Thursday, December 24, 2009

Down-Payment Standards Eased

From the Wall Street Journal:

Some mortgage insurers and lenders are beginning to relax their down-payment requirements, in a sign of increased confidence in the housing market.

The changes, which are being done on a market-by-market basis, mean buyers in some parts of the country can now borrow 95% instead of 90% of a property's value. Until recently, mortgage companies had tighter standards for these markets because of falling home prices.

A 'Quick Move In' sign sits outside a home for sale in Denver in October. As banks begin to relax their down-payment requirements, some borrowers can now finance 95% instead of 90% of a property's value.

"We are feeling better about the economic condition of the marketplace," said Michael Zimmerman, senior vice president of investor relations at mortgage insurer MGIC Insurance Corp. Borrowers who want to finance more than 80% of a home's value must typically purchase mortgage insurance.

Earlier this month, MGIC removed New Orleans, Dover, Del., Akron, Ohio, and four other areas in Ohio from its list of restricted markets. The moves followed the company's decision in September to loosen restrictions on 11 markets, including Denver and St. Louis.

Under the looser requirements, a borrower with a credit score of 680 or higher in New Orleans, for instance, can finance up to 95% of a home's value. Before the change, a borrower who wanted to finance that much of a home's value would have needed a credit score of at least 700.

In September, Genworth Financial Inc. winnowed its list of declining and distressed markets to five states: Arizona, California, Florida, Michigan and Nevada. That removed 63 markets from the list and followed an action in July that removed 136 other metro areas from the list.

"We've seen some stabilization in the housing market," said Kevin Schneider, president of Genworth. While "additional home price declines" are likely, he added, tighter credit standards, including the requirement of full documentation and higher credit scores, should limit delinquencies.

Credit remains tight in some markets, such as Florida, because of concerns about additional home-price declines. Mortgage companies continue to closely scrutinize property appraisals, making it difficult for some borrowers to get financing. Amid persistent high unemployment, lenders and mortgage insurers are maintaining tough standards for credit scores, documentation and other measures of creditworthiness.

In some cases, those standards are still getting tougher. Fannie Mae, the government-controlled mortgage company, last week raised its minimum credit score to 620 from 580.

But the latest moves, while modest, are an indication that some mortgage companies believe the worst home-price declines are over -- at least in certain parts of the country -- and that prices are likely to stabilize or fall slightly over the coming year.

A rosier view of the housing market isn't the only factor driving the changes. Mortgage insurers also are seeking to regain market share from the Federal Housing Administration.

New insurance written by private mortgage insurers dropped by nearly 60% in the first nine months of 2009, compared with the same period a year ago, according to Inside Mortgage Finance. Borrowers without sufficient funds for a 20% down payment have been flocking to the FHA, which lends to people with as little as a 3.5% down payment.

"To have any presence in the mortgage market, the mortgage insurers have to be more flexible," said Guy Cecala, editor of Inside Mortgage Finance, a trade publication. The mortgage insurers had gotten so strict, he noted, that their standards were tougher than those of Fannie Mae and Freddie Mac.

Meanwhile, some mortgage lenders are revisiting policies that were even tougher than those of the insurers.

Wells Fargo & Co. executives met Friday for their quarterly review of market-based lending standards. For the first time since 2007, more markets will be moving to a less-risky status and lower down-payment requirements. Among those benefiting are parts of central California.

Even in some of the country's most troubled markets, "we are starting to see...moderation" said Neil Librock, head of credit risk for the bank's home and consumer-finance group. Wells Fargo's changes could benefit borrowers the bank has been requiring to make down payments of more than 20%, he said.




Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Wednesday, December 23, 2009

Buyer's market wanes

From an article in the The Real Deal:

In New York City real estate, buyers have had the upper hand for a while. With transactions virtually frozen in the wake of last year's collapse of Lehman Brothers, sellers grew alarmed, dropping prices and offering incentives to tempt purchasers.

For the first time in a year, however, New York is no longer a buyer's market, brokers say. Or at least not the intense buyer's market of recent months.

"Neither buyers nor sellers have an obvious upper hand over each other right now," said Ric Swezey, a senior associate at the Corcoran Group.

As the stock market recovered and prices dropped, more buyers -- especially those who put off buying during the financial crisis -- came back into the market, searching for bargain prices.

"Attractively priced properties have brought patient buyers off the sidelines," said Douglas Heddings, founder of the Heddings Property Group at Charles Rutenberg Realty.

As a result, brokers are starting to notice more competition.

Rick Wohlfarth, founder of boutique Upper West Side brokerage Wohlfarth & Associates, said he's noticed a large number of buyers looking for "classic six" apartments priced under $1.5 million.

"Pent-up buyer demand is evident in the multiple bids we're seeing for this type of property," said Wohlfarth, who is also a member of the Manhattan Association of Realtors' Market Trends Committee. "We recently had 16 qualified bids for a classic six on West End Avenue, which resulted in a winning bid $200,000 over the asking price. There are a lot of buyers right now looking for this particular Holy Grail."

In response, sellers of these well-priced apartments no longer have to negotiate as much.

"Sellers recognize that buyers are out there and are more serious about purchasing, and are beginning to tighten up values, with less negotiating occurring in some cases," said Jacqueline Urgo, president of the new development firm the Marketing Directors.

In another sign that the buyer's market has faded, home seekers have started to complain about lack of inventory, Wohlfarth said.

"New York City has tremendous demand, and very little inventory," said Prudential Douglas Elliman managing director of luxury sales Darren Sukenik. "Trying to find B+ or better inventory in B+ or better locations has become very competitive."

There's one major caveat to all of this: Unlike in the boom, overpriced homes simply don't sell.

"This is a market where proper pricing brings results," Wohlfarth said. "Those apartments that are well-priced for today's market, not those idealized 'magical thinking' asking prices, are the ones that sell, frequently within a matter of weeks."

The same goes for new developments, where price cuts have sparked activity. "Both parties are finally seeing eye-to-eye on price point, which is injecting a moderate sense of urgency back into the marketplace," said Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group.

The new development market is also starting to see inventory drop as the supply of new projects dries up.

"All construction came to a screeching halt over 18 months ago," Sukenik said.

New development sales have gotten an additional boost from international buyers -- often armed with cash -- who are showing a renewed interest in the city, prompted by low prices.

"The volume of foreign buyers is growing at the moment," said James Cox Jr., the director of sales and marketing at One York Street condos. "It seems the value of the dollar and the market prices are attracting a lot of interest in New York City, and real estate opportunities."

As a result of all these factors, homeowners who had avoided putting their homes on the market are having a change of heart.

"We've been experiencing a steady stream of sellers contacting us recently who are exploring the feasibility of selling their homes in the near future," Wohlfarth said. "With the large turnouts in the last month at open houses, sellers are gaining confidence that there really are buyers out there wiling to buy now."

The lingering question, one that has plagued real estate experts since the spring, is how long the current rally will continue.

"The market has firmed up like a sheet of ice," said Meredyth Smith, a senior vice president at Sotheby's International Realty. In early 2009, "no one wanted to go out on the ice at all. Now there's the sense that you can be on the ice."

If the current surge in demand declines, however, a buyer's market could be back with a vengeance next year.

"We could go crashing through that ice again in 2010," she said.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Tuesday, December 22, 2009

Living Free in Staten Island

A New York Times audio slideshow article about the caretaker of the Alice Austen House, who lives there rent free.

http://www.statenislandhistorian.com/Images/Home-page-images/Alice-Austen-House-hires.jpg

http://www.nytimes.com/interactive/2009/12/18/realestate/1220-hab-audioss/index.html


Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Monday, December 21, 2009

Housing Starts Jump 8.9 Percent in November

More good news, this time from Housing Zone:

According to the U.S. Census Bureau’s new residential construction report, housing starts rose 8.9 percent to a seasonally-adjusted annual rate of 574,000, the highest level in a year and a stronger jump than most economists expected. This was a welcome rebound, considering construction on U.S. housing units dropped sharply in October.

Extension and expansion of the first-time home buyer $8,000 tax credit, lower home prices, looser credit conditions and low interest rates are expected to further drive sales and construction in coming months. Economists also believe the Federal Reserve will keep interest rates low to stimulate mortgage lending.

Other highlights from the report include:

• Building permits rose 6 percent to a seasonally-adjusted annual rate of 584,000 in November, which indicates builders are lining up future work.

• Construction of single-family houses rose 2.1 percent to a 482,000 rate, well above the low of 357,000 starts in February.

• Multifamily starts jumped 67 percent to an annual rate of 92,000—although an encouraging sign, this sector is still on a downward trend from the 189,000 high reached in early 2009.

• All four regions showed gains in housing starts in November, led by the Northeast (16 percent increase) and followed by the South (12 percent), the Midwest (3 percent) and the West (1.9 percent).

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Rock-bottom mortgage rates tempt hesitant home shoppers

Excerpted from a Housing Zone article:

he U.S. government's efforts to revive the housing market have pushed mortgage rates down to record levels and helped stoke demand, but the prospect of further home-price declines could keep more reluctant buyers on the fence.

The average rate on a 30-year fixed mortgage is below 5 percent and last week dropped to a fresh all-time low. The previous nadir was set in April.

Mortgage rates jumped last spring but have declined relatively steadily since then, with investors hoping the economy is on the mend after the credit crunch. Rates fell sharply in November.

Greg McBride, senior financial analyst at Bankrate.com, said in an interview that two main catalysts are driving rates lower. First, the Federal Reserve has indicated it plans to keep short-term interest rates low for an extended period to help the economy along. The second factor is continued strong demand for government-issued debt despite fears that unprecedented spending to combat the financial crisis will eventually spark a bout of inflation.

"The demand is not just from other central banks buying Treasury bonds," the analyst said. "Institutional investors and hedge funds are looking to protect their year-to-date profits."

The S&P 500 Index has rallied about 60 percent from the March lows, with speculative sectors like banks and real estate posting the strongest gains. To safeguard these gains, some big investors have moved cash into Treasury bonds, pushing prices up and yields down. Mortgage rates are closely linked to the yield on the 10-year Treasury note.

The Fed's program to buy up to $1.25 trillion of mortgage-backed securities, which has been extended through the first quarter, has also contributed to easing rates. McBride estimated the Fed is buying about 80 percent of newly issued agency mortgage-backed securities.

"The Fed is not just a big fish in the pond_it's the only fish in the pond," he said.

Meanwhile, more than 90 percent of all home loans this year have been purchased by government entities such as Fannie Mae, Freddie Mac and the Federal Housing Administration.

This support has been keeping mortgage rates artificially low, but rates could jump when it is finally removed, some economists worry.

However, McBride thinks the Fed will extend its program to buy mortgage-backed securities to nurture the nascent recovery in the housing market.

"The Fed can't go from full speed to a dead stop in four months without a spike in interest rates," he said. "The economy is too fragile for the Fed to risk a rate spike."

Other signs that rates may head higher are if institutional investors start unloading government debt for riskier assets, or a general cooling to Treasury bonds.

Even with mortgage rates at record lows, some buyers are hesitant to buy a house because they believe they might get a better deal by waiting for even lower home prices.

During the housing bust, many areas of the U.S. saw peak-to-trough home-price declines in the range of 20 percent to 30 percent.

Residential real estate values have been falling for more than three years in the aftermath of the subprime mortgage crisis, which burst the housing bubble. A global credit crunch, recession, job losses and rising foreclosures have put the housing market into a deep freeze.

Yet there have been some signs of life in recent months, with many attributing the positive momentum to the federal tax credit for first-time buyers. The program has been extended to the spring, and a new credit includes some move-up buyers.

The home's purchase price and the loan's mortgage rate are the primary factors driving borrowers' monthly payments. Low rates are enticing, but some buyers are holding out for lower prices.

Those buyers could be beaten to the punch by investors scooping up properties, McBride said. A spike in mortgage rates is another risk.

Buyers could "win the battle" by waiting for better prices, but "lose the war" with a much higher rate on the loan, which increases the monthly mortgage payment, McBride added.

Economists are closely watching housing data for signs that the worst is over for the housing market.

On Tuesday, a real-estate industry group reported that pending home sales rose nearly 4 percent in October, the ninth straight month of gains.

Later this week, luxury builder Toll Brothers Inc. is scheduled to report full quarterly results.

Sales are typically slow during the winter months, so many analysts are waiting for the spring selling season to truly gauge the market's health.

In the home-building industry, there is little consensus on the outlook for housing.

"It's been a tough four years," said Larry Nicholson, chief executive of Ryland Group Inc., at the recent UBS Building & Building Products CEO Conference. "Hopefully, I believe we are at the bottom of this thing, and I think that business will start to pick up sometime next year."



Reblog this post [with Zemanta]

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Friday, December 18, 2009

U.S. Home Value Losses Stabilize in 2009

http://www.totallymoney.com/news/wp-content/uploads/2009/09/house-question-mark.jpg

The good news is that everything is stabilizing. The bad news is that this also heralds the beginning of the end for bargain hunters looking for the bargain basement prices on homes because the prices are starting to trend upwards... Excerpted from an article in Custom Builder (read the full article here: http://www.housingzone.com/custombuilder/article/ca6710998.html?nid=2822&rid=12237451)

"Home values stabilized significantly during the second half of 2009, with the total dollar value of U.S. homes increasing since June," said Dr. Stan Humphries, Zillow's chief economist. "Most housing markets across the country had a good summer, spurred largely by the government's tax credits for homebuyers combined with very low mortgage rates. Unfortunately, we believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices."

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Thursday, December 17, 2009

Housing, the Economy Show Some Life

From the National Association of Homebuilders article:

More emerging data is signaling that the economy is in the early stages of recovery from a long, hard recession. The second estimate of third quarter gross domestic product (GDP), based on more complete data than what was available for the "advance" estimate issued last month, showed that GDP advanced 2.8% from the second quarter at a seasonally adjusted, annual rate.

While down from the 3.5% reported in the advance estimate, this was the first rise in this measure after four quarters of decline.

Residential construction, which has been a drag on GDP since the first quarter of 2006, subtracting roughly 1% growth from overall GDP each quarter (on an annualized, seasonally adjusted basis) on average for the last three and a half years, contributed a half percentage point of growth to overall GDP growth.

Retail sales have risen in four of the last six months. Excluding auto sales, which were affected by the “cash for clunkers” program, retail sales have risen in five of the last six months. Auto sales, which averaged 9.7 million units in the first half of the year, have averaged 11.4 million units over the last five months (July through November).

Even taking out sales from August, when the cash for clunkers program had its largest impact, and leaving in September sales, which were depressed from the program pulling sales into August, auto sales averaged 10.6 million units.

Another indication of the improving health of the economy, industrial production has now risen for four months in a row (July through October), as has capacity utilization. That is not to say that the economy has returned to anywhere near full strength. October’s capacity utilization of 70.7%, while an improvement over the low reading of 69.2% in April, is hardly robust.

Looking forward, businesses have drastically reduced their inventories over the past year and a half. That liquidation appears to be close to an end. Continued improvement in business will force businesses to rebuild some of their inventory. At minimum, businesses will have to replace some if not all of the inventory used to meet this rising demand.

Further, money is still flowing out from the stimulus package passed earlier this year.

The stimulus was intended to be spread out over a two-year period. Of the $787 billion authorized, only about 30% — $238 billion — of the funds have been paid out to date. Some of these funds have been transferred to states and localities, which have yet to spend all of the proceeds. That money, along with the future distribution of stimulus funds, will be injected into the economy over the next several months.

Employment is also showing what passes for improvement in this lagging indicator. Although we are still waiting for the first report of job gains, only 11,000 jobs were lost in November. While still a loss, this is much better than the 111,000 lost jobs in October or the 304,000 jobs lost as recently as July.

It was also the smallest decline in jobs since job losses started turning down in January 2008. Further, the unemployment rate fell from 10.2% in October to 10.0% in November. 

Perhaps even more encouraging, employment at temporary help services has now increased for four months running. Also, the rate of increase of employment in this area has risen each month. In November, it increased by 2.9% over the October figure, which was up 2.5% over the September number.

This is a hopeful sign; in the early stages of a recovery, employers who see an improvement in business often hire temporary workers to meet their immediate employment needs. They are more comfortable with temporary workers as they try to determine if the increase in business is part of a longer term advance in demand or just a temporary blip. If demand continues to increase, they will move from using temporary workers to hiring permanent, full-time employees.

Meanwhile, total residential construction employment fell 3,200 in November, the smallest monthly decline in that measure since the loss of 2,000 construction jobs in November 2006. However, the unemployment rate for construction (which includes both residential and commercial construction) rose to 19.4% in November from 18.7% in October.

The smaller loss of residential construction jobs is an early indication that the improvement in housing is beginning to take hold.

First-Time Home Buyer Tax Credit Does Its Work

Single-family housing starts have generally been rising since early this year. They hit a low of 357,000 in January and February of this year (seasonally adjusted, at an annual rate), their lowest level since current records of housing starts began in 1959. There was one stumble when starts fell in August from July, yet they still averaged almost 500,000 at an annual rate in the third quarter. But in October, single-family housing starts fell to 476,000 from September’s 511,000.

The drop-off appeared to be due to the looming expiration of the first-time home buyer tax credit, which was subsequently extended and expanded. It simply was impossible for a builder to start a home in October and deliver it by the end of November in time to qualify for the tax credit.

New home sales fell in September to 405,000 from 415,000 in August. A new home sale is recorded when a contract is signed and a deposit made. September would already have been too late to start a home and have it ready by the Nov. 30 deadline for closing on a home to qualify for the credit. However, a buyer could have purchased a completed or nearly completed house from a builder that month and still have had sufficient time to settle by that deadline.

In October, new home sales rebounded to 430,000. This was most likely due to first-time home buyers who had failed to act in time to qualify for the tax credit but were now interested in buying; non-first-time home buyers (i.e., sellers of existing homes) who had successfully sold their homes (many benefiting from first-time buyers buying their house — an expected ripple effect from the tax credit); and a few first-time home buyers who could still manage to qualify for the tax credit (some builders were advertising that they could make this happen if the buyer was willing to follow some requirements — presumably, such as buying a completed house out of the builder’s inventory and working with a bank that had agreed in advance to expedite buyers’ mortgages).

By the end of October, it looked like the home buyer tax credit was going to be extended (as it was). It’s not clear if that was sufficient to motivate some buyers to sign a contract for a new home that month.

Single-family existing home sales rose smartly to 5.33 million sales (at a seasonally adjusted, annual rate) in October from 4.86 million in September. That was the highest sales rate since the 5.75 million sales in February 2007.

Since existing home sales are based on sales closings (i.e., settlements), they represent contracts signed in previous months, incorporating the effects of the first-time home buyer tax credit at work. At the same time, distressed sales constitute roughly 30% of existing home sales. Single-family existing home sales have generally been rising since they hit their cyclical low of 4.05 million in January of this year.

Inventories of Unsold Homes Continue to Fall

As of the end of October, the inventory of new homes for sale had fallen to 239,000, the lowest it has been since May 1971 when it stood at 236,000. October’s months’ supply — the amount of time it would take to sell the current inventory of homes based on the month’s sales rate — fell to a respectable 6.7 months from 7.4 months in September and was down considerably from the historic high of 12.4 months in January this year.

Meanwhile, the inventory of single-family existing homes for sale fell to 3.0 million in October from 3.1 million in September and 3.3 million in August. The months’ supply of existing single-family homes for sale fell to 6.8 months in October, down from 7.6 months in September. That was down considerably from June 2008’s cyclical peak of 11.0 months.

Multifamily Construction Struggles

Multifamily units (in buildings with two or more units) were started at a seasonally adjusted annual rate of just 53,000 in October, their lowest level since starts began to be reported in 1959. Multifamily starts, which are notoriously volatile from month to month, averaged 142,000 in the first half of the year and averaged 80,000 from July through October.

Multifamily building permits, which are less volatile, have not been much more encouraging. In the first half of this year they averaged 146,000. From July through October, they averaged 110,000. In both July and October, 101,000 multifamily permits were pulled, the lowest number reported since the series began in 1960.

Multifamily construction is struggling against stiff competition from the single-family rental market and significant obstacles to construction financing that began in 2008.

Data on the Value of Construction Put in Place verify the differing trends in single-family and multifamily housing. The value of single-family construction rose 1.9% in October after rising 2.6% in September. By contrast, the value of multifamily construction fell 2.1% in October after falling 5.0% in September.

Housing Prices Show Some Life

The S&P/Case-Shiller national house price index rose in the third quarter, the second increase in a row. The index rose by 1.8% and 1.9% in the second and third quarters, respectively, on a seasonally adjusted basis.

Nonetheless, the national index was down 8.9% from third quarter 2008, leaving national prices at around their fall 2003 level. Meanwhile, the S&P/Case-Shiller 10-city and 20-city indexes have both shown four consecutive months of increases.

Similarly, the Federal Housing Finance Agency’s (FHFA) seasonally adjusted, purchase-only housing price index (formerly the OFHEO housing price index) has risen in four of the last five months as of its September reading. On a year-over-year basis, the index was down 3.0%.

It would appear that the activity generated by first-time home buyer tax credit helped boost demand, and that led to some price stability.

The battle between house prices and inventory overhang comes down to the amount of demand generated by the extension and expansion of the tax credit against rising foreclosures as a poor economy and weak labor market continue to reduce housing demand and increase mortgage failures.

The balance between the demand and supply forces is precarious. NAHB’s forecast places demand in the winner’s column, but it is a close call. 

Housing Still Faces Significant Headwinds

Although the economic environment for housing is improving and the extended and expanded home buyer tax credit will provide a much-needed boost to housing (for information on the credit, go to www.federalhousingtaxcredit.com), the housing market still faces significant headwinds, even as there are signs that these challenges may be starting to recede.

In addition to the expected weak job market recovery, potential home buyers need large downpayments and/or near stellar credit to obtain a reasonable mortgage.

Also, builders continue to face difficulty in obtaining Acquisition, Development and Construction (AD&C) loans. Not only have builders found it increasingly difficult to obtain these loans, but in many cases they have faced significant adverse changes to existing loans. These have included reductions in the size of loans previously agreed to (e.g., reductions in lines of credit), demands for increased equity for outstanding loans and, in some cases, demands for full repayment of outstanding loans.

It has not been uncommon for these increased requirements to transform a performing loan into a non-performing loan.

Inaccurate appraisals are another force hindering a faster recovery for housing. These occur when an appraiser — often from outside the area being appraised — uses sales from a dissimilar neighborhood as a comparison or uses a foreclosure or short sale as a comparison without proper adjustment for differences in the condition of the house.

Foreclosures remain a drag on numerous housing markets. Many of these foreclosures are concentrated in the formerly hot markets — parts of California, Las Vegas, Phoenix and southern Florida — and economically distressed markets, primarily in the Great Lakes region of the upper Midwest.

Even with an improving economy and the home buyer tax credit, foreclosures will be fed by the weak employment market and are likely to continue to rise into the first part of 2010, especially in these areas.



Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Wednesday, December 16, 2009

Foreclosures drop by 8 percent in November

For those looking to get in on a foreclosure sale, it seems the supply is starting to dwindle.
From a Housing Zone article.

According to RealtyTrac, 306,627 foreclosure filings were reported in November, a decrease of nearly 8 percent from the previous month but still 18 percent higher than this time last year. One in every 417 U.S. housing units received a foreclosure filing in November.

Although foreclosure rates are higher than they were in 2008, there is good news—they have declined 15 percent from their peak in July. Further, November represents the fourth straight month that U.S. foreclosure activity has dropped.

RealtyTrac believes foreclosure prevention efforts such as loan modifications, combined with the recently extended and expanded homebuyer tax credit, are largely responsible for the steady decline in foreclosure filings.

Other interesting findings:
• The top state for foreclosure activity is Nevada, where one in every 119 housing units received a foreclosure filing in November—3.5 times the national average. Rounding out the top 10 are Florida in second place, followed by California, Arizona, Idaho, Michigan, Illinois, Utah, Maryland and New Jersey.
• Four states—California, Florida, Illinois and Michigan—account for more than 50 percent of national total foreclosure activity.
• After four straight months as the nation’s top foreclosure-rate city with a population of at least 200,000, Las Vegas surrendered this crown to Merced, Calif., where one in every 83 housing units received a foreclosure filing in November.
• Rounding out the top 10 cities with the highest foreclosure rates are Stockton (second place), followed by Modesto, Cape Coral-Fort Myers, Las Vegas, Riverside-San Bernardino-Ontario, Bakersfield, Orlando-Kissimmee, Vallejo-Fairfield and Sacramento-Arden-Arcade-Roseville.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Tuesday, December 15, 2009

Mortgage Demand Hits Highest Level in Two Months

From Housing Zone:

The Mortgage Bankers Association announced that mortgage applications, based on the group's seasonally adjusted market index, rose 8.5% to the highest level since early October. The bulk of the activity was spurred by current homeowners refinancing existing mortgages to lock in interest rates that continue to hover around all-time lows. Demand for loans to refinance existing loans was up 11.1%. Refinancings represent about three-fourths of all applications. But purchasing activity is on the upswing too. Requests for loans to buy a home went up by 4%.

Here’s how rising mortgage applications could impact home builders:

* The four-week moving average of the purchase index is up 2.3%, a sign that more buyers are in the market.
* Interest rates rose slightly, pushing potential buyers to jump into the market before rates rise further. The average interest rate for a 30-year fixed rate mortgage rose slightly to 4.88% from 4.79%. The record low of 4.61% was set last March.
* 15-year fixed rate mortgages increased slightly to 4.33% from 4.27%
* Rates for one-year ARMs decreased to 6.55%
* More buyers are expected to enter the market since an $8,000 government tax credit for first-time buyers was recently extended.
* The government program now also includes move-up buyers, a good sign for builders in that market. Move-up buyers are eligible for a $6,500 tax credit for loan closings completed by June 30.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Monday, December 14, 2009

Realtors predict fate of home prices in 2010

Realtors believe that home prices are stabilizing and will continue to do so in 2010, according to a recent HomeGain survey of nearly 1,000 U.S. real estate agents and brokers. The majority also believe the first-time home buyer tax credit is spurring sales and is contributing factor to home prices stabilizing.

What does this mean for the housing market?
• Sellers are still a tough bunch as they continue to disagree with realtors, even more than before—the percentage of homeowners that believe that their homes should be listed 10-20 percent higher than what their realtors recommend continues to rise (41 percent in Q4 survey), as does the percent of home sellers that believe their homes are worth more than their realtor’s recommended listing price (76 percent in Q4 survey).

• While sellers think home prices are heading up, buyers think home prices are heading down. Realtors must educate both parties toward meeting in the middle.

• The first time homebuyers credit has and will spur sales. Twenty-one percent of realtors said half of their transactions involved a first time homebuyer. However, realtors question whether that spike will continue once the credit expires later next year and additional inventory hits the market.

• Home trends continue to vary by market—home buyers and sellers are more likely to see an increase in housing values in the West and a decrease in the Southeast.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Wednesday, December 9, 2009

Boomers' Downsizing Dilemma

http://tncommunities.holrob.com/downsizing.jpg

An article from Housing Zone discusses the increasing need for housing appropriate for baby boomers. The article sets out four main issues that baby boomers have with downsizing: Physical, Financial, Emotional and Social.

The Physical aspect of the downsizing dilemma is also typically the motivating factor for baby boomers to move in the first place. A new home that is smaller hits two of the biggest desires of empty nesters: a smaller footprint means less maintenance or less maintenance from shifting more of the maintenance duties to someone else like a condominium corp, and single-level living.

But baby boomers first have to overcome the mental roadblock that comes with a smaller home: “Where will the kids stay?” “My dining table and hutch won't fit!” Often, it takes time to realize that less maintenance and single level living trumps these issues, and in fact taking the opportunity to divest some of the items that require so much care leads to a lower maintenance lifestyle too.

That is often wrapped up in a second issue, which is Emotional attachment. Baby boomer often face this mental roadblock to downsizing as well. Letting go of possessions that they have had for years, like the greatly over sized dining room table, is fraught with emotion, regardless of the fact that the table sees far less use. That emotional impact is far greater when dealing with the “family home” until the baby boomers feel comfortable that this will be the place where new memories are made, and hat the features of their new home will make living there easier.

Baby boomer downsizers also have a problem reconciling the financial responsibilities of their new home with the value that they are getting. Many assume there is a dollar-for-dollar reduction in cost based on the size of the new home versus the old home, even though that is not typically the case since smaller homes are more expensive to build on a per-square-foot basis.

Lastly, the article discusses the Social aspect of downsizing for baby boomers. Drastic downsizing can begin to feel like downgrading. Boomers who mentally prepare for that and realize that their new home provides happiness in lower maintenance and costs will find making the move easier.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Tuesday, December 8, 2009

Newly Married, in Search of a Style

High style from a low budget, for a newly wed couple in their starter apartment. From an article in the NY Times.



LIKE many newlyweds, Elizabeth and Andrew Wooten eagerly anticipated making a home together. The couple, who met when he moved to her West Village neighborhood in 2006, were married in her hometown of St. Francisville, La., last May. But they began hunting for the right apartment in Manhattan several months before the big day.

After touring more than 70 places — “We drove our broker crazy,” Ms. Wooten said — they eventually found it: an 850-square-foot, one-bedroom rental on the ground floor of a stately town house off Washington Square Park, “one of those houses you walk past and stare at.”

Ms. Wooten, 27, who works in the development office of a private school on the Upper East Side, and Mr. Wooten, 30, a management consultant, hoped they could make the inside as appealing as the outside.

Employing the time-honored method of furnishing a starter apartment, they began asking family members for hand-me-downs and searching Craigslist, an approach that was somewhat successful: by late June, they had amassed a number of pieces in addition to the few they already owned, including a set of six French Empire dining chairs (courtesy of Ms. Wooten’s parents) and a dining table (found on Craigslist).

Ms. Wooten began setting out their wedding gifts, and they hung art. But despite their efforts, the living area felt dark and didn’t reflect the life they envisioned for themselves. They tried rearranging the furniture, but were still dissatisfied.

That was when Ms. Wooten saw a posting (no longer online) on The New York Times Web site, offering help to people struggling with “a furniture budget that feels too tight.” In an e-mail response, she described her dilemma as “not having much furniture” and feeling “not quite sure where to place the furniture we actually do have.”

There was also the issue of the couple’s conflicting tastes: “I lean toward French traditional but my husband likes modern, so it’s a challenge to blend our styles,” she wrote.

And although they could afford to buy a few new things, they had to be cost conscious: Ms. Wooten’s father had suffered congestive heart failure the year before, and was hospitalized shortly after the wedding, and Ms. Wooten wanted to be able to pay for frequent flights to Louisiana.

Brendan Kwinter-Schwartz, an interior designer who owns Kwinter & Company, a New York firm, agreed to help the couple achieve their goals without charging a fee, and a meeting was scheduled for mid-August.

Several days before they could meet for the first time, though, the project was put on hold when Ms. Wooten found out her father was dying and went to join her family at his bedside.

Back in New York a month later, after he had died, she was ready to move forward, citing the enthusiasm he had shown for the project during the five weeks he spent in the hospital. “He loved phone calls, so I called him three times a day,” she said. “He was very entertained by the whole idea of us doing this design project.”

When the meeting finally took place, at the newlyweds’ apartment, Ms. Kwinter-Schwartz arrived with two assistants, Kevin Jackson and Sabina Orlander, carrying tape measures and cameras. Looking around the living room, Ms. Kwinter-Schwartz immediately announced her first task: paring down the accessories.

“You’ve got lovely things,” she said gently, “but you’ve got them all out at once.”

Then she turned her attention to the furniture. The dark wood pieces were making the room feel dim, she said. “Something Lucite might brighten up” the space, she suggested, and could provide a “little break from all the wood and clutter.”

When she raised the issue of replacing the sofa, it became clear she had Mr. Wooten’s support: “It can definitely go,” he said, explaining that his wife had bought it used years ago from roommates and that it had seemed “old” and “crusty” even before they moved into the apartment.

Ms. Kwinter-Schwartz asked her clients to point out anything they couldn’t part with — only the paintings were nonnegotiable, she was told — and seemed relieved that they were willing to get rid of some of the more baroque items.

“Do you think there’s too much gold in here?” Ms. Wooten asked, alluding to a pair of gold lamps, two gold mirrors and several gold picture frames.

“When I’m done,” Ms. Kwinter-Schwartz promised, “there won’t be.”

Then she demonstrated a gift that sets many successful designers apart from their peers: providing constructive criticism in a diplomatic way.

“You have a beautiful aesthetic,” she said, indicating Ms. Wooten’s carefully assembled outfit. “Your apartment should look like you.” A polite way of saying, she later acknowledged privately, that the room looked as if it belonged to the couple’s grandparents.

The Wootens established a budget of about $2,000, and set to work on their first assignment: packing up the wedding gifts and storing them in the laundry room.

Over the next eight weeks, Ms. Kwinter-Schwartz reached out to a variety of contacts to find high-quality bargain-priced furnishings and sent near-daily e-mail messages to her clients.

One early e-mail discussion addressed the couple’s desire for a sleeper sofa: Ms. Kwinter-Schwartz suggested the Manstad from Ikea, but then found out that Avery Boardman, a high-end custom upholstery company in the Decoration & Design Building, was planning to start selling some merchandise at clearance prices, so she called a contact there to ask for an early look.

After identifying a sofa bed with “clean lines,” Ms. Kwinter-Schwartz invited Ms. Wooten to accompany her to the showroom and explained why she thought the piece — marked down from $5,800 to $1,950 (including delivery) — was a good investment. Their current apartment might be “a temporary space,” she said, but this piece was both “versatile” and “elegant” and would “be a permanent part of their collection.” And when Ms. Wooten’s mother visited, she added, “You want to have someplace she can come and stay and be comfortable.”

The couple talked it over and decided to increase their budget to $4,000 so they could buy the sofa.

Satisfied that the couple’s biggest expenditure was behind them, the designer began scouring estate sales for other pieces, eventually purchasing a coffee table, a chair and a ceramic lamp. A search for “midcentury table lamps” on eBay yielded a pair of “spectacular” Lucite lamps for $165: “I am so excited,” Ms. Kwinter-Schwartz reported after they arrived. “If someone said they were $4,000, I wouldn’t blink.”

The process was not without a few bumps, however. When Ms. Kwinter-Schwartz suggested reupholstering the dining chairs in a brighter material, for example, Ms. Wooten protested: “But my mother just reupholstered them before she sent them to us,” although she eventually agreed.

Then there was the prospect of adjusting to a new style. One night, the couple returned home after one of the designer’s many visits and were shocked to find she had hung a deer skull and antlers over the television and applied broad brown vinyl stripes to the wall behind the dining table.

“I would never have spent $150 on that,” Ms. Wooten said, referring to the stripes. “It’s a little out there.”

A design-savvy friend advised her that “antlers are so in right now,” and she responded with uncharacteristic frankness, telling him: “I so don’t care. They’re creeping me out.”

But when she voiced her concerns to the designer in a more polite way, she didn’t get the response she had hoped for: “Brendan said live with them for a few weeks, and I think they’ll grow on you,” Ms. Wooten said.

Finally, she decided to set aside her reservations. “I feel like I just have to let go,” she said. “She’s the pro. She’s a little bit more modern, but it’s good, because it’s making me try things.”

And in August, when she found out that her mother had breast cancer, it strengthened her Zen-like attitude. “I was like, you know what? What’s hanging on the wall doesn’t really matter.”

But even with that relaxed attitude, tensions arose after Will Erickson, an artist friend who was creating an enormous painting to hang over the couch, e-mailed a digital photo of the work in progress, and Ms. Kwinter-Schwartz decided she didn’t want to use it. Ms. Wooten, who loved the piece, was unable to bear the idea that it wouldn’t be used, and didn’t like Ms. Kwinter-Schwartz’s insistence that several pieces found at an estate sale, which she didn’t particularly like, be hung instead.

“It’s hard sometimes to stand up to her,” Ms. Wooten said in a moment of frustration. “She gets a little bit pushy.”

Once Ms. Kwinter-Schwartz saw Mr. Erickson’s painting in person, though, she decided it was the best of several options she had tried. “I’m really happy with it,” she said. “It’s so funny, because I put up such a fuss not having seen it.”

By the time the apartment was completed in November, all parties seemed thrilled with the outcome.

“They are such a sweet couple and I really wanted them to have very beautiful, quality pieces that are going to get better in time,” the designer said, adding that she was especially happy that the space “looks like Andrew and Elizabeth live here, and kind of echoes their style.”

Ms. Wooten agreed, noting that “it feels a lot more open and light — and more modern, too.”

She admitted that she had come to enjoy bargain hunting, was delighted when she managed to recoup nearly $500 by selling their old desk and trunk on Craigslist, and felt victorious after buying a slightly used version of the West Elm desk Ms. Kwinter-Schwartz selected for almost $200 less than it would have cost in the store.

And despite her initial reaction to the stripes, she said: “Now I think they’re really cool. And it really does define the dining space.”

Mr. Wooten, who left most of the decisions to his wife, said he liked the changes as well. “I wouldn’t say I’m ultramodern or supermodern by any means,” he said. “But I think we changed the room a lot, and it looks good.”

Except for the antlers, that is. “Maybe it’s hot in the market, but I don’t think it ties into anything else in the room,” he said, adding that he could only imagine them working “if you were going to have a motif with game hunting or safari.” (After the photo shoot, the Wootens returned the antlers to Ms. Kwinter-Schwartz, who had bought them on eBay for $76.)

Some of the aesthetic changes weren’t easy for his wife, Mr. Wooten said, but he appreciated her willingness to try something new: “I think it definitely stretched her taste in a good way.”

The final touch — which caused Ms. Wooten some sticker shock — were luxury throw pillows she picked out with the designer.

“I didn’t even know throw pillows could cost this much,” she said, holding a pillow that retails for more than $200.

“I just can’t believe how expensive things are, even when you’re shopping design on a dime,” she added. “It’s just funny how things add up.”

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Monday, December 7, 2009

Foreclosures Can Offer Deals, but Buyer Beware

If you are thinking of jumping in while the market is still good for buyers, then you probably have thought about jumping on a foreclosure. Here is a good article from the NY Times about the pitfalls to look out for when buying a foreclosure.

From a NY Times original article:

So you’re looking to buy a new home, and you think a foreclosed house may be the best deal. You’ve probably noticed, then, that many of the big banks’ Web sites are beginning to look a bit like real estate brokerages, showcasing the many properties that they’ve repossessed.

The Gordons are happily living in the three-bedroom ranch in San Juan Capistrano, Calif., that they bought for $500,000 through a short sale in February.

These houses often sell for about 15 to 20 percent less than comparable homes in the same neighborhood, according to the National Association of Realtors. And while the banks have been careful not to flood the market with all their properties at once, there are hundreds of thousands of listings now, and half a million more expected in the coming year.

Despite the seemingly high inventory, though, anyone considering buying a distressed property should heed the classic warning: Caveat emptor, or let the buyer beware.

Closing a deal in a desirable neighborhood can be hard to do. Many aspiring homeowners have lost out to all-cash bidders. Buyers also need to search more aggressively than usual, which means figuring out which brokers have the best foreclosure listings, religiously checking for new ones and visiting the properties shortly thereafter. Buyers also need to ensure that the home is truly a good deal and not a money pit — most of these homes are sold as is.

Still, as Rick Sharga, senior vice president of RealtyTrac, a foreclosure listing service, put it, “The best discounts have been on bank-owned property.”

If you are still interested in buying a distressed property, you have several options. You can buy it through a preforeclosure sale, at a public auction or through a bank or other entity that has taken ownership of the home — these properties are known as real estate owned, or R.E.O.’s.

Below is a more detailed description of the potential risks and benefits of buying R.E.O.’s and preforeclosure transactions known as short sales, where the bank agrees to sell a home for less than is owed on the mortgage. Through October, foreclosures and short sales accounted for nearly 37 percent of all home sales, on average, according to the Realtors’ association.

R.E.O.’s

Traditional homebuyers are generally discouraged from buying homes at auction because there are too many risks — you can’t tour the inside of the home, which increases your chances of buying a house that will drain your bank account. Equally important, the home won’t necessarily have a clear title, which means there may be tax liens or other debts against the property. And when you buy the home, you buy those issues, too.

One of the benefits of R.E.O.’s is that the bank typically clears any title issues before it puts the house on the market. “It’s easiest because there is a price already, there is access, you can do your estimate for repairs, and you can write your offer and go,” said Alexis McGee, president of Foreclosures.com, which lists foreclosures and offers classes for foreclosure investors.

But you need to do your share of preparatory work. Start by getting acquainted with the listings in your target area. All R.E.O.’s are sold through an agent. You can find their listings directly on the big banks’ Web sites, like Bank of America and Wells Fargo, as well as regional banks like SunTrust. Fannie Mae offers its listings through the HomePath Web site and Freddie Mac through HomeSteps.

You can also find free listings through independent brokerages like Redfin.com, which has a forum where you can compare notes with other buyers. If you pay a monthly fee, you can access sites that track distressed homes from the moment of default through foreclosure. These sites include RealtyTrac ($49.95 a month), Foreclosures.com ($49.95), and Foreclosure.com ($39.80), all of which provide a free weeklong trial.

One of your first steps would be getting preapproved by a mortgage lender so that once you find a property you are interested in, you can move quickly. Call the listing agent, or hire a buyer’s agent to do it for you. (You should hire a buyer’s agent with experience in these types of sales anyway. In some states, the listing agents may refer you to someone else in their office to represent your interests, said Frank Verna, an R.E.O. broker in Jupiter, Fla.). Arrange to see the home as soon as possible. The bank selling the property may want you to be preapproved with their own lending arm, though you can always use another lender in the end, experts said.

Most R.E.O.’s are sold as is, so buyers should make their offers contingent on a home inspection. It’s best to find inspectors who are also licensed contractors (with references), so they can estimate repair costs. Putting too many contingencies in your offer, however, is likely to derail your bid.

Buyers also need to be prepared to lose to buyers with all cash. That’s what happened to Jason and Elise Hope, who have been searching for a small starter home in San Diego County for six months. The couple has made more than two dozen offers on bank-owned properties, and a couple of short sales, priced from $300,000 to $400,000.

“For the most part, we never heard back from the listing agent,” said Mr. Hope, 28, who works as an equity research associate for a forensic accounting firm. “When we did hear back, we often heard the same story — that the listing had 10 to 20 offers on it, along with ours, within the first weekend of it being available for showing.”

As Mr. Verna, the broker, explained: “In the R.E.O. world, cash is still king because there is no appraisal, last-minute quality checks or potential problems to kill the deal.”

You may be able to increase your chances by making your best offer from the start. But to ensure you don’t overpay, research comparable sales on sites like Zillow.com or have your agent prepare a “comparative market analysis” for you. “You are negotiating with a calculator, and if the numbers don’t work for the seller, they just say no and move on,” Mr. Verna said.

Fannie Mae does give prospective homebuyers a leg up. Last month, it introduced a program that shuts out investor buyers for the first 15 days a home is on the market. Moreover, Fannie also has a financing program, which allows buyers to put down as little as 3 percent and doesn’t require them to carry mortgage insurance. It also provides loans that allow borrowers to wrap in costs for home renovations.

Freddie is testing a program that also initially shuts out investor buyers, and it is currently offering consumers who buy one of its properties up to 3.5 percent of a home’s purchase price, which can be used for closing costs, moving or even furnishings. The program was recently extended to buyers who submit a purchase offer by Jan. 31 and close by March 26. Primary homebuyers are also eligible for a two-year warranty on certain home repairs.

Short Sales

Short sales tend to be more problematic than R.E.O.’s. If you make an offer on an R.E.O., you can expect to get a response within a few days. With a short sale, experts say, it can take months. You also can’t necessarily trust the listing price.

“It may easily be a teaser price just to get offers in,” said Carolyn Warren, author of a new book “Homebuyers Beware: Who’s Ripping You Off Now?” (FT Press). “It’s kind of like posting something on eBay. They are going to list it at a dollar, but they might only sell it for $1,000.”

There are other potential problems as well. While the seller may be motivated, the bank has to be convinced of two things: “One is that the homeowner in question deserves a hardship exception,” Mr. Sharga of RealtyTrac said. “The second thing is that you have to convince it that it is market value, even though it is below the mortgage amount.”

Complicating matters further, the homeowner may have more than one loan on the property, adding to the number of parties involved in the negotiations.

All this lengthens the time to close a deal.

You can get lucky, too. Michelle and Mark Gordon are happily living in a three-bedroom ranch that they bought through a short sale in San Juan Capistrano, Calif., in February. It took only three months to close — record time in the world of short sales. But Mrs. Gordon, a librarian who now stays home with her young daughter, did her homework and was aggressive in her search. She checked the listings religiously on Redfin.com, and saw the property the day after she found it.

The Gordons paid $500,000 for the home, and the bank paid the $12,000 in closing costs. The property was recently valued at $537,500 on Zillow.com. “We painted two rooms,” Mrs. Gordon said. “That was it.”

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Tuesday, December 1, 2009

Housing Affordability Hovers Near Record-High Level

An article from Housing Zone:

Nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI showed that 70.1 percent of all new and existing homes sold in the third quarter of 2009 were affordable to families earning the national median income of $64,000, down slightly from a near-record 72.3 percent during the previous quarter and up from 56.1 percent during the third quarter of 2008.

"At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its Nov. 30 deadline and expanding it to a wider group of eligible home buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "With interest rates now lower than last quarter, the tax credit will encourage even more home buyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."

Indianapolis was the most affordable major housing market in the country during the third quarter, a position the metro area now has held for 17 consecutive quarters. Almost 95 percent of all homes sold were affordable to households earning the area's median family income of $68,100.

Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa., and three Michigan metropolitan areas, Detroit-Livonia-Dearborn; Warren-Troy-Farmington Hills; and Grand Rapids-Wyoming.

Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind. outscoring all others. There, 96.7 percent of homes sold during the third quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Springfield, Ohio; Bay City, Mich.; Mansfield, Ohio; and Elkhart-Goshen, Ind.

New York-White Plains-Wayne, N.Y.-N.J., was the nation's least affordable major housing market during the third quarter of 2009, the New York metro area's sixth consecutive appearance at the bottom of the list. Slightly more than 19 percent of all homes sold during the third quarter were affordable to those earning the New York area's median income of $64,800.

The other major metro areas near the bottom of the affordability scale included San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Nassau-Suffolk, N.Y.

San Luis Obispo-Paso Robles, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Others near the bottom of the chart included Ocean City, N.J.; Santa Cruz-Watsonville, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.

Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Thursday, November 26, 2009

Mortgages: Reaching Out to Condo Buyers

An article from the NY Times about how the FHA is reaching out to condo buyers with their program:

CONDOMINIUM buyers in the New York area often paid little mind to Federal Housing Administration mortgages, either because these government-backed loans had relatively low dollar limits or because federal rules put them beyond the reach of most condo associations.

But last year, the federal government raised the maximum F.H.A. loan amount to $729,750 from $362,790 for high-cost areas like Manhattan and northern New Jersey. It recently extended that ceiling through 2010.

Then, earlier this month, the agency said that through next January it would relax some rules under which condo owners can qualify for the loans. (The F.H.A. still does not make loans on co-ops, and mortgage executives say they don’t expect that policy to change anytime soon.)

Industry executives say the F.H.A.’s new rules will open an important lending option to condo buyers, especially those with weak credit.

“This will absolutely be a big help for condo buyers,” said Melissa Cohn, the president of the Manhattan Mortgage Company. “The loans are still more costly for people, but it will at least allow them to gain entry into condos, and they can always refinance into more traditional, better-priced loans.”

F.H.A. loans have grown in popularity since the collapse of the mortgage market in 2007, because borrowers need not maintain stellar credit scores or save up for large down payments to qualify. Borrowers with credit scores as low as 600 can often qualify, and they can secure a mortgage with a down payment of less than 5 percent.

The downside, though, is that borrowers must pay an F.H.A. insurance premium, similar to private mortgage insurance. On a $300,000 mortgage, that could add nearly $150 to the monthly payment.

Under the old F.H.A. rules, a borrower couldn’t qualify for a loan unless the condominium development had been approved by the housing administration, a process that could take months.

Ms. Cohn said many condominium associations in New York City declined even to try, because the agency barred “right of first refusal” clauses, which many associations include in their ownership agreements. Such language grants the association the right to buy a unit at the price listed by the unit’s owner. That restriction has now been dropped by the housing administration.

The government has also streamlined the process for lenders that want to qualify a condominium for the F.H.A. program. Lenders can now approve condos without applying to the government, if they believe the condominium complies with F.H.A. lending policies.

The F.H.A. will permit these “spot approvals” until Jan. 31, 2010, but lenders say they are hopeful the government will extend the policy beyond that date.

Brian J. Chappelle, a partner with Potomac Partners, a mortgage industry consultant in Washington, says some lenders are uncomfortable with determining whether a condominium project meets F.H.A. eligibility requirements. “If they make a mistake, they’re responsible,” and could face F.H.A. sanctions, he said. “So I’m not sure how many will take advantage of this at the start.”

The government also relaxed rules that had limited the number of condominiums that would qualify for F.H.A. loans. Under the old rules, if more than 50 percent of a new development was unsold, the F.H.A. would deny a loan. Now, just 30 percent of a development must be sold before an F.H.A. borrower can qualify.

And the old rules capped, at 30 percent, the share of condos that could have F.H.A. loans in a given development. Now the figure is 50 percent.

Richard L. Tracy Jr., the chief executive of Campbell Mortgage in West Haven, Conn., and an F.H.A.-approved lender, said the various changes could increase his loan volume by 10 percent or more. “F.H.A. realizes this is one thing they can do to keep the real estate market going,” he said.



Digg It!
Buzz Up!
Add to Stumble
Add to Delicious
Reddit
Twit This
Add to Facebook
Google Bookmarks
Sphere: Related Content

Tuesday, November 24, 2009

Home prices rise for 4th month in a row

AP Photo

From an AP story:

Home prices rose slightly in September, the fourth straight monthly increase and a clear sign the housing market recovery is continuing.The Standard & Poor's/Case-Shiller home price index of 20 major cities released Tuesday rose 0.3 percent to a seasonally adjusted reading of 144.96 in September. Prices rose month-over-month in 11 metro areas, a weaker showing than in recent months.Compared with a year earlier, prices were down 9.4 percent, the smallest year over year decline since January 2008."We have seen broad improvement in home prices for most of the past six months," David M. Blitzer, chairman of the Standard & Poor's index committee. "However, the gains in the most recent month are more modest than during the seasonally strong summer months."