From Realtor Magazine Online, Daily Real Estate News September 14, 2009
A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis.
Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:
* Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
* Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
* Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
* Include a maintenance budget. Even new homes need upkeep and repairs.
* Buyers who can't afford their dream home now should opt for a starter home where they can save money each month for what they really want.
* Consider a property that can be expanded and improved down the road when money is available.
* No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.
Source: The New York Times, Ron Lieber (09/12/2009)
Monday, September 14, 2009
Wednesday, September 2, 2009
FHA Is Having Busiest Year Ever
From Realtor Magazine Online, Daily Real Estate News September 2, 2009
About 25 percent of all new mortgages are backed by the Federal Housing Administration in what will probably be the busiest year yet for the federal agency.
Applications for FHA mortgages rose 50 percent from last October through mid-August 2009 and approvals for purchases, refinancings, and reverse mortgages rose 70 percent to 1.67 million.
FHA loans "are one of the most important sources in this market," says Mark Zandi of Moody's Economy.com. "Without FHA, the housing slide would be much more severe. We wouldn't be talking about a recovery now. We'd still be talking about a crash."
Some analysts are concerned about the risk the FHA has taken on, but others point out that borrowers with FHA-insured loans now have an average credit score of 690, compared to 630 two years ago. Borrowers with a credit score below 500 must come up with a 10 percent down payment.
Source: USA Today, Stephanie Armour (09/02/2009)
About 25 percent of all new mortgages are backed by the Federal Housing Administration in what will probably be the busiest year yet for the federal agency.
Applications for FHA mortgages rose 50 percent from last October through mid-August 2009 and approvals for purchases, refinancings, and reverse mortgages rose 70 percent to 1.67 million.
FHA loans "are one of the most important sources in this market," says Mark Zandi of Moody's Economy.com. "Without FHA, the housing slide would be much more severe. We wouldn't be talking about a recovery now. We'd still be talking about a crash."
Some analysts are concerned about the risk the FHA has taken on, but others point out that borrowers with FHA-insured loans now have an average credit score of 690, compared to 630 two years ago. Borrowers with a credit score below 500 must come up with a 10 percent down payment.
Source: USA Today, Stephanie Armour (09/02/2009)
Tuesday, September 1, 2009
Priciest Zip Codes Down, Not Out
From Realtor Magazine Online, Daily Real Estate News September 1, 2009
This year, home prices fell in the nation’s most exclusive neighborhoods.
In Alpine, N.J., which tops Forbes’ magazine’s list of America’s 500 Most Expensive Zip Codes, home prices declined 23 percent in the last year. Overall, asking prices in the zip codes on Forbes’ list dropped an average of 7 percent. Prices are only rising in a few areas. For instance, on New York’s Upper West Side, zip code 10023, prices rose 4 percent in the last year.
Forbes’ list was compiled by Altos Research, a real estate data collection and research firm that tracks about 90 percent of all real estate transactions.
Based on Altos’ figures, here are the country’s 10 most-expensive Zip codes and the median home prices there:
1. 07620, Alpine, N.J., Median Home Price: $4,139,041
2. 94027, Atherton, Calif.: $3,849,133
3. 10014, New York, N.Y.: $3,521,514
4. 91008, Duarte, Calif.: $3,444,773
5. 90210, Beverly Hills, Calif.: $3,367,167
6. 92067, Rancho Santa Fe, Calif.: $3,362,493
7. 93108, Santa Barbara, Calif.: $3,284,652
8. 94024, Los Altos Hills, Calif.: median unavailable
9. 10065, New York, N.Y.: $3,176,534
10. 07926, Brookside, N.J.: $3,121,115
Source: Forbes, Francesca Levy (08/27/2009)
This year, home prices fell in the nation’s most exclusive neighborhoods.
In Alpine, N.J., which tops Forbes’ magazine’s list of America’s 500 Most Expensive Zip Codes, home prices declined 23 percent in the last year. Overall, asking prices in the zip codes on Forbes’ list dropped an average of 7 percent. Prices are only rising in a few areas. For instance, on New York’s Upper West Side, zip code 10023, prices rose 4 percent in the last year.
Forbes’ list was compiled by Altos Research, a real estate data collection and research firm that tracks about 90 percent of all real estate transactions.
Based on Altos’ figures, here are the country’s 10 most-expensive Zip codes and the median home prices there:
1. 07620, Alpine, N.J., Median Home Price: $4,139,041
2. 94027, Atherton, Calif.: $3,849,133
3. 10014, New York, N.Y.: $3,521,514
4. 91008, Duarte, Calif.: $3,444,773
5. 90210, Beverly Hills, Calif.: $3,367,167
6. 92067, Rancho Santa Fe, Calif.: $3,362,493
7. 93108, Santa Barbara, Calif.: $3,284,652
8. 94024, Los Altos Hills, Calif.: median unavailable
9. 10065, New York, N.Y.: $3,176,534
10. 07926, Brookside, N.J.: $3,121,115
Source: Forbes, Francesca Levy (08/27/2009)
Pending Home Sales on a Record Roll
From Realtor Magazine Online, Daily Real Estate News September 1, 2009
Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007, when it was 100.7.
Affordability at Record HighLawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said.
“Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.
First-Time BuyersNAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.
By Region
* Northeast: The Pending Home Sales Index declined 3.0 percent to 78.8 in July but is 4.7 percent higher than July 2008.
* Midwest: The index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago.
* South: Pending home sales activity rose 3.1 percent to an index of 103.8 in July and is 12.0 percent above July 2008.
* West: The index jumped 12.1 percent to 112.5 and is 20.0 percent above a year ago.
"Keep the Momentum Going"
NAR President Charles McMillan said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said.
“To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.
NAR’s Housing Affordability Index stood at 158.5 in July, below the peak set in April but is still 36.0 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.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later?’ to ‘I don’t want to miss out on a recovery.’”
Source: NAR
Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007, when it was 100.7.
Affordability at Record HighLawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said.
“Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.
First-Time BuyersNAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.
By Region
* Northeast: The Pending Home Sales Index declined 3.0 percent to 78.8 in July but is 4.7 percent higher than July 2008.
* Midwest: The index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago.
* South: Pending home sales activity rose 3.1 percent to an index of 103.8 in July and is 12.0 percent above July 2008.
* West: The index jumped 12.1 percent to 112.5 and is 20.0 percent above a year ago.
"Keep the Momentum Going"
NAR President Charles McMillan said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said.
“To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.
NAR’s Housing Affordability Index stood at 158.5 in July, below the peak set in April but is still 36.0 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.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later?’ to ‘I don’t want to miss out on a recovery.’”
Source: NAR
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