Daily Real Estate News | November 20, 2009 | Share

One piece of good news coming out of the Great Recession is the increasing affordability of housing.

The typical U.S. family earning the nation's median income of $64,000 a year could afford to buy 70.1 percent of all homes sold in the United States during the third quarter, according to a report from the National Association of Home Builders and Wells Fargo. The report relied on the government standard of spending no more than 28 percent on housing. In the same quarter of 2008, only 56.1 percent qualified.

The five most affordable areas are:

• Indianapolis
• Youngstown, Ohio
• Detroit
• Warren, Mich.
• Grand Rapids, Mich.

The five least-affordable areas are:

• New York City
• San Francisco
• Honolulu
• Santa Ana, Calif.
• Nassau and Suffolk, Long Island, N.Y.

Source: CNNMoney.com, Les Christie (11/19/2009)

HOPEFULLY THIS WILL BE THE CASE

Daily Real Estate News | November 19, 2009 |

Housing industry consultant John Burns says low mortgage
rates and the home buyer tax credit, plus the availability of FHA loans - "the new subprime," as he calls it - will
combine to keep housing transaction levels at "near normal" through Spring 2010.

First-time homebuyers are about the half the market, he says, while the expansion of the housing tax credit will get
senior buyers "off the fence" and buying retirement properties.

What would have happened if Congress hadn't extended the tax credit? "I think we would see housing crater," Burns said.

Burns clients include home builders, lenders, and equity invrstors.

Source: the Wall Street Journal, Nick Timiraos (11/18/2009)
 

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POTENTIAL DOWNSIDE TO WAITING FOR HOUSING PRICES TO FALL FURTHER

Daily Real Estate News | November 18, 2009 |

SOME SECTORS OF THE REAL ESTATE MARKET ARE SHOWING LIFE.

Daily Real Estate News | November 17, 2009 |

Executives from some of the largest brokerages in the country expect to see their sales grow 6-8 percent in 2010 and home prices to start heading up about 3 percent, REALTORS® heard in a state of the real estate industry discussion Saturday at the 2009 NAR Conference & Expo.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said expansion of the tax credit to include repeat buyers will help boost middle-market sales next year, although mortgage financing above the $417,000 non-jumbo conforming loan limit will remain a challenge. "The repeat tax credit will at least start a conversation about buying" among existing home owners, Scott said.

Congress recently extended temporary high-cost loan limits of $729,750 for 2010, but the lion's share of markets don't qualify for those so-called jumbo-conforming loans. As a result, repeat buyers face tougher underwriting challenges. "People applying for a $419,000 mortgage are not wealthy-they're two teachers," said Helen Hanna Casey, president of Howard Hanna Real Estate Services, which operates in Pennsylvania, New York, and other states in that region.

The improvement in the middle market will help tighten inventories, helping to shore up prices, but the upper-end market will continue to underperform until companies start hiring again. That's when the industry will see more relocation business among transferees, a critical component of the upper-end market, said Scott.

Merle Whitehead, president and CEO of RealtyUSA said a key job of brokers next year is making sure their sales associates understand FHA, because federally-backed mortgages will remain the principal provider of mortgage financing for most borrowers. Too many sales associates still think of FHA as financing for people who can't qualify for conventional mortgages, but in fact FHA is the main source of mortgage capital today. "We have to change the thoughts and beliefs of our agents," he said.

-Robert Freedman, REALTOR® magazine

The Federal Housing Administration released an audit Thursday showing that its cash reserves had seriously declined because so many borrowers have defaulted on their mortgages.

The audit showed reserves to be 0.53 percent of the total portfolio, significantly below the 2 percent minimum mandated by Congress. The agency announced plans to tighten its credit rating standards so it wouldn't be a drain on taxpayers, but officials warned that if the drain worsens, the agency might fail, leaving taxpayers to clean up the mess.

Critics of the agency, which last year guaranteed about 30 percent of new loans, say it should tighten its standards further, including increasing down payments to 10 percent.

Source: The New York Times, David Streitfeld (11/13/2009)
 

REALTORS GIVING OF THEMSELVES

Daily Real Estate News | November 12, 2009 |

About 50 real estate practitioners kicked off the 2009 REALTORS® Convention & Expo on Wednesday, Nov. 11, by lending a hand to the building of 1441 Harding Avenue, a green home constructed by Habitat for Humanity. While the initial construction of the house began in August, real estate pros helped with some of the finishing touches: painting, nailing, framing doors, and putting up drywall. New homeowners Abdi Farah and Amran Abdi, Somalian refugees who relocated to the U.S. a few years ago, will be able to move in this December.

"Nothing feels better than to see your lifelong dream become a reality. Homeownership is one of the most important financial steps you could take in order to secure your family's future," Abdi Farah said.

Since 2001, NAR has partnered with Habitat for Humanity to build a home in the city where the REALTORS® Convention & Expo; however, this was the first green home built under this partnership. The unit was constructed under the LEED-certification guidelines and will be solar-powered. "Today is a great day to show that REALTORS® do care," said Bradford Bates, San Diego Habitat for Humanity's executive director.

"It's giving back, and helping a family to give them a leg up," said Jan Hayden, ABR®, e-PRO®, an associate with Coldwell Banker in Baltimore, who has worked on almost 60 Habitat for Humanity homes. Like Hayden, many of the participants volunteer for Habitat for Humanity in their local communities.

2009 NAR President Charles McMillan and other members of the NAR Leadership Team were on hand to present the family of five keys to their new home, along with a toolbox, green cleaning supplies, and a Lowe's gift card.

Source: Katherine Tarbox, REALTOR® magazine (11/12/2009)

New Rules Improve Transparency In Mortgage Closing Costs

Daily Real Estate News | November 9, 2009 |

New regulations from the Department of Housing and Urban Development will require that closing costs be spelled out on a revised and consumer-friendly version of the good-faith estimate form that borrowers are supposed to receive within three days of applying for a mortgage. These rules will take effect Jan. 1, 2010.

Fees are divided into three categories:

• Fees that cannot increase from upfront estimates to closing, including lender or broker's mortgage origination, processing, and underwriting charges, as well as lender or broker's "points" based on the interest rate quoted and local transfer taxes.
• Fees that can increase as much as 10 percent from upfront estimates, including services such as appraisals, title insurance, and recording fees from local governments.
• Fees that can increase without limit because the amount is difficult to predict in advance, including home owners insurance, daily interest charges on the loan, and initial deposits by the borrower into an escrow account.

The new HUD-1 form will allow the borrower to easily compare what they were told the settlement fees will be with what they actually are at closing.

Source: The Washington Post Writers Group, Kenneth R. Harney (11/06/2009)

Congress has provided the stimulus in the form of an extended tax credit period. Now we have to wait and see what the effect on the housing market will be.

The Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they've lived in their home for five of the past eight years. Home prices are capped at $800,000.

The legislation was included in a bill to extend unemployment benefits and is expected to be passed by the House today or tomorrow. President Obama is expected to sign the legislation when it's sent to his desk.

Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.

Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2010.

More on the credit is available from NAR.

Source: The Associated Press (11/5/2009)

Potential Bad News for Sellers

Daily Real Estate News | November 3, 2009 |

SIGNS OF A REAL ESTATE MARKET RECOVERY?

Daily Real Estate News | November 2, 2009 |

Pending home sales rose again, marking eight consecutive monthly gains - the longest streak since measurement began in 2001, according to the National Association of REALTORS®.

The Pending Home Sales Index,^* a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9.

The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

Lawrence Yun, NAR chief economist, said the momentum is understandable.
"What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," he said. "Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery."

Watch a video interview of Yun as he talks about these latest pending-home sales trends.

NAR estimates approximately 3 million renters are now financially well-qualified to buy a median-priced home. "As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers," Yun said. "Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans."

The Pending Home Sales Index in the Northeast slipped 2.0 percent to 83.6 in September but remains 16.9 percent above September 2008. In the Midwest the index rose 8.1 percent to 98.2 in September and is 17.8 percent higher than a year ago. In the South, pending home sales increased 4.9 percent to an index of 109.7 and is 22.8 percent above September 2008. In the West the index jumped 10.2 percent to 143.8 and is 23.7 percent above a year ago.

Yun added that strong near-term reports should not be overstated. "We're clearly not out of the woods because an excess of homes remains on the market despite recent improvements," he said. "Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory."

- NAR