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.
Sunday, September 20, 2009
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
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