends monitoring current sale listings instead.
Mollie Carmichael, senior vice president of John Burns Real Estate Consulting in Irvine, Calif., says that setting the initial asking price 15 percent to 20 percent below other listings from the very beginning can get things moving and even trigger a bidding war.
"If you close fast and sell fast, you have a better opportunity to retain value," Carmichael says. "Premiums are very, very difficult to achieve in a market like the one we have today."
Source: Business Week, Prashant Gopal (05/06/2009)
Market Shift: More Houses Get Multiple Offers
From Realtor Magazine Online, Daily Real Estate News May 7, 2009
Julie Holt of Tarpon Springs, Fla.-based Anclote Title Services says 10 percent of the homes for sale are generating more than one bid.
Experts say markets hit hard by foreclosure are seeing more multiple offers, as residential price declines make homes more affordable and banks low-ball asking prices on distressed properties.
"If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers," says Holt.
Although many markets are far from fully shaking off the downturn, the pick-up in multiple offers is a reason for optimism.
"When you begin to see people willing to fight for a property, that's a good sign," says Beth Peerce, treasurer of the CALIFORNIA ASSOCIATION OF REALTORS®. "We are beginning to see the beginning of the end of a disaster time."
Source: USA Today, Julie Schmit (5/6/09)
Julie Holt of Tarpon Springs, Fla.-based Anclote Title Services says 10 percent of the homes for sale are generating more than one bid.
Experts say markets hit hard by foreclosure are seeing more multiple offers, as residential price declines make homes more affordable and banks low-ball asking prices on distressed properties.
"If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers," says Holt.
Although many markets are far from fully shaking off the downturn, the pick-up in multiple offers is a reason for optimism.
"When you begin to see people willing to fight for a property, that's a good sign," says Beth Peerce, treasurer of the CALIFORNIA ASSOCIATION OF REALTORS®. "We are beginning to see the beginning of the end of a disaster time."
Source: USA Today, Julie Schmit (5/6/09)
Wednesday, May 6, 2009
Fast Facts from California Association of Realtors
Calif. median home price - March 09: $253,040 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region March 09: Santa Barbara So. Coast $825,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region March 09: High Desert $114,670 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Fourth Quarter 08: 59 percent (Source: C.A.R.)
Mortgage rates - week ending 4/30/09
* 30-yr. fixed: 4.78% Fees/points: 0.7%
* 15-yr. fixed: 4.48% Fees/points: 0.7%
* 1-yr. adjustable: 4.77% Fees/points: 0.7%
(Source: Freddie Mac)
Calif. highest median home price by C.A.R. region March 09: Santa Barbara So. Coast $825,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region March 09: High Desert $114,670 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Fourth Quarter 08: 59 percent (Source: C.A.R.)
Mortgage rates - week ending 4/30/09
* 30-yr. fixed: 4.78% Fees/points: 0.7%
* 15-yr. fixed: 4.48% Fees/points: 0.7%
* 1-yr. adjustable: 4.77% Fees/points: 0.7%
(Source: Freddie Mac)
Tuesday, May 5, 2009
Prime Mortgage Demand Is Up
From Realtor Magazine Online, Daily Real Estate News May 5, 2009
Demand for prime mortgages was up substantially in the first quarter of this year for the first time since early 2007, according to a Federal Reserve survey of loan officers released Monday.
The rise in demand comes at a time when rates are low, but about 50 percent of banks say they are tightening lending standards.
More than 65 percent of the banks tightened standards on the kinds of loans available to borrowers with blemished credit. Only two of the 53 domestic banks and 23 branches of foreign parent banks surveyed reported that they were offering adjustable-rate loans.
Banks also reported that they were tightening standards for commercial lending, credit cards, and other consumer loans.
Source: The Associated Press, Jeannine Aversa and Reuters News, Mark Felsenthal (05/04/2009)
Demand for prime mortgages was up substantially in the first quarter of this year for the first time since early 2007, according to a Federal Reserve survey of loan officers released Monday.
The rise in demand comes at a time when rates are low, but about 50 percent of banks say they are tightening lending standards.
More than 65 percent of the banks tightened standards on the kinds of loans available to borrowers with blemished credit. Only two of the 53 domestic banks and 23 branches of foreign parent banks surveyed reported that they were offering adjustable-rate loans.
Banks also reported that they were tightening standards for commercial lending, credit cards, and other consumer loans.
Source: The Associated Press, Jeannine Aversa and Reuters News, Mark Felsenthal (05/04/2009)
Bargains Hard to Find In Attractive Areas
From Realtor Magazine Online, Daily Real Estate News May 5, 2009
Potential buyers in areas that were hard hit by the housing downturn have read about bargains, but only find it disappointing when they go shopping.
"Every open house I've been to has been a zoo," says first-time homebuyer Sam Rivero, who has looked at 35 properties during the last three months. "If you follow what the media say, you'd think sellers are desperate to sell a house, but when you get there it's totally the opposite."
When the real estate bubble burst, it didn’t affect the mid-priced market, said real estate information firm MDA DataQuick. Instead, it created opportunities in troubled neighborhoods and slowed sales in the market of homes priced above $1 million. But in areas where most of the homes sell for $400,000 to $800,000, there are few discounts to be found.
Even the foreclosure market has slowed, says University of Southern California Professor of Real Estate Tracey Seslen. Seslen said lenders with foreclosures are supporting market stabilization and releasing only a few homes at a time to avoid flooding the markets.
"The biggest problem," says Phyllis Harb, an associate with RE/Max Tri City in La Canada, Calif., "is that people are overreacting to housing statistics, thinking they can come in and make an offer 20 percent below price."
Source: Los Angeles Times, Chip Jacobs (05/03/2009)
Potential buyers in areas that were hard hit by the housing downturn have read about bargains, but only find it disappointing when they go shopping.
"Every open house I've been to has been a zoo," says first-time homebuyer Sam Rivero, who has looked at 35 properties during the last three months. "If you follow what the media say, you'd think sellers are desperate to sell a house, but when you get there it's totally the opposite."
When the real estate bubble burst, it didn’t affect the mid-priced market, said real estate information firm MDA DataQuick. Instead, it created opportunities in troubled neighborhoods and slowed sales in the market of homes priced above $1 million. But in areas where most of the homes sell for $400,000 to $800,000, there are few discounts to be found.
Even the foreclosure market has slowed, says University of Southern California Professor of Real Estate Tracey Seslen. Seslen said lenders with foreclosures are supporting market stabilization and releasing only a few homes at a time to avoid flooding the markets.
"The biggest problem," says Phyllis Harb, an associate with RE/Max Tri City in La Canada, Calif., "is that people are overreacting to housing statistics, thinking they can come in and make an offer 20 percent below price."
Source: Los Angeles Times, Chip Jacobs (05/03/2009)
Monday, May 4, 2009
Lenders Chase Short Sale Sellers
From Realtor Magazine Online, Daily Real Estate News May 4, 2009
An increasing number of lenders are going after borrowers who sell their homes for less than they owe – known as a short sale – in order to recover more of the difference between the amount owed and the sale price.
Lenders say the factors that they consider when they decide to seek more money are:
* How large was the unpaid debt?
* Was the property an investment or a personal residence?
* How much money does the borrower make and what other assets does he have?
* What is the policy of the mortgage insurer or the holder of the second lien?
A PMI Group Inc. spokesman says the mortgage insurer "primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value."
Source: The Wall Street Journal, Ruth Simon (04/30/2009)
An increasing number of lenders are going after borrowers who sell their homes for less than they owe – known as a short sale – in order to recover more of the difference between the amount owed and the sale price.
Lenders say the factors that they consider when they decide to seek more money are:
* How large was the unpaid debt?
* Was the property an investment or a personal residence?
* How much money does the borrower make and what other assets does he have?
* What is the policy of the mortgage insurer or the holder of the second lien?
A PMI Group Inc. spokesman says the mortgage insurer "primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value."
Source: The Wall Street Journal, Ruth Simon (04/30/2009)
NAR: Pending Home Sales, Affordability Rise
From Realtor Magazine Online, Daily Real Estate News May 4, 2009
Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the latest report by the NATIONAL ASSOCIATION OF REALTORS ®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82 in February. It is 1.1 percent higher than March 2008 when it was 83.7.
Lawrence Yun, NAR chief economist, says it should take a few months for the market to gain momentum.
“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment,” he says. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”
By Region
Here is a breakdown of pending home sales by region:
South: rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago.
West: increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008.
Northeast: fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago.
Midwest: slipped 1 percent to 82.3 but is 8.2 percent higher than March 2008.
NAR: Affordability Remains High
Meanwhile, NAR’s Housing Affordability Index remained near record highs.
The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago.
The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
NAR President Charles McMillan says the increase in buying power is quite remarkable.
“Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he says. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”
A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest.
Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.
Source: NAR
Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the latest report by the NATIONAL ASSOCIATION OF REALTORS ®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82 in February. It is 1.1 percent higher than March 2008 when it was 83.7.
Lawrence Yun, NAR chief economist, says it should take a few months for the market to gain momentum.
“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment,” he says. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”
By Region
Here is a breakdown of pending home sales by region:
South: rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago.
West: increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008.
Northeast: fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago.
Midwest: slipped 1 percent to 82.3 but is 8.2 percent higher than March 2008.
NAR: Affordability Remains High
Meanwhile, NAR’s Housing Affordability Index remained near record highs.
The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago.
The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
NAR President Charles McMillan says the increase in buying power is quite remarkable.
“Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he says. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”
A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest.
Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.
Source: NAR
Friday, May 1, 2009
Here's How Much $$$ Remains for CA Tax Credit
To find out how much money remains in the California coffers for the CA New Home Buyers Tax Credit, click on this link...
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
$10,000 Tax Credit for Home Buyers in California
The tax credit incentive represents hope for struggling home builders, but is it a repeat of the same thinking that brought about this economic turmoil? A large part of how we got into this mess was by making it easy for home buyers to temporarily afford a home, is this not another way of doing the same? Either way, it will be interesting to see how successful the tax credit is, and to see if it starts a trend in other construction dependent states.
The $10,000 tax credit is for home buyers that purchase a new home between March 1, 2009 and March 1, 2010. The bill set aside $100 million for the tax credit, so after 10,000 new homes are purchased, the credit is gone. Last month, an estimated 29,458 new and resale houses were sold statewide; if you want the incentive, you probably won’t want to wait until next March.
Below are details about the tax credit.
1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.
2. The tax credit is for new homes only. The construction of a new home generates more tax revenues than the $10,000 tax credit will cost, so the credit is limited to the purchase of new homes. You will not qualify for the state tax credit if you buy an existing home.
3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.
Examples: (price of home x .05)
If you purchase a new home that costs $150,000, your tax credit will be $7,500.
If you purchase a new home that costs $200,000, your tax credit will be $10,000.
If you purchase a new home that costs $450,000, your tax credit will be $10,000.
4. Home buyers will receive the tax credit, in equal amounts, over 3-years.
Examples: (Tax Credit / 3)
If your tax credit is $7,500, you will receive a tax credit of $2,500 each year for three years.
If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.
5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.
6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.
7. The tax credit only applies if the purchased home is your primary residence.
8. There is no down payment requirement to receive the $10,000 tax credit.
9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.
10. The tax credit is limited to the first 10,000 new home purchases.
In addition, first-time home buyers may qualify for the Federal Tax Credit for Home Purchases (first-time home buyers) - $8,000
The $10,000 tax credit is for home buyers that purchase a new home between March 1, 2009 and March 1, 2010. The bill set aside $100 million for the tax credit, so after 10,000 new homes are purchased, the credit is gone. Last month, an estimated 29,458 new and resale houses were sold statewide; if you want the incentive, you probably won’t want to wait until next March.
Below are details about the tax credit.
1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.
2. The tax credit is for new homes only. The construction of a new home generates more tax revenues than the $10,000 tax credit will cost, so the credit is limited to the purchase of new homes. You will not qualify for the state tax credit if you buy an existing home.
3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.
Examples: (price of home x .05)
If you purchase a new home that costs $150,000, your tax credit will be $7,500.
If you purchase a new home that costs $200,000, your tax credit will be $10,000.
If you purchase a new home that costs $450,000, your tax credit will be $10,000.
4. Home buyers will receive the tax credit, in equal amounts, over 3-years.
Examples: (Tax Credit / 3)
If your tax credit is $7,500, you will receive a tax credit of $2,500 each year for three years.
If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.
5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.
6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.
7. The tax credit only applies if the purchased home is your primary residence.
8. There is no down payment requirement to receive the $10,000 tax credit.
9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.
10. The tax credit is limited to the first 10,000 new home purchases.
In addition, first-time home buyers may qualify for the Federal Tax Credit for Home Purchases (first-time home buyers) - $8,000
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