This year the housing market showed signs of life. But with foreclosures and unemployment climbing, prices have further to fall.
By Beth Kowitt, reporter
December 15, 2009: 09:43 AM
(Fortune magazine) -- In a dour year for the economy, the housing market has offered some glimmers of hope. Home sales have improved, recently hitting their highest level in more than two years. There's been talk of bidding wars resuming in places like Silicon Valley and New York City. And cocktail party chatter everywhere has started to turn to talk of a bottom. So at least where housing's concerned, things are looking not so bad -- right?
If that's what you think, you may not want to invite Mark Zandi to your next cocktail party. The chief economist of Moody's Economy.com, Zandi has some sobering predictions: Home prices are going to fall 5% to 10% more -- and over 30% in places like Miami -- between now and this time next year. Then they might start turning around. (Emphasis on "might.")
At the top of Zandi's list of worries are foreclosures -- specifically, the millions of loans that are in foreclosure or headed there that can't or won't be modified. According to RealtyTrac, nearly 2 million housing units in the U.S. are in foreclosure or bank-owned, and millions more are likely to join them.
Zandi estimates that 2.4 million homes will find their way into foreclosure next year. He expects banks to start putting those properties on the market more aggressively during the first half of the year, resulting in a flood of cut-rate inventory that will drag prices down.
It would be one thing if banks could sell into a hungry real estate market. But that brings us to Zandi's second concern: skyhigh unemployment.
October's 10.2% figure was higher than what most economists forecast for the peak. A soft job market, especially one this soft, means potential buyers don't have money to pour into new homes or the confidence that they'll be able to hang on to their jobs and pay the mortgage on their existing home.
Another concern: Policymakers will pull their support from the market prematurely. Aggressive government moves, like the recently extended first-time-homebuyer tax credit and the Fed's purchase of mortgage-backed securities, have been propping up the market.
The purchase plan is set to expire in March, which Zandi says could bump mortgage rates up as much as a full point. "That raises the cost of buying a home, and in this fragile market people won't buy," he says. "And that's a problem."
All those factors are figured into Economy.com's housing price outlook for 2010 -- as are local figures for income, population, interest rates, and foreclosures.
The results are broken into 100 metropolitan areas. (Last year the projections were pretty accurate, forecasting a 14.5% decline in 2009; the actual figure is likely to come in around --13.2%.)
As the sea of red above shows, the numbers are negative across the country.
The weakest areas are Florida, California, Nevada, and Arizona -- what Zandi calls the "usual suspects" -- where foreclosures are highest and likely to rise. The worst market: Miami, where the 2009 median home price of $183,530 is expected to fall 33%.
But Zandi also points to less discussed regions where prices are still inflated relative to rents, like the Pacific Northwest and New York through Virginia.
If there's a bright spot, it's pockets of the Midwest -- states like the Dakotas, Kansas, and Nebraska, which have stronger economies based on agricultural and energy industries.
Then there's Pittsburgh, which didn't have much of a housing bubble to begin with and is the only market projected to grow next year, up 0.41%.
The good news? "It's clear we're closer to the end of this crash than the beginning," says Zandi. Housing is more affordable, and construction is still low, so sales will eat up excess inventory. "We're moving in the right direction, and that's reason for optimism," he says.
Another plus: He says there's almost zero possibility of another U.S. housing bubble anytime soon.
Sunday, December 20, 2009
Sunday, December 6, 2009
Home sales contracts soar
Home sales contracts soar
National Association of Realtors index spikes 32% as buyers take advantage of first-time homebuyer tax credit.
By Les Christie, CNNMoney.com staff writer
December 2, 2009: 02:51 PM
NEW YORK (CNNMoney.com) -- Americans are inking a lot of deals to buy homes.
In October the National Association of Realtors recorded an unprecedented ninth consecutive month of increases in the number of signed contracts.
Although these are not closed sales, and some deals can fall through, signed contracts are a good indicator of where the housing market is headed.
Between September and October NAR's Pending Home Sales Index rose 3.7% to 114.1 from 110 in October. But the index is 31.8% higher than a year ago, when it was 86.6. That's the biggest year-over-year gain in the history of the index. The PHSI is also at its highest level since March 2006.
NAR's chief economist, Lawrence Yun, gives much of the credit for increased sales to the homebuyer's tax credit, which first-time homebuyers could claim to reduce their taxes by up to $8,000.
"The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future," Yun said in a prepared statement.
The credit had be due top lapse on Dec. 1, so many October buyers may have acted to get in under the wire.
However, the credit has been extended through the middle of 2010 and expanded to include many move-up buyers. The housing industry hopes that will keep sales perking until the economy picks up and markets return to a more normal condition.
National Association of Realtors index spikes 32% as buyers take advantage of first-time homebuyer tax credit.
By Les Christie, CNNMoney.com staff writer
December 2, 2009: 02:51 PM
NEW YORK (CNNMoney.com) -- Americans are inking a lot of deals to buy homes.
In October the National Association of Realtors recorded an unprecedented ninth consecutive month of increases in the number of signed contracts.
Although these are not closed sales, and some deals can fall through, signed contracts are a good indicator of where the housing market is headed.
Between September and October NAR's Pending Home Sales Index rose 3.7% to 114.1 from 110 in October. But the index is 31.8% higher than a year ago, when it was 86.6. That's the biggest year-over-year gain in the history of the index. The PHSI is also at its highest level since March 2006.
NAR's chief economist, Lawrence Yun, gives much of the credit for increased sales to the homebuyer's tax credit, which first-time homebuyers could claim to reduce their taxes by up to $8,000.
"The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future," Yun said in a prepared statement.
The credit had be due top lapse on Dec. 1, so many October buyers may have acted to get in under the wire.
However, the credit has been extended through the middle of 2010 and expanded to include many move-up buyers. The housing industry hopes that will keep sales perking until the economy picks up and markets return to a more normal condition.
Sunday, November 22, 2009
7 tips for buying foreclosures
7 tips for buying foreclosures
There are a lot of great deals on the market, but buyers beware: Purchasing a foreclosure is rife with pitfalls.
By Les Christie, CNNMoney.com staff writer
November 19, 2009: 04:12 AM
NEW YORK (CNNMoney.com) -- Foreclosures are dominating the housing market. Right now, there are 1.5 million such homes for sale, and more are expected to be available soon. That provides both opportunities and pitfalls for bargain hunters.
Just because prices are low doesn't mean you should make snap decisions or buy something that isn't right. Here are 7 tips for making sure you don't get taken for a ride.
1. Don't get caught up in a feeding frenzy
"Everybody and their grandmas are trying to buy foreclosures," said Glenn Kelman, CEO of Redfin, an online, discount broker. But that doesn't mean you should lose your head.
Banks put repossessed homes back on the market at cut-rate prices because quick sales help avoid the expense of upkeep, such as property taxes, insurance, heat and electricity.
Those lowball prices represent golden opportunities, but they also attract dozens of buyers who may bid until homes are no longer bargains.
Don't get caught up in a bidding war. Instead, carefully calculate what you want to spend and do not exceed that price.
2. Contact lenders directly
Smart buyers establish relations with asset managers at banks. This may reward them with inside information or first crack at new foreclosures hitting the market.
In the case of a short sale, for example, it can give the inside edge. If a buyer is pursuing a short sale -- buying a home for less than what the current owner owes on the mortgage -- she should talk directly to the property's asset manager. That way, if the short sale falls through and the bank repossess the house, the asset manager knows she is still interested. It could lead to a quick sale without other bidders.
3. Get pre-approved from the lender you want to buy from
If you're trying to buy a property from, say Bank of America, it can help to get a pre-approved mortgage from Bank of America. Doing so may cause lenders to look more favorably on your bid if its similar to others.
Plus, you're not locked in if other lenders offer you better terms. You can always change your mind and get your mortgage from another source.
4. Consider fix-ups
Most REOs, the industry term for bank owned properties, are sold as is. "The conventional wisdom is that banks will do nothing to the houses before the sale," said Kelman.
That can be problematic today because so many foreclosed homes are in less-than-mint conditions. Often, the former owners were struggling to pay their bills and may have neglected routine maintenance. Or, they may have trashed the properties before leaving
In 25% of cases, homebuyers persuade lenders to fix some of the problems before the sale closes. Most of the time, banks would rather sell the house to the next available bidder -- one who doesn't ask the bank to pay for repairs.
So be willing to consider a home that needs some work -- but budget accordingly.
5. Hire a real estate attorney
Once banks agree to sales, they often want to move fast and load contracts up with legal mumbo jumbo. As a result, buyers often do not have the time or expertise to figure all the angles.
The solution is to hire a real estate attorney -- even in states where home sales are usually completed without one. Considering you're making a six-figure investment, the legal fees are cheap insurance against the risks.
6. Wait to make an offer
Homebuyers may be well served to wait before making an offer. Let the house sit on the market for a few days, giving others a chance to set the bidding tone. Then jump in.
"Talk to the agent selling the property," said Kelman. "The agent may tip his hand. Call up and ask, 'Should I make an offer? What should I come in at?'"
The agent may tell you he has offers at, say $300,000 and you should bid bit bit higher, giving you an advantage over earlier bidders.
7. Tour properties with contractors
With so many REOs in seriously deficient shape, it's essential to go over every inch with someone who can spot problems and tell you how much it will cost to remedy them.
A foundation crack can be a minor problem or a deal breaker, and most ordinary homebuyers have no way of telling the difference. Like an attorney, a contractor can be very worthwhile insurance.
There are a lot of great deals on the market, but buyers beware: Purchasing a foreclosure is rife with pitfalls.
By Les Christie, CNNMoney.com staff writer
November 19, 2009: 04:12 AM
NEW YORK (CNNMoney.com) -- Foreclosures are dominating the housing market. Right now, there are 1.5 million such homes for sale, and more are expected to be available soon. That provides both opportunities and pitfalls for bargain hunters.
Just because prices are low doesn't mean you should make snap decisions or buy something that isn't right. Here are 7 tips for making sure you don't get taken for a ride.
1. Don't get caught up in a feeding frenzy
"Everybody and their grandmas are trying to buy foreclosures," said Glenn Kelman, CEO of Redfin, an online, discount broker. But that doesn't mean you should lose your head.
Banks put repossessed homes back on the market at cut-rate prices because quick sales help avoid the expense of upkeep, such as property taxes, insurance, heat and electricity.
Those lowball prices represent golden opportunities, but they also attract dozens of buyers who may bid until homes are no longer bargains.
Don't get caught up in a bidding war. Instead, carefully calculate what you want to spend and do not exceed that price.
2. Contact lenders directly
Smart buyers establish relations with asset managers at banks. This may reward them with inside information or first crack at new foreclosures hitting the market.
In the case of a short sale, for example, it can give the inside edge. If a buyer is pursuing a short sale -- buying a home for less than what the current owner owes on the mortgage -- she should talk directly to the property's asset manager. That way, if the short sale falls through and the bank repossess the house, the asset manager knows she is still interested. It could lead to a quick sale without other bidders.
3. Get pre-approved from the lender you want to buy from
If you're trying to buy a property from, say Bank of America, it can help to get a pre-approved mortgage from Bank of America. Doing so may cause lenders to look more favorably on your bid if its similar to others.
Plus, you're not locked in if other lenders offer you better terms. You can always change your mind and get your mortgage from another source.
4. Consider fix-ups
Most REOs, the industry term for bank owned properties, are sold as is. "The conventional wisdom is that banks will do nothing to the houses before the sale," said Kelman.
That can be problematic today because so many foreclosed homes are in less-than-mint conditions. Often, the former owners were struggling to pay their bills and may have neglected routine maintenance. Or, they may have trashed the properties before leaving
In 25% of cases, homebuyers persuade lenders to fix some of the problems before the sale closes. Most of the time, banks would rather sell the house to the next available bidder -- one who doesn't ask the bank to pay for repairs.
So be willing to consider a home that needs some work -- but budget accordingly.
5. Hire a real estate attorney
Once banks agree to sales, they often want to move fast and load contracts up with legal mumbo jumbo. As a result, buyers often do not have the time or expertise to figure all the angles.
The solution is to hire a real estate attorney -- even in states where home sales are usually completed without one. Considering you're making a six-figure investment, the legal fees are cheap insurance against the risks.
6. Wait to make an offer
Homebuyers may be well served to wait before making an offer. Let the house sit on the market for a few days, giving others a chance to set the bidding tone. Then jump in.
"Talk to the agent selling the property," said Kelman. "The agent may tip his hand. Call up and ask, 'Should I make an offer? What should I come in at?'"
The agent may tell you he has offers at, say $300,000 and you should bid bit bit higher, giving you an advantage over earlier bidders.
7. Tour properties with contractors
With so many REOs in seriously deficient shape, it's essential to go over every inch with someone who can spot problems and tell you how much it will cost to remedy them.
A foundation crack can be a minor problem or a deal breaker, and most ordinary homebuyers have no way of telling the difference. Like an attorney, a contractor can be very worthwhile insurance.
Back to Business With F.H.A. Help, Easy Loans in Expensive Areas
Back to Business
With F.H.A. Help, Easy Loans in Expensive Areas
LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy DAVID STREITFELD
Published: November 19, 2009
SAN FRANCISCO — In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.
Skip to next paragraph
Enlarge This Image
Joe Raedle/Getty Images
Policy changes in insurance, while introduced on a temporary basis, are becoming so popular that they could prove difficult to undo.
Back to Business
Risky Incentives
This series examines the battles taking place to reshape the financial industry.
Previous Articles in the Series »
Related
U.S. Mortgage Delinquencies Reach a Record High (November 20, 2009)
Enlarge This Image
Joe Raedle/Getty Images
From left to right, Jordan Kurland, Mike Rowland and Michael Bedar, in front of the building they bought in San Francisco for nearly a million dollars, with help from the Federal Housing Administration.
A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.
“It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.”
In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default.
In 2007, the government did not insure a single mortgage in this city, one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own.
Now the government is guaranteeing an average of six mortgages a week here. Real estate agents say the insurance is such a good deal that there will soon be many more.
Policy changes like the shift in insurance, while often introduced on a temporary basis, are becoming so popular that they could prove difficult to undo. With government finances already under great strain, the policy expansions are creating new risks for American taxpayers.
The Internal Revenue Service is giving tax rebates to first-time buyers, and soon to move-up buyers, in a program beset by accusations of fraud. And the government agency that issues mortgage insurance, the Federal Housing Administration, is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling. On Thursday, the Mortgage Bankers Association said more than one in six F.H.A. borrowers was behind on payments.
F.H.A. insurance was created for minority and low-income families who could not come up with the traditional down payment of 20 percent required by private lenders. Buyers receive loans from government-approved lenders and are required to document their income and assets. They must pay a substantial insurance premium of 1.75 percent of the loan. But in return, their down payment can be as low as 3.5 percent.
For decades, most F.H.A. loans were in low-cost states like Texas and Michigan. Under the agency’s loan limits, houses along the coasts were usually too expensive to qualify. In 2007, fewer than 4,400 F.H.A. loans were made in California, according to the research firm MDA DataQuick, and none were in San Francisco.
The Economic Stimulus Act of 2008 helped change that by temporarily doubling the maximum loan the F.H.A. insured, to $729,750. A two-unit property like the one bought by Mr. Rowland and his friends can be insured for up to $934,200.
“F.H.A. financing was a lost language in San Francisco, the real estate equivalent of Aramaic,” said Michael Ackerman, the agent who represented Mr. Rowland and his friends. “Once the limits were raised, smart buyers started calling.”
The F.H.A. has insured more than 107,000 loans so far this year in the state, according to DataQuick, about 270 of them in San Francisco.
Condominium buildings approved for F.H.A. financing — a relative handful — trumpet the news on their Web sites. The Soma Grand, a new 246-unit building downtown where one-bedrooms cost in excess of $500,000, received F.H.A. certification early in the summer. A half-dozen buyers since then used F.H.A. insurance.
At Guarantee Mortgage Corporation, which has 150 mortgage brokers in the Bay Area, Seattle and Portland, Ore., F.H.A. loans have grown to about 15 percent of its business, from less than 3 percent a few years ago.
“It sure has helped us put a lot of deals together,” said Guarantee’s chief sales officer, Bob Siefert. He predicts that a quarter of Guarantee’s deals will soon be guaranteed by the F.H.A.
Some F.H.A. borrowers here say they have the cash for a full down payment but would rather invest it in the stock market or use it for remodeling. Others, like Mr. Rowland and his friends, simply do not have the money required by private lenders — which would have been nearly $200,000, in their case.
1 2 Next Page »
Louise Story contributed reporting.
With F.H.A. Help, Easy Loans in Expensive Areas
LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy DAVID STREITFELD
Published: November 19, 2009
SAN FRANCISCO — In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.
Skip to next paragraph
Enlarge This Image
Joe Raedle/Getty Images
Policy changes in insurance, while introduced on a temporary basis, are becoming so popular that they could prove difficult to undo.
Back to Business
Risky Incentives
This series examines the battles taking place to reshape the financial industry.
Previous Articles in the Series »
Related
U.S. Mortgage Delinquencies Reach a Record High (November 20, 2009)
Enlarge This Image
Joe Raedle/Getty Images
From left to right, Jordan Kurland, Mike Rowland and Michael Bedar, in front of the building they bought in San Francisco for nearly a million dollars, with help from the Federal Housing Administration.
A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.
“It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.”
In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default.
In 2007, the government did not insure a single mortgage in this city, one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own.
Now the government is guaranteeing an average of six mortgages a week here. Real estate agents say the insurance is such a good deal that there will soon be many more.
Policy changes like the shift in insurance, while often introduced on a temporary basis, are becoming so popular that they could prove difficult to undo. With government finances already under great strain, the policy expansions are creating new risks for American taxpayers.
The Internal Revenue Service is giving tax rebates to first-time buyers, and soon to move-up buyers, in a program beset by accusations of fraud. And the government agency that issues mortgage insurance, the Federal Housing Administration, is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling. On Thursday, the Mortgage Bankers Association said more than one in six F.H.A. borrowers was behind on payments.
F.H.A. insurance was created for minority and low-income families who could not come up with the traditional down payment of 20 percent required by private lenders. Buyers receive loans from government-approved lenders and are required to document their income and assets. They must pay a substantial insurance premium of 1.75 percent of the loan. But in return, their down payment can be as low as 3.5 percent.
For decades, most F.H.A. loans were in low-cost states like Texas and Michigan. Under the agency’s loan limits, houses along the coasts were usually too expensive to qualify. In 2007, fewer than 4,400 F.H.A. loans were made in California, according to the research firm MDA DataQuick, and none were in San Francisco.
The Economic Stimulus Act of 2008 helped change that by temporarily doubling the maximum loan the F.H.A. insured, to $729,750. A two-unit property like the one bought by Mr. Rowland and his friends can be insured for up to $934,200.
“F.H.A. financing was a lost language in San Francisco, the real estate equivalent of Aramaic,” said Michael Ackerman, the agent who represented Mr. Rowland and his friends. “Once the limits were raised, smart buyers started calling.”
The F.H.A. has insured more than 107,000 loans so far this year in the state, according to DataQuick, about 270 of them in San Francisco.
Condominium buildings approved for F.H.A. financing — a relative handful — trumpet the news on their Web sites. The Soma Grand, a new 246-unit building downtown where one-bedrooms cost in excess of $500,000, received F.H.A. certification early in the summer. A half-dozen buyers since then used F.H.A. insurance.
At Guarantee Mortgage Corporation, which has 150 mortgage brokers in the Bay Area, Seattle and Portland, Ore., F.H.A. loans have grown to about 15 percent of its business, from less than 3 percent a few years ago.
“It sure has helped us put a lot of deals together,” said Guarantee’s chief sales officer, Bob Siefert. He predicts that a quarter of Guarantee’s deals will soon be guaranteed by the F.H.A.
Some F.H.A. borrowers here say they have the cash for a full down payment but would rather invest it in the stock market or use it for remodeling. Others, like Mr. Rowland and his friends, simply do not have the money required by private lenders — which would have been nearly $200,000, in their case.
1 2 Next Page »
Louise Story contributed reporting.
Sunday, November 15, 2009
Housing Agency’s Cash Reserves Down Sharply
November 13, 2009
Housing Agency’s Cash Reserves Down Sharply
By DAVID STREITFELD
The Federal Housing Administration, the government agency whose loan-insurance programs have become a crucial source of support for the housing market, said on Thursday that its cash reserves had dwindled significantly in the last year as more borrowers defaulted on their mortgages.
The agency released an audit that spelled out the rapid deterioration of its finances. It is tightening loan standards in hopes it will not become another drain on the United States Treasury, but is reluctant to clamp down so much that it snuffs out the tentative recovery in housing.
How successfully the agency walks this tightrope could well determine whether the recovery gathers force, or whether home prices slide again — perhaps creating a fresh economic downturn.
As recently as a few weeks ago, the F.H.A. had said that even under the bleakest economic forecast, its cash cushion would quickly recover. On Thursday, it abandoned that position.
“There is a real risk. Nobody has a crystal ball,” Shaun Donovan, secretary of housing and urban development, said in an interview. “We recognize there is a possibility that the reserves go below zero and stay there.”
Still, Mr. Donovan stressed that the agency, which had a role in one out of five home purchases in the last year, would not need a direct taxpayer bailout.
“There is no extraordinary action that Congress or anyone else needs to take,” he said during a news conference in Washington.
Instead, the agency would borrow from the Treasury, under authority previously granted by Congress. In the worst case, involving a protracted recession, the audit said the F.H.A. would run out of capital in 2011 and have to borrow $1.6 billion from the Treasury to pay insurance claims, a relatively small sum.
That is not a situation the agency considers likely. In line with many analysts, the agency expects the housing market to turn down again over the next nine months and then to recover. Under this projection, foreclosures would be manageable and the reserves would quickly grow.
The F.H.A.’s annual audit was scheduled for release last week, but was mysteriously delayed at the last minute. On Thursday, as it released the document, the agency explained that it wanted its auditors to include more negative forecasts as a way of understanding the worst-case risk.
The audit showed reserves to be 0.53 percent of the total portfolio, far below the 2 percent minimum mandated by Congress and far less than the audit last year had forecast. In 2007, just before housing prices began their worst slump in decades, the reserves were above 6 percent.
Ann Schnare, a consultant who has analyzed the F.H.A. balance sheet, put the situation this way: “They’re running on empty.”
As the fortunes of the F.H.A. have deteriorated over the last few months, the agency has become a focal point for dissatisfaction over federal efforts to prop up the housing market.
It is drawing comparisons to Fannie Mae and Freddie Mac, the giant agencies created by Congress to keep the mortgage market supplied with cash by buying up pools of home loans. With borrowers defaulting in the downturn, Fannie and Freddie have required enormous bailouts.
The F.H.A.’s role differs from that of Fannie and Freddie. Through its insurance, it helps marginal buyers get loans if they do not have the 20 percent down payment a traditional bank loan requires. The agency requires a 3.5 percent down payment. Critics say it went overboard and insured too many loans to unqualified borrowers in 2007 and 2008, a position with which the agency itself now agrees.
Nearly one in five loans it insured in 2007 falls into the category of “seriously delinquent,” it said Thursday. These loanholders are at least three months behind in their payments. For 2008 loans, 12 percent of them were seriously delinquent.
The F.H.A. says it is insuring loans to more financially secure buyers with higher credit scores. The average credit score of new borrowers, it said, is 693, compared with 633 two years ago.
In a sense, the agency is bulking up and giving as many loans as it can to qualified buyers as a way to diminish the relative size of the pool of problem loans. It guaranteed more than $360 billion in mortgages in the last year, four times the amount of 2007.
Critics say this is only increasing the size of the ultimate peril.
“They keep saying they’re going to outrun their problems, but some way, somehow, the taxpayer is going to end up on the hook,” said Edward Pinto, a former executive with Fannie Mae.
During the news conference, Secretary Donovan and the agency’s commissioner, David H. Stevens, said that the cash reserve, the figure that has fallen to 0.53 percent of loans outstanding, was merely a supplement to a much larger fund that the F.H.A. was holding against expected losses. Between the two accounts, the agency has $31 billion to cover losses over the next 30 years.
The F.H.A.’s problems stem from its rapid transition from a wallflower to the most popular student in class.
During the housing boom, buyers flocked to private subprime lenders, who offered deals that required no money down and no documentation. The F.H.A., which required its token down payment and documentation of the borrower’s earning power, lost ground.
But as the market tumbled and the subprime outfits failed, F.H.A. loans became the next best thing. Brian Montgomery, who ran the F.H.A. for the Bush administration, said in a recent interview that the agency felt it had no choice but to open the doors to a broader group of applicants.
Citing pressure from Congress and the White House, Mr. Montgomery said: “We had to let these loans through.”
Mr. Montgomery, now a consultant, says that anyone dismayed by the possibility of yet another bailout should feel a different emotion toward the Department of Housing and Urban Development and, for that matter, himself: gratitude.
“They should be going over to the H.U.D. building and frankly thanking the career staff for saving them from a depression,” Mr. Montgomery said.
Louise Story contributed reporting.
Housing Agency’s Cash Reserves Down Sharply
By DAVID STREITFELD
The Federal Housing Administration, the government agency whose loan-insurance programs have become a crucial source of support for the housing market, said on Thursday that its cash reserves had dwindled significantly in the last year as more borrowers defaulted on their mortgages.
The agency released an audit that spelled out the rapid deterioration of its finances. It is tightening loan standards in hopes it will not become another drain on the United States Treasury, but is reluctant to clamp down so much that it snuffs out the tentative recovery in housing.
How successfully the agency walks this tightrope could well determine whether the recovery gathers force, or whether home prices slide again — perhaps creating a fresh economic downturn.
As recently as a few weeks ago, the F.H.A. had said that even under the bleakest economic forecast, its cash cushion would quickly recover. On Thursday, it abandoned that position.
“There is a real risk. Nobody has a crystal ball,” Shaun Donovan, secretary of housing and urban development, said in an interview. “We recognize there is a possibility that the reserves go below zero and stay there.”
Still, Mr. Donovan stressed that the agency, which had a role in one out of five home purchases in the last year, would not need a direct taxpayer bailout.
“There is no extraordinary action that Congress or anyone else needs to take,” he said during a news conference in Washington.
Instead, the agency would borrow from the Treasury, under authority previously granted by Congress. In the worst case, involving a protracted recession, the audit said the F.H.A. would run out of capital in 2011 and have to borrow $1.6 billion from the Treasury to pay insurance claims, a relatively small sum.
That is not a situation the agency considers likely. In line with many analysts, the agency expects the housing market to turn down again over the next nine months and then to recover. Under this projection, foreclosures would be manageable and the reserves would quickly grow.
The F.H.A.’s annual audit was scheduled for release last week, but was mysteriously delayed at the last minute. On Thursday, as it released the document, the agency explained that it wanted its auditors to include more negative forecasts as a way of understanding the worst-case risk.
The audit showed reserves to be 0.53 percent of the total portfolio, far below the 2 percent minimum mandated by Congress and far less than the audit last year had forecast. In 2007, just before housing prices began their worst slump in decades, the reserves were above 6 percent.
Ann Schnare, a consultant who has analyzed the F.H.A. balance sheet, put the situation this way: “They’re running on empty.”
As the fortunes of the F.H.A. have deteriorated over the last few months, the agency has become a focal point for dissatisfaction over federal efforts to prop up the housing market.
It is drawing comparisons to Fannie Mae and Freddie Mac, the giant agencies created by Congress to keep the mortgage market supplied with cash by buying up pools of home loans. With borrowers defaulting in the downturn, Fannie and Freddie have required enormous bailouts.
The F.H.A.’s role differs from that of Fannie and Freddie. Through its insurance, it helps marginal buyers get loans if they do not have the 20 percent down payment a traditional bank loan requires. The agency requires a 3.5 percent down payment. Critics say it went overboard and insured too many loans to unqualified borrowers in 2007 and 2008, a position with which the agency itself now agrees.
Nearly one in five loans it insured in 2007 falls into the category of “seriously delinquent,” it said Thursday. These loanholders are at least three months behind in their payments. For 2008 loans, 12 percent of them were seriously delinquent.
The F.H.A. says it is insuring loans to more financially secure buyers with higher credit scores. The average credit score of new borrowers, it said, is 693, compared with 633 two years ago.
In a sense, the agency is bulking up and giving as many loans as it can to qualified buyers as a way to diminish the relative size of the pool of problem loans. It guaranteed more than $360 billion in mortgages in the last year, four times the amount of 2007.
Critics say this is only increasing the size of the ultimate peril.
“They keep saying they’re going to outrun their problems, but some way, somehow, the taxpayer is going to end up on the hook,” said Edward Pinto, a former executive with Fannie Mae.
During the news conference, Secretary Donovan and the agency’s commissioner, David H. Stevens, said that the cash reserve, the figure that has fallen to 0.53 percent of loans outstanding, was merely a supplement to a much larger fund that the F.H.A. was holding against expected losses. Between the two accounts, the agency has $31 billion to cover losses over the next 30 years.
The F.H.A.’s problems stem from its rapid transition from a wallflower to the most popular student in class.
During the housing boom, buyers flocked to private subprime lenders, who offered deals that required no money down and no documentation. The F.H.A., which required its token down payment and documentation of the borrower’s earning power, lost ground.
But as the market tumbled and the subprime outfits failed, F.H.A. loans became the next best thing. Brian Montgomery, who ran the F.H.A. for the Bush administration, said in a recent interview that the agency felt it had no choice but to open the doors to a broader group of applicants.
Citing pressure from Congress and the White House, Mr. Montgomery said: “We had to let these loans through.”
Mr. Montgomery, now a consultant, says that anyone dismayed by the possibility of yet another bailout should feel a different emotion toward the Department of Housing and Urban Development and, for that matter, himself: gratitude.
“They should be going over to the H.U.D. building and frankly thanking the career staff for saving them from a depression,” Mr. Montgomery said.
Louise Story contributed reporting.
Monday, November 9, 2009
Tax Credit Update
NEW YORK (CNNMoney.com) -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.
The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.
The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.
"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.
Who qualifies?
Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:
• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.
• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.
• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.
• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.
How it helps the economy
Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.
"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."
That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.
The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.
Would it have happened anyway?
But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.
Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."
The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.
The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.
That did not happen, according to Lawrence Yun, NAR's chief economist.
"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."
So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.
"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."
The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.
The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.
"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.
Who qualifies?
Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:
• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.
• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.
• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.
• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.
How it helps the economy
Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.
"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."
That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.
The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.
Would it have happened anyway?
But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.
Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."
The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.
The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.
That did not happen, according to Lawrence Yun, NAR's chief economist.
"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."
So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.
"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."
Sunday, November 8, 2009
Tip of the Week: GA Hot in Foreclosures
From: "Luther Ragsdale II Broker/C.E.O. Platinum Real Estate"
Platinum Real Estate
Tip of the Week:
Atlanta is Hot in Foreclosures
Now is the time to buy and take advantage of the great prices in our area on foreclosure homes. Georgia ranks #5 on the list of states that have the most savings when purchasing foreclosure properties.
Experts say that Georgia's foreclosures are up 7% from last month and 26% from last year at this time. This means it is a great opportunity to purchase properties at abnormally low prices. Buyers on average can save up to 46% when purchasing foreclosure properties, getting more house for less money. Research shows that the states with the largest percentage of savings based on September 09 average sales price verses the average foreclosure sales price, Georgia is 5th on the list at a 46% savings. Now is the time to purchase your dream home or investment property before these low prices start to disappear.
Now is also a great time to have your Platinum agent assist you in finding the property to fit your needs. With 6 locations in Cumberland, Gwinett, Buckhead, Perimeter, Decatur, and Old National Highway there is an agent in your area - north, south, east or west!
IT IS TIME TO TAKE REAL ESTATE TO THE NEXT LEVEL.
" THE ULTIMATE LEVEL"
Call today and one of our skilled agents will be glad to service you. Or call and join us at our next seminar or workshop in your area to learn more.
Platinum Real Estate
3330 Cumberland Blvd.
Suite 500
Atlanta, GA 30339
www.PlatinumRealEstate.com
Office: 404-559-0332
Platinum Real Estate
Tip of the Week:
Atlanta is Hot in Foreclosures
Now is the time to buy and take advantage of the great prices in our area on foreclosure homes. Georgia ranks #5 on the list of states that have the most savings when purchasing foreclosure properties.
Experts say that Georgia's foreclosures are up 7% from last month and 26% from last year at this time. This means it is a great opportunity to purchase properties at abnormally low prices. Buyers on average can save up to 46% when purchasing foreclosure properties, getting more house for less money. Research shows that the states with the largest percentage of savings based on September 09 average sales price verses the average foreclosure sales price, Georgia is 5th on the list at a 46% savings. Now is the time to purchase your dream home or investment property before these low prices start to disappear.
Now is also a great time to have your Platinum agent assist you in finding the property to fit your needs. With 6 locations in Cumberland, Gwinett, Buckhead, Perimeter, Decatur, and Old National Highway there is an agent in your area - north, south, east or west!
IT IS TIME TO TAKE REAL ESTATE TO THE NEXT LEVEL.
" THE ULTIMATE LEVEL"
Call today and one of our skilled agents will be glad to service you. Or call and join us at our next seminar or workshop in your area to learn more.
Platinum Real Estate
3330 Cumberland Blvd.
Suite 500
Atlanta, GA 30339
www.PlatinumRealEstate.com
Office: 404-559-0332
Sunday, November 1, 2009
Home prices continue rebound
Case-Shiller index shows fourth straight month-over-month increase. Year-over-year decline moderates more than expected.
By Ben Rooney, CNNMoney.com staff reporter
October 27, 2009: 12:01 PM
NEW YORK (CNNMoney.com) -- Home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop, according to a report issued Tuesday.
Prices in the S&P Case-Shiller Home Price index of 20 cities rose a non-seasonally adjusted 1.2% in August. It was the fourth consecutive monthly increase and followed a 1.6% gain in July.
Prices were down 11.3% versus August 2008, but that drop was less severe than expected. Analysts surveyed by Briefing.com had forecast an 11.9% year-over-year drop.
"Broadly speaking, the rate of annual decline in home price values continues to improve" said David Blitzer, chairman of Standard & Poor's index committee.
While many U.S. markets remain down versus this time last year, the relative rate of decline "has shown some real improvement," Blitzer added.
Home prices improved on an annual basis in 19 of the 20 major metropolitan markets in the survey.
State by state. In California, home prices have recovered notably from depressed levels in recent months, according to the report.
Home prices rose 2.8% in San Francisco during August, while San Diego prices were up 2.5% and Los Angeles gained 1.8% in the month.
Minneapolis had the biggest increase, with home prices rising 3.2% from July to August.
But prices continued to slide in areas that have been hit hard by foreclosures. Prices dropped 0.5% in Cleveland and 0.3% in Las Vegas during August.
A shaky recovery. Overall, the housing market has been stabilizing as low home prices and attractive mortgage rates, as well as government tax credits, have revived anemic home sales.
However, the market remains hampered by unemployment, which rose to a 26-year high last month. And real estate analysts warn that the expiration of a popular new homebuyer tax credit next month could stifle the rebound in home sales.
The improvement in home prices could also be hindered by a "wall of supply" coming to market this spring from private sellers and foreclosures, warned Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Given the long-term challenges facing the housing market, the outlook for home prices remains grim.
Home values are predicted to drop in 342 out of 381 markets during the next year, according to a recent study by financial information and analysis firm Fiserv.
Fiserv expects the national median home price to drop 11.3% by June 30, 2010.
By Ben Rooney, CNNMoney.com staff reporter
October 27, 2009: 12:01 PM
NEW YORK (CNNMoney.com) -- Home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop, according to a report issued Tuesday.
Prices in the S&P Case-Shiller Home Price index of 20 cities rose a non-seasonally adjusted 1.2% in August. It was the fourth consecutive monthly increase and followed a 1.6% gain in July.
Prices were down 11.3% versus August 2008, but that drop was less severe than expected. Analysts surveyed by Briefing.com had forecast an 11.9% year-over-year drop.
"Broadly speaking, the rate of annual decline in home price values continues to improve" said David Blitzer, chairman of Standard & Poor's index committee.
While many U.S. markets remain down versus this time last year, the relative rate of decline "has shown some real improvement," Blitzer added.
Home prices improved on an annual basis in 19 of the 20 major metropolitan markets in the survey.
State by state. In California, home prices have recovered notably from depressed levels in recent months, according to the report.
Home prices rose 2.8% in San Francisco during August, while San Diego prices were up 2.5% and Los Angeles gained 1.8% in the month.
Minneapolis had the biggest increase, with home prices rising 3.2% from July to August.
But prices continued to slide in areas that have been hit hard by foreclosures. Prices dropped 0.5% in Cleveland and 0.3% in Las Vegas during August.
A shaky recovery. Overall, the housing market has been stabilizing as low home prices and attractive mortgage rates, as well as government tax credits, have revived anemic home sales.
However, the market remains hampered by unemployment, which rose to a 26-year high last month. And real estate analysts warn that the expiration of a popular new homebuyer tax credit next month could stifle the rebound in home sales.
The improvement in home prices could also be hindered by a "wall of supply" coming to market this spring from private sellers and foreclosures, warned Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Given the long-term challenges facing the housing market, the outlook for home prices remains grim.
Home values are predicted to drop in 342 out of 381 markets during the next year, according to a recent study by financial information and analysis firm Fiserv.
Fiserv expects the national median home price to drop 11.3% by June 30, 2010.
What do investors look for?
John Adams
Published: Yesterday
Last week we saw that some 35 percent of home sales during the past year were bank-owned foreclosures or government-owned resales. That is a huge increase from just a few years ago, when sales of these homes were not a significant part of the Atlanta market. Two factors cause these homes to sell at dramatic discounts:
● Lenders and government agencies are charged with disposal of these properties regardless of price. They do not have the luxury of waiting until the market improves; and
● These sellers have a policy of selling the properties in “as-is” condition, meaning no repairs and no disclosure statements. The buyer takes all the risk. The only potential buyers are investors looking for a bargain.
So, what are the specific characteristics investors look for in today’s market? There are many, but the main three are:
This is the most important part of the equation. The acquisition price needs to be low enough to cover all needed repairs, carrying costs, marketing expenses and still represent a bargain to the end consumer.
The price paid for the acquisition is critical to all later profitability. In the case of Atlanta’s post-foreclosure marketplace, investors have found a “market bottom.” Almost anything will sell very quickly if it is offered in the $30,000 to $40,000 range. Furthermore, the market is getting hotter.
While the uninitiated might think that the level of repairs necessary would be the most important consideration of an investor, such is not the case. Instead, price conquers all. Sometimes the best deals require cash for major systems as well as structural repairs.
That said, every investor hopes to minimize capital outlays for the rehab. Smart investors are experts at estimating overall repair costs.
Investors always look for pride of ownership in the neighborhood. Graffiti, junk cars, “boarded-up” or vacant homes are all indications of problems in the neighborhood. Wise investors try to avoid these signs.
The good news is that Atlanta’s investor community is working hard to absorb this glut of bank-owned homes. The question no one can answer is when the supply of these homes will begin to decline.
John Adams is a broker and investor. He answers real estate questions on radio station WGKA (920 AM) every Saturday at noon. For more real estate information, visit www.money99.com.
AP Mobile. © 2009 The Associated Press. All Rights Reserved.
Published: Yesterday
Last week we saw that some 35 percent of home sales during the past year were bank-owned foreclosures or government-owned resales. That is a huge increase from just a few years ago, when sales of these homes were not a significant part of the Atlanta market. Two factors cause these homes to sell at dramatic discounts:
● Lenders and government agencies are charged with disposal of these properties regardless of price. They do not have the luxury of waiting until the market improves; and
● These sellers have a policy of selling the properties in “as-is” condition, meaning no repairs and no disclosure statements. The buyer takes all the risk. The only potential buyers are investors looking for a bargain.
So, what are the specific characteristics investors look for in today’s market? There are many, but the main three are:
This is the most important part of the equation. The acquisition price needs to be low enough to cover all needed repairs, carrying costs, marketing expenses and still represent a bargain to the end consumer.
The price paid for the acquisition is critical to all later profitability. In the case of Atlanta’s post-foreclosure marketplace, investors have found a “market bottom.” Almost anything will sell very quickly if it is offered in the $30,000 to $40,000 range. Furthermore, the market is getting hotter.
While the uninitiated might think that the level of repairs necessary would be the most important consideration of an investor, such is not the case. Instead, price conquers all. Sometimes the best deals require cash for major systems as well as structural repairs.
That said, every investor hopes to minimize capital outlays for the rehab. Smart investors are experts at estimating overall repair costs.
Investors always look for pride of ownership in the neighborhood. Graffiti, junk cars, “boarded-up” or vacant homes are all indications of problems in the neighborhood. Wise investors try to avoid these signs.
The good news is that Atlanta’s investor community is working hard to absorb this glut of bank-owned homes. The question no one can answer is when the supply of these homes will begin to decline.
John Adams is a broker and investor. He answers real estate questions on radio station WGKA (920 AM) every Saturday at noon. For more real estate information, visit www.money99.com.
AP Mobile. © 2009 The Associated Press. All Rights Reserved.
Sunday, October 25, 2009
NEW PLATINUM OFFICE LOCATIONS
3330 Cumberland Blvd. Suite 500
Atlanta, Georgia 30339
3355 Lenox Road
Suite 750
Atlanta, Georgia 30346
303 Perimeter Center North
Suite 300
Atlanta, Georgia 30346
3235 Satellite Blvd
Building 400
Suite 300
Deluth, Georgia 30096
160 Clairemont Ave
Suite 200
Decatur, Georgia 30036
Atlanta, Georgia 30339
3355 Lenox Road
Suite 750
Atlanta, Georgia 30346
303 Perimeter Center North
Suite 300
Atlanta, Georgia 30346
3235 Satellite Blvd
Building 400
Suite 300
Deluth, Georgia 30096
160 Clairemont Ave
Suite 200
Decatur, Georgia 30036
What housing bust?
What housing bust?
During the past three years, home prices grew in the beer-guzzling heartland and fell in the wine-sipping coastal states.
By Les Christie, CNNMoney.com staff writer
October 21, 2009: 10:49 PM
NEW YORK (CNNMoney.com) -- If you're a beef-eating, beer-guzzling, pick-up driving resident of heartland America, there's a good chance you escaped the housing bust. But pesto-chomping, chardonnay-sipping, hybrid-driving city-slickers were probably out of luck.
Over the past three years, 23 states recorded home price gains in the majority of their metro areas, according to analytics firm Fiserv. And where were most of those gainers? In much of the so-called heartland: the South, the Plains and most of the non-coastal West.
Meanwhile, the 16 states that posted declines were led by much of New England and the Northeast, plus California, Florida, Nevada and Arizona.
Most telling, however, was that the 12 remaining states -- those that posted mixed results in their metro areas -- were found in every region of America.
And even in the mixed results states, such as New York, the bust hit "blue" metro areas, like New York City and Long Island (both down 21.7%), and spared "red" upstate cities. Buffalo prices grew 8.3%, Syracuse climbed 8.4%, Utica gained 10.4%, and Binghamton was up 17.7%.
The states where metro markets rose generally share two characteristics, according to Mark Fleming, chief economist for First American CoreLogic: low prices and open space.
"In markets with a lot of developable land, volatility is much reduced," he said.
That lack of volatility meant house prices did not skyrocket during the boom, which left them less likely to crash after the bubble burst.
Foreclosure factor
In bubble markets, such as California and Florida, many homebuyers struggled to afford homes when prices were experiencing double-digit growth. As a result, they tapped exotic mortgage products -- sub-prime hybrid ARMs, interest-only loans, option ARMs -- to get in the door.
These mortgages often proved disastrous once home prices stopped growing. Defaults multiplied, bank repossessions soared and home prices, as a consequence, nose-dived.
In contrast, home prices remained more affordable in states where land was available. That's because the constant influx of supply kept demand -- and thus prices -- more in check. Homebuyers did not need to resort to toxic mortgages and there was little real estate speculation because price gains were too modest to make "flipping" profitable.
Texas is the poster child for these "steady Eddie" states. House prices during the past three years rose in all 26 metro areas with gains ranging from 2.8% for Dallas, the second largest metro area, to 9.7% in Houston, the largest, to a whopping 32.5% in Odessa.
Texas illustrates that housing markets show considerable "elasticity of supply," according to Fleming. When demand -- and prices -- for housing go up, developers can, quite quickly, build new homes to meet that need -- if there's land available. That quick response tends to prevent prices from running away as supply increases to meet demand. Texas real estate in a nutshell.
Of course, that also means sprawl. And a lot of it.
Some states, Illinois being a prime example, contain both types of markets. There, home prices in most markets rose while Chicago, the largest market -- and the the one most lacking developable land -- absorbed a 25.2% decline.
While places such as Manhattan and San Francisco have natural restrictions on growth -- both are essentially surrounded by water -- some cities, especially in the Northeast and the West Coast, have artificially restricted growth.
Those policies are meant to promote density in core areas, preserve nearby green space and eliminate sprawl. Urban planners of smart growth cities intend the policies to foster an exciting, more urban lifestyle, while facilitating easy access to outdoor recreation and nearby food sources.
Portland is the shining example of smart growth. In 1973, Oregon passed an urban growth boundary law, which required that each of the state's municipalities set a line in the sand on which open land could be developed.
The policy is credited with fostering Portland's excellent reputation as an attractive, livable city -- but it may have been too successful. Population growth has been so robust that some residents have complained about too much congestion in its core. And some building has been pushed out into nearby areas, such as in adjacent Washington, that have less strict policies.
Meanwhile, the home price in Portland recorded a more than 86% gain from 2000 through the middle of 2007. The median, at $255,000 during the second quarter of 2009, is well above the national average of $174,000.
In contrast, a Texas city like Dallas, for example, which is practically an anti-Portland, recorded only 26% appreciation over the same period.
The most notable exceptions to the Budweiser/Beaujolais divide are Midwestern cities where economic turmoil has played havoc with housing markets. Ohio and Michigan, the two states hit hardest by auto-industry job losses, both had many more cities record losses than gains.
In Ohio, only the smallest and least industrialized metro areas, Weirton-Steubenville and Lima gained over the 36 months. Meanwhile, the heavy industry cities of Toledo, Youngstown and Cleveland produced big losses.
All but one of Michigan's 15 metro areas lost home value, with Detroit falling 51.7%, the worst case.
--------
During the past three years, home prices grew in the beer-guzzling heartland and fell in the wine-sipping coastal states.
By Les Christie, CNNMoney.com staff writer
October 21, 2009: 10:49 PM
NEW YORK (CNNMoney.com) -- If you're a beef-eating, beer-guzzling, pick-up driving resident of heartland America, there's a good chance you escaped the housing bust. But pesto-chomping, chardonnay-sipping, hybrid-driving city-slickers were probably out of luck.
Over the past three years, 23 states recorded home price gains in the majority of their metro areas, according to analytics firm Fiserv. And where were most of those gainers? In much of the so-called heartland: the South, the Plains and most of the non-coastal West.
Meanwhile, the 16 states that posted declines were led by much of New England and the Northeast, plus California, Florida, Nevada and Arizona.
Most telling, however, was that the 12 remaining states -- those that posted mixed results in their metro areas -- were found in every region of America.
And even in the mixed results states, such as New York, the bust hit "blue" metro areas, like New York City and Long Island (both down 21.7%), and spared "red" upstate cities. Buffalo prices grew 8.3%, Syracuse climbed 8.4%, Utica gained 10.4%, and Binghamton was up 17.7%.
The states where metro markets rose generally share two characteristics, according to Mark Fleming, chief economist for First American CoreLogic: low prices and open space.
"In markets with a lot of developable land, volatility is much reduced," he said.
That lack of volatility meant house prices did not skyrocket during the boom, which left them less likely to crash after the bubble burst.
Foreclosure factor
In bubble markets, such as California and Florida, many homebuyers struggled to afford homes when prices were experiencing double-digit growth. As a result, they tapped exotic mortgage products -- sub-prime hybrid ARMs, interest-only loans, option ARMs -- to get in the door.
These mortgages often proved disastrous once home prices stopped growing. Defaults multiplied, bank repossessions soared and home prices, as a consequence, nose-dived.
In contrast, home prices remained more affordable in states where land was available. That's because the constant influx of supply kept demand -- and thus prices -- more in check. Homebuyers did not need to resort to toxic mortgages and there was little real estate speculation because price gains were too modest to make "flipping" profitable.
Texas is the poster child for these "steady Eddie" states. House prices during the past three years rose in all 26 metro areas with gains ranging from 2.8% for Dallas, the second largest metro area, to 9.7% in Houston, the largest, to a whopping 32.5% in Odessa.
Texas illustrates that housing markets show considerable "elasticity of supply," according to Fleming. When demand -- and prices -- for housing go up, developers can, quite quickly, build new homes to meet that need -- if there's land available. That quick response tends to prevent prices from running away as supply increases to meet demand. Texas real estate in a nutshell.
Of course, that also means sprawl. And a lot of it.
Some states, Illinois being a prime example, contain both types of markets. There, home prices in most markets rose while Chicago, the largest market -- and the the one most lacking developable land -- absorbed a 25.2% decline.
While places such as Manhattan and San Francisco have natural restrictions on growth -- both are essentially surrounded by water -- some cities, especially in the Northeast and the West Coast, have artificially restricted growth.
Those policies are meant to promote density in core areas, preserve nearby green space and eliminate sprawl. Urban planners of smart growth cities intend the policies to foster an exciting, more urban lifestyle, while facilitating easy access to outdoor recreation and nearby food sources.
Portland is the shining example of smart growth. In 1973, Oregon passed an urban growth boundary law, which required that each of the state's municipalities set a line in the sand on which open land could be developed.
The policy is credited with fostering Portland's excellent reputation as an attractive, livable city -- but it may have been too successful. Population growth has been so robust that some residents have complained about too much congestion in its core. And some building has been pushed out into nearby areas, such as in adjacent Washington, that have less strict policies.
Meanwhile, the home price in Portland recorded a more than 86% gain from 2000 through the middle of 2007. The median, at $255,000 during the second quarter of 2009, is well above the national average of $174,000.
In contrast, a Texas city like Dallas, for example, which is practically an anti-Portland, recorded only 26% appreciation over the same period.
The most notable exceptions to the Budweiser/Beaujolais divide are Midwestern cities where economic turmoil has played havoc with housing markets. Ohio and Michigan, the two states hit hardest by auto-industry job losses, both had many more cities record losses than gains.
In Ohio, only the smallest and least industrialized metro areas, Weirton-Steubenville and Lima gained over the 36 months. Meanwhile, the heavy industry cities of Toledo, Youngstown and Cleveland produced big losses.
All but one of Michigan's 15 metro areas lost home value, with Detroit falling 51.7%, the worst case.
--------
Sunday, September 20, 2009
House approves Lee bill to modernize the FHA
WASHINGTON—The House has unanimously approved a bill sponsored by Rep. Chris Lee, R-Clarence, and Rep. John Adler, D-N. J., aimed at modernizing the Federal Housing Administration.
The bill heightens oversight of lenders that offer FHA-insured loans, boosts the agency’s staff and technology, and provides the federal housing secretary the authority to work to minimize foreclosures on FHA loans.
“This bipartisan legislation implements a number of smart, commonsense reforms that will help responsible borrowers gain access to safe, affordable mortgages,” Lee said. “We cannot keep the dream of homeownership within reach of working families unless we have an FHA that works better.”
Lee and Adler are colleagues on the House Financial Services Committee, which has jurisdiction over the FHA. They introduced the bill in July.
The bill heightens oversight of lenders that offer FHA-insured loans, boosts the agency’s staff and technology, and provides the federal housing secretary the authority to work to minimize foreclosures on FHA loans.
“This bipartisan legislation implements a number of smart, commonsense reforms that will help responsible borrowers gain access to safe, affordable mortgages,” Lee said. “We cannot keep the dream of homeownership within reach of working families unless we have an FHA that works better.”
Lee and Adler are colleagues on the House Financial Services Committee, which has jurisdiction over the FHA. They introduced the bill in July.
New home building increased in August
NEW YORK (CNNMoney.com) -- New home building increased in August, a government report said Thursday, further signaling that home builders are regaining their confidence in the housing market recovery.
The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That was considerably higher than industry experts were predicting: The consensus analyst forecast compiled by Briefing.com was for 583,000 new starts.
Building permits rose 2.7% to 579,000 from a revised 564,000 in July.
On Wednesday, the National Association of Home Builders reported their index of homebuilder confidence had risen a point to 19, its highest level since May 2008.
Helping to boost demand for new homes has been the first-time homebuyer tax credit, which has enabled many builders to reduce their inventories of unsold homes.
"Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they've just sold," said Brad Hunter, chief economist for Metrostudy, a real estate analytics firm.
Both starts and permits are still well off from their levels of a year ago. The number of starts is down 29.6% from 849,000 last August, and permits dropped 32.4% from 857,000 last year.
The housing starts report was the latest in a series of releases that indicate that the market may have bottomed. These include improvement in new home sales, existing home sales and housing prices.
There are some clouds on the horizon. Foreclosures continue to trouble many markets; another 76,000 homes were repossessed by banks in August. That was actually an improvement over recent months, but the expectation is that the rate of foreclosures will begin rising again.
That's because a great number of non-conventional mortgage loans, including interest-only mortgages and option ARMS, will reset over the next year or so, yielding substantial increases in the monthly mortgage payments for homeowners. Many people will not be able to afford the increases.
With interest-only loans, homeowners pay just the interest for a fixed number of months, usually 60, before they have to start paying off the mortgage at fully amortizing rates. There was an explosion of these mortgages issued in 2005, so many will reset in 2010.
Option ARMs are loans in which borrowers are permitted to make minimum payments every month, payments that are less than their monthly interest charges. Many borrowers use that option for as long as they can, but once the mortgage balance reaches between 110% and 125% of the original loan balance, the loans reset into a fully amortizing mortgage -- and payments rise steeply since the balances themselves have also gone up.
Real estate analysts predict a spike in these resetting loans, which might force another wave of homeowners into foreclosure.
The fear is that all these foreclosed homes will flood the market and drive down prices even more for existing homes, making it harder for new-home builders to compete.
--------
Sent from a mobile device
The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That was considerably higher than industry experts were predicting: The consensus analyst forecast compiled by Briefing.com was for 583,000 new starts.
Building permits rose 2.7% to 579,000 from a revised 564,000 in July.
On Wednesday, the National Association of Home Builders reported their index of homebuilder confidence had risen a point to 19, its highest level since May 2008.
Helping to boost demand for new homes has been the first-time homebuyer tax credit, which has enabled many builders to reduce their inventories of unsold homes.
"Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they've just sold," said Brad Hunter, chief economist for Metrostudy, a real estate analytics firm.
Both starts and permits are still well off from their levels of a year ago. The number of starts is down 29.6% from 849,000 last August, and permits dropped 32.4% from 857,000 last year.
The housing starts report was the latest in a series of releases that indicate that the market may have bottomed. These include improvement in new home sales, existing home sales and housing prices.
There are some clouds on the horizon. Foreclosures continue to trouble many markets; another 76,000 homes were repossessed by banks in August. That was actually an improvement over recent months, but the expectation is that the rate of foreclosures will begin rising again.
That's because a great number of non-conventional mortgage loans, including interest-only mortgages and option ARMS, will reset over the next year or so, yielding substantial increases in the monthly mortgage payments for homeowners. Many people will not be able to afford the increases.
With interest-only loans, homeowners pay just the interest for a fixed number of months, usually 60, before they have to start paying off the mortgage at fully amortizing rates. There was an explosion of these mortgages issued in 2005, so many will reset in 2010.
Option ARMs are loans in which borrowers are permitted to make minimum payments every month, payments that are less than their monthly interest charges. Many borrowers use that option for as long as they can, but once the mortgage balance reaches between 110% and 125% of the original loan balance, the loans reset into a fully amortizing mortgage -- and payments rise steeply since the balances themselves have also gone up.
Real estate analysts predict a spike in these resetting loans, which might force another wave of homeowners into foreclosure.
The fear is that all these foreclosed homes will flood the market and drive down prices even more for existing homes, making it harder for new-home builders to compete.
--------
Sent from a mobile device
Housing recovery to depend on location
By Michelle E. Shaw
Published: Sep 18, 2009
Metro Atlanta home prices may have hit bottom this summer after two years of decline, but how fast they’ll rebound - or if they ever will - is a trickier calculation.
Some local experts are optimistic.
“I think we can make up 70 percent of the difference in the next year and a half,” said Steve Palm, president of SmartNumbers, a real estate research firm in Marietta.
But some homeowners will do better than that, and some won’t. What happens with your house will depend on where you live, when you bought and whether there was a lot of new homebuilding near you when the market collapsed.
In the 30075 Zip code in Roswell, for instance, median resale prices were $315,000 in this year’s second quarter, compared to $373,000 in the same period of 2007 and $318,000 in 2005, according to data from SmartNumbers.
That contrasts sharply with the nosedive in the 30058 Zip code in Lithonia, where median prices were $51,448 in the second quarter, less than half the $129,900 median for the same period of 2007 or $131,600 for 2005.
Key factors in such wild swings of fortune include the amount of inventory in an area and the number of foreclosures and other distress sales. The latter skew median prices downward -- severely if the market for conventional sales is so slow it does not offset fire-sale foreclosures.
Areas that were on the suburban fringes of the housing boom in 2006 and 2007 are going to struggle longer with lowered home values and a slow resale market, one expert said.
“You don’t see as many problems in north Fulton because it was already built out and it was relatively expensive for builders to go in and buy large tracts of land and put a lot of homes there,” said Mark Vitner, managing director and senior economist for Wells Fargo in Charlotte.
“So essentially the areas that had the most problems are the areas where it was the easiest for builders to go and quickly put up a lot of homes.”
Clayton and Rockdale counties and south Fulton County, he said, are examples of such areas.
“These places are having very significant problems,” he said, “and that’s where most of the oversupply is.”
Two Riverdale Zip codes, 30296 and 30274, saw median prices plummet by more than two-thirds, according to the SmartNumbers data. The second quarter median price this year was $33,999, down from $106,500 in 2007 and $131,600 in 2005.
A wave of foreclosures in Clayton County - more than 7,400 homes have been listed this year alone, according to Equity Depot - has weighed down the median price. Real estate experts say prices will have a better chance at recovery once all of the distressed properties have been sold.
More than 130,000 homes were sold in 2006 at the height of the building boom, according to Metrostudy, a national real estate tracking firm with a office in Atlanta.
But by the end of 2007, shortly after the average home price reached its apex, closings had fallen to around 105,000. They fell again to about 80,000 in 2008. The number should be about steady or slightly up for this year, said Eugene James, director of Metrostudy’s Atlanta office.
On average, a home bought in 2006 or 2007 has lost about 20 percent of its value, according to an analysis by Prudential Georgia Realty.
The most recent Case Shiller home price index, a widely watched national measure, showed the Atlanta region with a 1 percent seasonally adjusted gain from May to June. It was the first monthly uptick since 2007 and gave real estate pros hope that battered home prices will begin rising.
Values in some stable and established areas have held up better - also explaining why places like Roswell, Peachtree City and Decatur have not been hit as hard.
Homes bought in 2005, 2004 and 2003 are estimated to have lost 16, 12 and 9 percent respectively.
Those bought before 2000 are likely to have seen an appreciation in values, the numbers say. In other words, home values are much like 401(k)s - many people who’ve been in homes for a few years or more still have booked gains, though they’ve been trimmed by price drops of the past couple years.
Those who bought closer to the market peak, however, have a much tougher hill to climb.
Eddie and Kimberly Morris, who bought their Douglas County home in 2002 for $250,000, fear they are in the latter group, even though they’ve been in the house for seven years.
The couple, who have three children, saw the seven-bedroom, five-bathroom home as “a steal at the time” because it appraised for about $390,000, Eddie Morris said.
Now the estimated appraisal is $100,000 less than the Morrises paid, and there are multiple foreclosures in the golf course community. A house nearby recently sold for less than $150,000, Morris said.
“This is not where we thought we’d be right now, as far as equity in the house goes,” he said. “We couldn’t move if we wanted to.”
Thirty miles east, Amy and Duffy Beigel want to move, but they can’t afford the loss they’d face on their Capitol View Manor home in southwest Atlanta. They bought it in 2005 for $147,000; the home was appraised for $110,000 a few weeks ago, said Amy Beigel.
The three-bedroom, one-bathroom home is now too small for the Beigels and their three children. The disappointing appraisal put on hold their plans to move closer to family in New York she said.
“We knew things were bad, but we were hoping things would be better than that,” Beigel said. “I guess now we just have to wait and see what happens.”
Palm, the real estate analyst who forecasts the region will make up most of its price declines in about 18 months, noted that inventory is steadily declining amid bargain-hunting by buyers and little new building activity.
“We have 30,000 fewer houses on the market than we did in 2007, so that helps,” he said. “And if we get any type of demand back, that price is coming back.”
How far and how fast is impossible to predict, said another expert.
“As far as prices returning to 2007 levels, it is a mixed bag,” said Alan Wexler, president of Databank Inc., a real estate analysis firm. “I don’t see prices ... in many areas - not all, but many - returning to the past normal for quite a while. There will be a ‘new normal.’ ”
Prudential Georgia Realty owner Dan Forsman thinks it could be three or four years before overall prices increase significantly. If the job market doesn’t get better, it could take longer, he said.
“I think the second half of 2010 will be a strong transaction market, but I don’t expect to see any increase in average sales price,” he said. “So as we roll into 2011, there isn’t going to be much inventory and there will be far fewer foreclosures. I think 2012 and 2013 will be seller’s markets.”
AP Mobile. © 2009 The Associated Press. All Rights Reserved.
Published: Sep 18, 2009
Metro Atlanta home prices may have hit bottom this summer after two years of decline, but how fast they’ll rebound - or if they ever will - is a trickier calculation.
Some local experts are optimistic.
“I think we can make up 70 percent of the difference in the next year and a half,” said Steve Palm, president of SmartNumbers, a real estate research firm in Marietta.
But some homeowners will do better than that, and some won’t. What happens with your house will depend on where you live, when you bought and whether there was a lot of new homebuilding near you when the market collapsed.
In the 30075 Zip code in Roswell, for instance, median resale prices were $315,000 in this year’s second quarter, compared to $373,000 in the same period of 2007 and $318,000 in 2005, according to data from SmartNumbers.
That contrasts sharply with the nosedive in the 30058 Zip code in Lithonia, where median prices were $51,448 in the second quarter, less than half the $129,900 median for the same period of 2007 or $131,600 for 2005.
Key factors in such wild swings of fortune include the amount of inventory in an area and the number of foreclosures and other distress sales. The latter skew median prices downward -- severely if the market for conventional sales is so slow it does not offset fire-sale foreclosures.
Areas that were on the suburban fringes of the housing boom in 2006 and 2007 are going to struggle longer with lowered home values and a slow resale market, one expert said.
“You don’t see as many problems in north Fulton because it was already built out and it was relatively expensive for builders to go in and buy large tracts of land and put a lot of homes there,” said Mark Vitner, managing director and senior economist for Wells Fargo in Charlotte.
“So essentially the areas that had the most problems are the areas where it was the easiest for builders to go and quickly put up a lot of homes.”
Clayton and Rockdale counties and south Fulton County, he said, are examples of such areas.
“These places are having very significant problems,” he said, “and that’s where most of the oversupply is.”
Two Riverdale Zip codes, 30296 and 30274, saw median prices plummet by more than two-thirds, according to the SmartNumbers data. The second quarter median price this year was $33,999, down from $106,500 in 2007 and $131,600 in 2005.
A wave of foreclosures in Clayton County - more than 7,400 homes have been listed this year alone, according to Equity Depot - has weighed down the median price. Real estate experts say prices will have a better chance at recovery once all of the distressed properties have been sold.
More than 130,000 homes were sold in 2006 at the height of the building boom, according to Metrostudy, a national real estate tracking firm with a office in Atlanta.
But by the end of 2007, shortly after the average home price reached its apex, closings had fallen to around 105,000. They fell again to about 80,000 in 2008. The number should be about steady or slightly up for this year, said Eugene James, director of Metrostudy’s Atlanta office.
On average, a home bought in 2006 or 2007 has lost about 20 percent of its value, according to an analysis by Prudential Georgia Realty.
The most recent Case Shiller home price index, a widely watched national measure, showed the Atlanta region with a 1 percent seasonally adjusted gain from May to June. It was the first monthly uptick since 2007 and gave real estate pros hope that battered home prices will begin rising.
Values in some stable and established areas have held up better - also explaining why places like Roswell, Peachtree City and Decatur have not been hit as hard.
Homes bought in 2005, 2004 and 2003 are estimated to have lost 16, 12 and 9 percent respectively.
Those bought before 2000 are likely to have seen an appreciation in values, the numbers say. In other words, home values are much like 401(k)s - many people who’ve been in homes for a few years or more still have booked gains, though they’ve been trimmed by price drops of the past couple years.
Those who bought closer to the market peak, however, have a much tougher hill to climb.
Eddie and Kimberly Morris, who bought their Douglas County home in 2002 for $250,000, fear they are in the latter group, even though they’ve been in the house for seven years.
The couple, who have three children, saw the seven-bedroom, five-bathroom home as “a steal at the time” because it appraised for about $390,000, Eddie Morris said.
Now the estimated appraisal is $100,000 less than the Morrises paid, and there are multiple foreclosures in the golf course community. A house nearby recently sold for less than $150,000, Morris said.
“This is not where we thought we’d be right now, as far as equity in the house goes,” he said. “We couldn’t move if we wanted to.”
Thirty miles east, Amy and Duffy Beigel want to move, but they can’t afford the loss they’d face on their Capitol View Manor home in southwest Atlanta. They bought it in 2005 for $147,000; the home was appraised for $110,000 a few weeks ago, said Amy Beigel.
The three-bedroom, one-bathroom home is now too small for the Beigels and their three children. The disappointing appraisal put on hold their plans to move closer to family in New York she said.
“We knew things were bad, but we were hoping things would be better than that,” Beigel said. “I guess now we just have to wait and see what happens.”
Palm, the real estate analyst who forecasts the region will make up most of its price declines in about 18 months, noted that inventory is steadily declining amid bargain-hunting by buyers and little new building activity.
“We have 30,000 fewer houses on the market than we did in 2007, so that helps,” he said. “And if we get any type of demand back, that price is coming back.”
How far and how fast is impossible to predict, said another expert.
“As far as prices returning to 2007 levels, it is a mixed bag,” said Alan Wexler, president of Databank Inc., a real estate analysis firm. “I don’t see prices ... in many areas - not all, but many - returning to the past normal for quite a while. There will be a ‘new normal.’ ”
Prudential Georgia Realty owner Dan Forsman thinks it could be three or four years before overall prices increase significantly. If the job market doesn’t get better, it could take longer, he said.
“I think the second half of 2010 will be a strong transaction market, but I don’t expect to see any increase in average sales price,” he said. “So as we roll into 2011, there isn’t going to be much inventory and there will be far fewer foreclosures. I think 2012 and 2013 will be seller’s markets.”
AP Mobile. © 2009 The Associated Press. All Rights Reserved.
Sunday, September 13, 2009
Act fast! Homebuyer tax credit ends soon
Act fast! Homebuyer tax credit ends soon
There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home.
By Les Christie, CNNMoney.com staff writer
Last Updated: August 27, 2009: 3:38 PM ET
NEW YORK (CNNMoney.com) -- Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.
Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.
The bad part: It ends on Dec. 1.
Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.
"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."
Sense of urgency
What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)
In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.
"That's why there's such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they're taking three to six months to do that."
That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.
Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.
The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.
"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn't want to move in because of the [less than perfect] conditions the homes are in."
That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.
"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."
Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He's spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He's stretching the cash by doing much of the work himself.
Cash for Clunkers effect
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.
In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program
There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home.
By Les Christie, CNNMoney.com staff writer
Last Updated: August 27, 2009: 3:38 PM ET
NEW YORK (CNNMoney.com) -- Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.
Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.
The bad part: It ends on Dec. 1.
Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.
"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."
Sense of urgency
What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)
In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.
"That's why there's such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they're taking three to six months to do that."
That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.
Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.
The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.
"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn't want to move in because of the [less than perfect] conditions the homes are in."
That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.
"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."
Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He's spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He's stretching the cash by doing much of the work himself.
Cash for Clunkers effect
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.
In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program
Sunday, August 23, 2009
Housing starts, building permits dip
By Catherine Clifford, CNNMoney.com staff writer
August 18, 2009: 09:34 AM EDT
Initial construction of U.S. homes edged lower in July following a surge in the previous month, according to government figures released Tuesday.
The report had some modest indications of stabilization. "A mixed bag this time around," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.
Housing starts fell to a seasonally adjusted annual rate of 581,000, down 1% from a revised 587,000 in June, the Commerce Department said.
Economists were expecting housing starts to increase to an annual rate of 599,000 units, according to a consensus estimate gathered by Briefing.com.
The recession has cut deeply into consumer demand and access to financing. Housing starts for July were 37.7% lower than the July 2008 rate of 933,000.
Meanwhile, applications for building permits, an indication of future construction activity, dipped 1.8% to a seasonally adjusted annual rate of 560,000 in July. Economists were looking for the forward-looking measure to increase to an annual rate of 577,000 units.
Building permits were 39.4% below the July 2008 rate of 924,000.
"Construction activity remains low, historically speaking," said Larson. "But evidence continues to mount that the worst of the declines for this cycle are behind us."
Single-family strength: One indication of strength was single-family housing starts, considered the core of the housing market, which managed to gain 1.7% in July after rising sharply the previous month. Single-family building permits rose 5.8% in July.
As the single-family segment showed signs of improvement, however, the multi-family segment continued to get hit hard, pulling topline numbers lower.
Going forward, Larson predicts the construction market will continue to struggle because of the oversupply of foreclosed properties available at bargain basement prices.
"Buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010," said Larson.
Regionally, the Midwest was the only part of the country with an increase in the rate of new homes being constructed, posting a 12.9% gain from June.
The Northeast suffered the most severe pullback, with housing starts down 16.3%. Starts dipped 1.4% in the South and 1.6% in the West.
August 18, 2009: 09:34 AM EDT
Initial construction of U.S. homes edged lower in July following a surge in the previous month, according to government figures released Tuesday.
The report had some modest indications of stabilization. "A mixed bag this time around," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.
Housing starts fell to a seasonally adjusted annual rate of 581,000, down 1% from a revised 587,000 in June, the Commerce Department said.
Economists were expecting housing starts to increase to an annual rate of 599,000 units, according to a consensus estimate gathered by Briefing.com.
The recession has cut deeply into consumer demand and access to financing. Housing starts for July were 37.7% lower than the July 2008 rate of 933,000.
Meanwhile, applications for building permits, an indication of future construction activity, dipped 1.8% to a seasonally adjusted annual rate of 560,000 in July. Economists were looking for the forward-looking measure to increase to an annual rate of 577,000 units.
Building permits were 39.4% below the July 2008 rate of 924,000.
"Construction activity remains low, historically speaking," said Larson. "But evidence continues to mount that the worst of the declines for this cycle are behind us."
Single-family strength: One indication of strength was single-family housing starts, considered the core of the housing market, which managed to gain 1.7% in July after rising sharply the previous month. Single-family building permits rose 5.8% in July.
As the single-family segment showed signs of improvement, however, the multi-family segment continued to get hit hard, pulling topline numbers lower.
Going forward, Larson predicts the construction market will continue to struggle because of the oversupply of foreclosed properties available at bargain basement prices.
"Buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010," said Larson.
Regionally, the Midwest was the only part of the country with an increase in the rate of new homes being constructed, posting a 12.9% gain from June.
The Northeast suffered the most severe pullback, with housing starts down 16.3%. Starts dipped 1.4% in the South and 1.6% in the West.
Subscribe to:
Posts (Atom)
