New-home sales climbed 4.7% during February to a seasonally adjusted annual rate of 337,000, the first month-to-month increase since July, the Commerce Department said. The data marked another favorable sign for the housing market, but prices continued to decline. The median price of a new home tumbled 18% in February from a year earlier to $200,900. The median price in January was $206,800.
In another positive sign for the economy, an earlier report from the Commerce Department showed durable-goods orders unexpectedly climbed 3.4% during February.
-WSJ March 25, 2009
Wednesday, March 25, 2009
Friday, March 6, 2009
Ambitious Foreclosure Plan Revealed - How Will It Help?
By Kevin G. Hall
RISMEDIA, March 6, 2009-(MCT/RISMedia)-The Obama administration on Wednesday detailed its ambitious $275 billion plan to halt soaring foreclosures nationwide, outlining the financial incentives it’s offering investors, lenders and their bill collectors to lure them into modifying distressed mortgages to keep Americans in their homes. The slump in home prices is the root cause of the global financial meltdown, so the success or failure of the administration’s housing plan is vital to ending the deepening economic recession.
Shortly before financial markets opened, the Treasury Department provided its long-awaited update to the Making Home Affordable program, which the administration thinks can help up to 9 million homeowners.
“It’s a major break with the past because it really takes up a multifaceted approach. It used several different carrots and a stick to come at a comprehensive plan to reduce the number of foreclosures,” said Kathleen Day, a spokeswoman for the advocacy group Center for Responsible Lending in Durham, N.C. “That’s the only way you’re going to stabilize the financial system.”
The plan’s details came out a day before the House of Representatives is expected to pass compromise legislation giving bankruptcy judges power that they now lack to modify the terms of certain mortgages. Bankruptcy changes are the stick to go along with the carrots-new financial incentives for lenders to modify mortgages instead of moving to foreclosure.
The Obama housing plan attacks two problems that are creating a vicious cycle in the nation’s housing market.
First, it offers $200 billion to provide refinancing for some homeowners who owe more than their homes are now worth-shorthanded as being “underwater” on their mortgages. To qualify, these homeowners-5 million of them by administration estimates-must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September.
“We have been advocating for one unified approach to help modify or refinance delinquent and underwater loans and thus we think this program will undoubtedly help servicers keep more at-risk borrowers in their homes, which is a crucial step to helping stabilize the mortgage and housing markets,” stated John A. Courson, president and CEO of the Mortgage Bankers Association (MBA).
Many of these homeowners would like to take advantage of today’s historically low interest rates and refinance but can’t, since the law prohibits refinancing if the current mortgages reflects less than 80% of the homes’ values. These homeowners now can seek to refinance if their mortgages are up to 5% higher than the present-day values of their homes. That helps some, but it won’t reach lots of homeowners in California, Florida and elsewhere whose homes are now worth substantially less than their mortgages.
Because most mortgages are bundled into securities and sold into a secondary market, it’s often difficult for homeowners to find out whether Fannie or Freddie owns their loans or whether they’ve been pooled with other loans and sold by an investment bank to other investors.
The other pillar of Obama’s plan attacks the problem of affordability. The administration provides another $75 billion in incentives to help prevent foreclosures in cases in which the homeowners, up to 4 million of them, are about to lose their homes. The money comes from the $700 billion bailout fund approved last October.
Under this complex portion of the plan, the president offers a stream of financial incentives to mortgage servicers, who are essentially bill collectors for private investors who own pools of U.S. mortgages. Some incentives stay with the servicers while others flow through to investors.
In exchange for the incentives, a servicer would modify a mortgage so that no more than 38% of a homeowner’s monthly after-tax income was taken by the monthly mortgage payment. The government then would step in and share the cost of reworking that mortgage so that no more than 31% of the borrower’s monthly income was tied up in the payment.
This could result in some mortgages carrying interest rates as low as 2% for five years. Critics think that this mortgage subsidy interferes with the natural process of letting the marketplace find the floor on home prices.
“Not only do these gimmicks prevent home prices from falling to the market-clearing levels that would give private lenders the confidence to loan, but the continued specter of subsequent government-mandated modification will keep lenders out of the game,” said Peter Schiff, the president of investment strategist Euro Pacific Capital.
Treasury Secretary Timothy Geithner told lawmakers Wednesday that the administration plan offers “a powerful set of incentives” and “persuasive force and some economic inducements to provide substantial improvements in affordability. With those changes you will be put in an economically viable position and stay in your home.”
Although lenders have worked over the past year to freeze mortgage rates that were about to adjust to higher monthly payments, few have been willing to take losses and significantly rework the loan terms. This has led to a high percentage of re-defaults on modified mortgages and avoided tackling the problem of affordability.
Federal Deposit Insurance Corp. Chairman Sheila Bair pushed unsuccessfully during the Bush administration to rework loans with an eye toward affordability, and the Obama administration is implementing her ideas.
Any lender that takes new taxpayer bailout money under the administration’s Financial Stability Plan will be required to participate. The Obama team also is betting that requiring a standard guideline for mortgage modification will provide more protection to mortgage servicers, who are bound by contract to investors, not homeowners, and can be sued if they modify mortgages.
The Obama plan got a strong endorsement Wednesday from the Financial Services Roundtable, which represents many of the largest mortgage lenders.
“Our member companies intend to implement the program for all at-risk borrowers consistent with program guidelines and contractual requirements,” the group said in a statement. “For the benefit of at-risk borrowers who are facing the loss of their homes, for communities and for our nation in this time of extraordinary economic challenges, it is imperative that investors and servicers that choose to participate in the program adopt a national standard model.”
In an administration background briefing that was conducted under the administration’s insistence on anonymity in order to speak freely, it was clear that the plan is far from a panacea.
Senior government and industry officials confirmed that homeowners who seek to refinance to the new low interest rates will have to foot the bill for a range of new fees that Fannie and Freddie require. It’s not clear whether these will have to be paid upfront or can be folded into the loans.
The officials also confirmed that there’s no standard procedure for lenders under the Fannie and Freddie portion of the plan. It will be up to each lender to determine whether the refinances go through them or whether mortgage brokers and other intermediaries can help homeowners seek refinanced loans under the program.
Officials were also careful to note that mortgage servicers won’t be able to modify mortgages if the terms of their contracts with the investors who own the pools of mortgages don’t allow it. That leaves matters at square one for many homeowners, since many investors, like lenders, have been reluctant to take losses in hopes of an eventual government bailout.
Officials confirmed that they have no reliable data on how many of these investors are on the other ends of contracts that prohibit mortgage modifications. That question is important, since many of the weakest loans underwritten during the height of the housing boom, from 2004 to 2006, were sold by now-defunct investment banks to investors abroad, many in Europe.
These pools of mortgages, called mortgage-backed securities, are the so-called toxic assets that are at the heart of the global banking meltdown. This unresolved question about their contract terms is relevant to recovery in housing and the financial sector.
So, who qualifies for help of what kind? Here are some answers for consumers:
Q: How do I know if I qualify?
A: Your mortgage must predate the start of 2009, you must live in the home and you’ll have to provide proof of income. Then ask two questions. First, are you already behind on payments or even in the foreclosure process? If the answer is no, then ask yourself whether your current mortgage rate is high enough to make it worth your while to refinance to take advantage of today’s low rates for 15-year and 30-year fixed-rate mortgages.
Q: That’s it?
A: No. If you think it’s advantageous to refinance, you must find out who owns your loan. Most mortgages are bundled together and sold into a secondary market, where investors technically own them. If Fannie Mae or Freddie Mac placed your loan into the secondary market, you can contact the company that sends your monthly mortgage statement to discuss the new program. If your mortgage is in the portion of the secondary market where the private sector issued the mortgage-backed securities, you don’t qualify.
Q: How do I know who owns my loan?
A: You’ll have to ask the company that sends your monthly statement. These companies are sure to be swamped with calls this week, so be patient. And be warned: Borrowers have found in the past that mortgage-bill collectors-called servicers-often are less than forthcoming with answers as to who owns the loans.
Q: What if my loan is owned by Fannie or Freddie but I have negative equity?
A: You’re not alone. Researcher First American CoreLogic reported Wednesday that one in five homeowners nationwide now owes more than his or her home is worth. To qualify under the refinance portion of the Obama plan, you can owe up to 5% more than your home is now worth. Thus, many homeowners in California, Florida, Arizona and Nevada, where home prices have plunged, won’t qualify.
Homeowners in 250 high-cost U.S. counties can seek help under either track, however, provided that they qualify, even if the mortgage is worth up to $729,750. This could help high-income homeowners in Middle America and the Northeast, where home prices haven’t fallen as much.
Q: What about those of us who are about to lose our homes?
A: A lot will depend on whether the mortgage bill collectors, the servicers, think that they have leeway from investors to modify the loans. They’re being offered an upfront fee of $1,000 and will get “pay for success” fees for three years if a borrower’s modified loan remains in good standing. They’re being offered even more fees if they get homeowners into this program before they fall behind on payments.
Q: What happens if the servicer agrees to modify my mortgage?
A: First, the servicer has to get your monthly payment down to 38% of your monthly after-tax income. It can do this by taking a loss on the loan or stretching a 30-year loan into a 40-year, for example. It’s allowed to reduce interest rates as low as 2%.
Once the 38% threshold is met, the government matches lenders dollar for dollar to get the payment even lower, to 31% of monthly after-tax income.
This percentage is calculated on the value of a first-lien mortgage. If a home carries a second lien-often called a second, or junior, lien-the servicer will get another $250 if it extinguishes the second mortgage.
Q: Is the modification a permanent fix?
A: The new interest rate would be valid for five years. Afterward, it can rise 1% a year until the lending rate hits the conforming loan survey rate at the time of the modification. Given that mortgage rates today are low by historical standards, the loan survey rate is likely to be well below the punishing adjustable rates that are at the heart of many distressed mortgages.
Q: Do lenders have to participate in Making Home Affordable?
A: If they’re getting Wall Street bailout money and hope to get any more, then they have to play ball. Many mortgage servicers are outside this realm, however, and their trade group, the American Securitization Forum, gave only lukewarm, qualified support to the Obama administration’s plan.
Q: Is there any way to force servicers to help homeowners?
A: The House of Representatives is expected to pass legislation this week that would allow bankruptcy judges to modify mortgages. This measure, which seems to have support in the Senate, too, would let judges shave off of mortgages the difference between what homeowners owe and what their homes are now worth. This would give homeowners some leverage in negotiations.
Q: But don’t these homeowners deserve what they get for overextending themselves?
A: Some think so. There are two parties to a bad deal, however-people who bought too much home and lenders who let their underwriting standards fail in lending to them. Somebody has to lose. The Obama administration is betting that keeping owners in their homes helps set a floor under prices. Critics think that only the marketplace can find a floor for home prices.
© 2009, McClatchy-Tribune Information Services.
RISMEDIA, March 6, 2009-(MCT/RISMedia)-The Obama administration on Wednesday detailed its ambitious $275 billion plan to halt soaring foreclosures nationwide, outlining the financial incentives it’s offering investors, lenders and their bill collectors to lure them into modifying distressed mortgages to keep Americans in their homes. The slump in home prices is the root cause of the global financial meltdown, so the success or failure of the administration’s housing plan is vital to ending the deepening economic recession.
Shortly before financial markets opened, the Treasury Department provided its long-awaited update to the Making Home Affordable program, which the administration thinks can help up to 9 million homeowners.
“It’s a major break with the past because it really takes up a multifaceted approach. It used several different carrots and a stick to come at a comprehensive plan to reduce the number of foreclosures,” said Kathleen Day, a spokeswoman for the advocacy group Center for Responsible Lending in Durham, N.C. “That’s the only way you’re going to stabilize the financial system.”
The plan’s details came out a day before the House of Representatives is expected to pass compromise legislation giving bankruptcy judges power that they now lack to modify the terms of certain mortgages. Bankruptcy changes are the stick to go along with the carrots-new financial incentives for lenders to modify mortgages instead of moving to foreclosure.
The Obama housing plan attacks two problems that are creating a vicious cycle in the nation’s housing market.
First, it offers $200 billion to provide refinancing for some homeowners who owe more than their homes are now worth-shorthanded as being “underwater” on their mortgages. To qualify, these homeowners-5 million of them by administration estimates-must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September.
“We have been advocating for one unified approach to help modify or refinance delinquent and underwater loans and thus we think this program will undoubtedly help servicers keep more at-risk borrowers in their homes, which is a crucial step to helping stabilize the mortgage and housing markets,” stated John A. Courson, president and CEO of the Mortgage Bankers Association (MBA).
Many of these homeowners would like to take advantage of today’s historically low interest rates and refinance but can’t, since the law prohibits refinancing if the current mortgages reflects less than 80% of the homes’ values. These homeowners now can seek to refinance if their mortgages are up to 5% higher than the present-day values of their homes. That helps some, but it won’t reach lots of homeowners in California, Florida and elsewhere whose homes are now worth substantially less than their mortgages.
Because most mortgages are bundled into securities and sold into a secondary market, it’s often difficult for homeowners to find out whether Fannie or Freddie owns their loans or whether they’ve been pooled with other loans and sold by an investment bank to other investors.
The other pillar of Obama’s plan attacks the problem of affordability. The administration provides another $75 billion in incentives to help prevent foreclosures in cases in which the homeowners, up to 4 million of them, are about to lose their homes. The money comes from the $700 billion bailout fund approved last October.
Under this complex portion of the plan, the president offers a stream of financial incentives to mortgage servicers, who are essentially bill collectors for private investors who own pools of U.S. mortgages. Some incentives stay with the servicers while others flow through to investors.
In exchange for the incentives, a servicer would modify a mortgage so that no more than 38% of a homeowner’s monthly after-tax income was taken by the monthly mortgage payment. The government then would step in and share the cost of reworking that mortgage so that no more than 31% of the borrower’s monthly income was tied up in the payment.
This could result in some mortgages carrying interest rates as low as 2% for five years. Critics think that this mortgage subsidy interferes with the natural process of letting the marketplace find the floor on home prices.
“Not only do these gimmicks prevent home prices from falling to the market-clearing levels that would give private lenders the confidence to loan, but the continued specter of subsequent government-mandated modification will keep lenders out of the game,” said Peter Schiff, the president of investment strategist Euro Pacific Capital.
Treasury Secretary Timothy Geithner told lawmakers Wednesday that the administration plan offers “a powerful set of incentives” and “persuasive force and some economic inducements to provide substantial improvements in affordability. With those changes you will be put in an economically viable position and stay in your home.”
Although lenders have worked over the past year to freeze mortgage rates that were about to adjust to higher monthly payments, few have been willing to take losses and significantly rework the loan terms. This has led to a high percentage of re-defaults on modified mortgages and avoided tackling the problem of affordability.
Federal Deposit Insurance Corp. Chairman Sheila Bair pushed unsuccessfully during the Bush administration to rework loans with an eye toward affordability, and the Obama administration is implementing her ideas.
Any lender that takes new taxpayer bailout money under the administration’s Financial Stability Plan will be required to participate. The Obama team also is betting that requiring a standard guideline for mortgage modification will provide more protection to mortgage servicers, who are bound by contract to investors, not homeowners, and can be sued if they modify mortgages.
The Obama plan got a strong endorsement Wednesday from the Financial Services Roundtable, which represents many of the largest mortgage lenders.
“Our member companies intend to implement the program for all at-risk borrowers consistent with program guidelines and contractual requirements,” the group said in a statement. “For the benefit of at-risk borrowers who are facing the loss of their homes, for communities and for our nation in this time of extraordinary economic challenges, it is imperative that investors and servicers that choose to participate in the program adopt a national standard model.”
In an administration background briefing that was conducted under the administration’s insistence on anonymity in order to speak freely, it was clear that the plan is far from a panacea.
Senior government and industry officials confirmed that homeowners who seek to refinance to the new low interest rates will have to foot the bill for a range of new fees that Fannie and Freddie require. It’s not clear whether these will have to be paid upfront or can be folded into the loans.
The officials also confirmed that there’s no standard procedure for lenders under the Fannie and Freddie portion of the plan. It will be up to each lender to determine whether the refinances go through them or whether mortgage brokers and other intermediaries can help homeowners seek refinanced loans under the program.
Officials were also careful to note that mortgage servicers won’t be able to modify mortgages if the terms of their contracts with the investors who own the pools of mortgages don’t allow it. That leaves matters at square one for many homeowners, since many investors, like lenders, have been reluctant to take losses in hopes of an eventual government bailout.
Officials confirmed that they have no reliable data on how many of these investors are on the other ends of contracts that prohibit mortgage modifications. That question is important, since many of the weakest loans underwritten during the height of the housing boom, from 2004 to 2006, were sold by now-defunct investment banks to investors abroad, many in Europe.
These pools of mortgages, called mortgage-backed securities, are the so-called toxic assets that are at the heart of the global banking meltdown. This unresolved question about their contract terms is relevant to recovery in housing and the financial sector.
So, who qualifies for help of what kind? Here are some answers for consumers:
Q: How do I know if I qualify?
A: Your mortgage must predate the start of 2009, you must live in the home and you’ll have to provide proof of income. Then ask two questions. First, are you already behind on payments or even in the foreclosure process? If the answer is no, then ask yourself whether your current mortgage rate is high enough to make it worth your while to refinance to take advantage of today’s low rates for 15-year and 30-year fixed-rate mortgages.
Q: That’s it?
A: No. If you think it’s advantageous to refinance, you must find out who owns your loan. Most mortgages are bundled together and sold into a secondary market, where investors technically own them. If Fannie Mae or Freddie Mac placed your loan into the secondary market, you can contact the company that sends your monthly mortgage statement to discuss the new program. If your mortgage is in the portion of the secondary market where the private sector issued the mortgage-backed securities, you don’t qualify.
Q: How do I know who owns my loan?
A: You’ll have to ask the company that sends your monthly statement. These companies are sure to be swamped with calls this week, so be patient. And be warned: Borrowers have found in the past that mortgage-bill collectors-called servicers-often are less than forthcoming with answers as to who owns the loans.
Q: What if my loan is owned by Fannie or Freddie but I have negative equity?
A: You’re not alone. Researcher First American CoreLogic reported Wednesday that one in five homeowners nationwide now owes more than his or her home is worth. To qualify under the refinance portion of the Obama plan, you can owe up to 5% more than your home is now worth. Thus, many homeowners in California, Florida, Arizona and Nevada, where home prices have plunged, won’t qualify.
Homeowners in 250 high-cost U.S. counties can seek help under either track, however, provided that they qualify, even if the mortgage is worth up to $729,750. This could help high-income homeowners in Middle America and the Northeast, where home prices haven’t fallen as much.
Q: What about those of us who are about to lose our homes?
A: A lot will depend on whether the mortgage bill collectors, the servicers, think that they have leeway from investors to modify the loans. They’re being offered an upfront fee of $1,000 and will get “pay for success” fees for three years if a borrower’s modified loan remains in good standing. They’re being offered even more fees if they get homeowners into this program before they fall behind on payments.
Q: What happens if the servicer agrees to modify my mortgage?
A: First, the servicer has to get your monthly payment down to 38% of your monthly after-tax income. It can do this by taking a loss on the loan or stretching a 30-year loan into a 40-year, for example. It’s allowed to reduce interest rates as low as 2%.
Once the 38% threshold is met, the government matches lenders dollar for dollar to get the payment even lower, to 31% of monthly after-tax income.
This percentage is calculated on the value of a first-lien mortgage. If a home carries a second lien-often called a second, or junior, lien-the servicer will get another $250 if it extinguishes the second mortgage.
Q: Is the modification a permanent fix?
A: The new interest rate would be valid for five years. Afterward, it can rise 1% a year until the lending rate hits the conforming loan survey rate at the time of the modification. Given that mortgage rates today are low by historical standards, the loan survey rate is likely to be well below the punishing adjustable rates that are at the heart of many distressed mortgages.
Q: Do lenders have to participate in Making Home Affordable?
A: If they’re getting Wall Street bailout money and hope to get any more, then they have to play ball. Many mortgage servicers are outside this realm, however, and their trade group, the American Securitization Forum, gave only lukewarm, qualified support to the Obama administration’s plan.
Q: Is there any way to force servicers to help homeowners?
A: The House of Representatives is expected to pass legislation this week that would allow bankruptcy judges to modify mortgages. This measure, which seems to have support in the Senate, too, would let judges shave off of mortgages the difference between what homeowners owe and what their homes are now worth. This would give homeowners some leverage in negotiations.
Q: But don’t these homeowners deserve what they get for overextending themselves?
A: Some think so. There are two parties to a bad deal, however-people who bought too much home and lenders who let their underwriting standards fail in lending to them. Somebody has to lose. The Obama administration is betting that keeping owners in their homes helps set a floor under prices. Critics think that only the marketplace can find a floor for home prices.
© 2009, McClatchy-Tribune Information Services.
Wednesday, February 25, 2009
The Other Side of the Story
The beauty of these crazy low prices is crazy low monthly payments for homeowners that are taking advantage of this nationwide real estate sale. However, the other side of the coin holds a different story for renters and landlords.
When rents are high, investment properties are very profitable, easy income -if you have a management company doing all the heavy lifting of course. However, when rents go down, renters rejoice but your profit margin frowns. Now, with home prices being so low, moderate income buyers can purchase a home for equal or less monthly cost than renting someone else's home. A home they can't paint, remodel, or improve.
Even so, this speaks again to the profitability of buying investment properties only because the overhead is low as well. Then in 5+ years when you go to sell it, you've just made quite a lovely profit.
Check out this link for a Wall Street Journal article that covers the whole issue:
http://online.wsj.com/article_email/SB123552129423664663-lMyQjAxMDI5MzI1NTUyMjUxWj.html
When rents are high, investment properties are very profitable, easy income -if you have a management company doing all the heavy lifting of course. However, when rents go down, renters rejoice but your profit margin frowns. Now, with home prices being so low, moderate income buyers can purchase a home for equal or less monthly cost than renting someone else's home. A home they can't paint, remodel, or improve.
Even so, this speaks again to the profitability of buying investment properties only because the overhead is low as well. Then in 5+ years when you go to sell it, you've just made quite a lovely profit.
Check out this link for a Wall Street Journal article that covers the whole issue:
http://online.wsj.com/article_email/SB123552129423664663-lMyQjAxMDI5MzI1NTUyMjUxWj.html
Thursday, February 19, 2009
Q&A on the New Housing Plan
http://www.nytimes.com/2009/02/19/your-money/mortgages/19modify.html?_r=1&emc=eta1
Above is a link to a New York Times article that addresses the frequently asked questions regarding the new mortgage incentives as a part of the Obama Housing Plan.
Check this out for detailed information and to see if it can help you, or someone you know.
Give us a call if you have any other questions 775-828-3292.
Above is a link to a New York Times article that addresses the frequently asked questions regarding the new mortgage incentives as a part of the Obama Housing Plan.
Check this out for detailed information and to see if it can help you, or someone you know.
Give us a call if you have any other questions 775-828-3292.
Monday, January 12, 2009
We Need To Go On A Diet
I just heard David give the best analogy to describe our market:
"Imagine I gained 200 pounds, can you picture how big my pants would have to be? Now imagine I lost all that weight really fast, but I still had to wear the same pants. I'd be little but my pants would be huge, THEY WOULDN'T FIT!
That's what our market is like; a thin pool of motivated buyers swimming around in an ocean of homes. We have to tailor down our oversized inventory to fit our thin buyer pool."
Ok folks, 2008 was a doozey and unless we want to prolong the pain past 2009, we need sellers to get realistic about fair market value and we need buyers to come to the table with serious, well-written offers.
We still have some muck to wade through (read: short sales and foreclosures), but all signs point to increased units sold in the latter half of 2009, which will help increase competition by tailoring down our inventory.
If the vibes and changes that come down from capitol hill boost consumer confidence, all sales fields will feel the love.
For anyone out there thinking about putting an offer in on a short sale:
I've noticed banks drawing a line when it comes to how low they will go and the "10% rule" doesn't cut it anymore. Unless you are right on, or darn close to, asking price (assuming it's a well-priced home), expect to see a counter from the bank at or above asking price. If they keep this up and more buyers agree to these terms, you will see a price floor form fast.
"Imagine I gained 200 pounds, can you picture how big my pants would have to be? Now imagine I lost all that weight really fast, but I still had to wear the same pants. I'd be little but my pants would be huge, THEY WOULDN'T FIT!
That's what our market is like; a thin pool of motivated buyers swimming around in an ocean of homes. We have to tailor down our oversized inventory to fit our thin buyer pool."
Ok folks, 2008 was a doozey and unless we want to prolong the pain past 2009, we need sellers to get realistic about fair market value and we need buyers to come to the table with serious, well-written offers.
We still have some muck to wade through (read: short sales and foreclosures), but all signs point to increased units sold in the latter half of 2009, which will help increase competition by tailoring down our inventory.
If the vibes and changes that come down from capitol hill boost consumer confidence, all sales fields will feel the love.
For anyone out there thinking about putting an offer in on a short sale:
I've noticed banks drawing a line when it comes to how low they will go and the "10% rule" doesn't cut it anymore. Unless you are right on, or darn close to, asking price (assuming it's a well-priced home), expect to see a counter from the bank at or above asking price. If they keep this up and more buyers agree to these terms, you will see a price floor form fast.
Sunday, January 4, 2009
Happy New Year!
We hope everyone had a wonderful holiday season and we wish you the best for 2009.
Stay tuned for a look back on 2008 and what to expect over this next year.
Stay tuned for a look back on 2008 and what to expect over this next year.
Friday, November 7, 2008
November 2008-sans stats
I have one thing to say, BUY, BUY, BUY. If ever there was a time to get off of the fence it is now. I encourage all of you to BUY, and your friends to buy. As of today we are below 2004 values, year-to-date, with the exception of area 171 (southwest suburban) and that area is trending down as well.
The foreclosed market is finite, one TRILLION dollars is going to make a difference in this market and now is the time to buy. Over this weekend JP Morgan (read Washington Mutual) has acknowledged that the company needs to re think the foreclosure process and even go beyond to look at homeowners that are in good standing today but may become distressed sellers tomorrow. Other lenders are beginning to show signs of similar thinking.
Are the prices going to descend lower? Here is food for thought:
Double Diamond/Damonte Ranch, one of the hot beds for distressed sales, data is for homes under $300,000 sold in 2008 by quarters:
1st quarter sales: 21 homes sold for an average of $267,258
2nd quarter sales: 37 homes sold for an average of $263,010
3rd quarter sales: 47 homes sold for an average of $262,347
That is a change in values of only 2% over 10 months. The average home in escrow today is $265,627. I have to ask you is this the picture of a bottomless market?
With a trillion dollars and banks possibly rethinking how they foreclose, we are in a great position to see inventory drop and choices dry up. I am not suggesting a price bounce of any measure now, or any time soon. What I do see is that the deals of today will disappear much sooner than buyers realize.
Where are the good buys? Just about anywhere you look and for whatever your budget is. I do not see any price recovery for homes valued after late 2003 through mid-2007 for several years or more. The real road to recovery will be for the sellers that sell today and buy back into these much reduced values and ride the recovery from the bottom up. Holding on is going to be expensive for those that really want to sell and are trying to “hold out” for the market to “go up.”
Oh, one last thought, I have purposely written this on November the 3rd. Whatever happens tomorrow, regardless of your feelings, a major milestone will be behind us and we will all have the same opportunity to move forward for the better and look up. I for one plan on moving forward and I expect to find willing and capable buyers for every one of my clients and for my buyers, to find them a home that they can be proud of for many years to come.
The foreclosed market is finite, one TRILLION dollars is going to make a difference in this market and now is the time to buy. Over this weekend JP Morgan (read Washington Mutual) has acknowledged that the company needs to re think the foreclosure process and even go beyond to look at homeowners that are in good standing today but may become distressed sellers tomorrow. Other lenders are beginning to show signs of similar thinking.
Are the prices going to descend lower? Here is food for thought:
Double Diamond/Damonte Ranch, one of the hot beds for distressed sales, data is for homes under $300,000 sold in 2008 by quarters:
1st quarter sales: 21 homes sold for an average of $267,258
2nd quarter sales: 37 homes sold for an average of $263,010
3rd quarter sales: 47 homes sold for an average of $262,347
That is a change in values of only 2% over 10 months. The average home in escrow today is $265,627. I have to ask you is this the picture of a bottomless market?
With a trillion dollars and banks possibly rethinking how they foreclose, we are in a great position to see inventory drop and choices dry up. I am not suggesting a price bounce of any measure now, or any time soon. What I do see is that the deals of today will disappear much sooner than buyers realize.
Where are the good buys? Just about anywhere you look and for whatever your budget is. I do not see any price recovery for homes valued after late 2003 through mid-2007 for several years or more. The real road to recovery will be for the sellers that sell today and buy back into these much reduced values and ride the recovery from the bottom up. Holding on is going to be expensive for those that really want to sell and are trying to “hold out” for the market to “go up.”
Oh, one last thought, I have purposely written this on November the 3rd. Whatever happens tomorrow, regardless of your feelings, a major milestone will be behind us and we will all have the same opportunity to move forward for the better and look up. I for one plan on moving forward and I expect to find willing and capable buyers for every one of my clients and for my buyers, to find them a home that they can be proud of for many years to come.
Monday, November 3, 2008
Apple Hill Excursion
The Morris family took a trip up to Apple Hill on Nevada Day and it was a fantastic way to spend the holiday. The drive up was gorgeous and all the orchards were brimming with shiny, fresh apples and apple products galore. Who knew so many different kinds of apples existed and were readily available so close to home?
After it was all said and done, we hit about half a dozen orchards and went home leaden with Winesape, Pink Lady, Arkansas Black, Granny Smith and even a few Red and Golden Delicious, not to mention all the apple butter and jam!
No trip to Apple Hill is complete without tasting some fresh, homemade apple pie. Kids Inc. had amazing French apple pie with vanilla icecream and cinnamon-caramel sauce. Since it was a state holiday in Nevada, the vast majority of cars in every parking lot had Nevada plates and the orchards offered discounts and fun freebies to Nevada residents, which was pretty special.
Apple Hill (near Placerville) is a fun and nostalgic way to kick off the fall/winter season. The apples are still great, so be sure to scoot over the hill soon and pick up a stash. Shauna has put her takings to good use and made an apple pie with Gruyere backed into the crust, as well as apple tarts, which were a great way to use up the "scraps" from the pie. She'd be happy to share the recipe as well.
Happy apple picking!
After it was all said and done, we hit about half a dozen orchards and went home leaden with Winesape, Pink Lady, Arkansas Black, Granny Smith and even a few Red and Golden Delicious, not to mention all the apple butter and jam!
No trip to Apple Hill is complete without tasting some fresh, homemade apple pie. Kids Inc. had amazing French apple pie with vanilla icecream and cinnamon-caramel sauce. Since it was a state holiday in Nevada, the vast majority of cars in every parking lot had Nevada plates and the orchards offered discounts and fun freebies to Nevada residents, which was pretty special.
Apple Hill (near Placerville) is a fun and nostalgic way to kick off the fall/winter season. The apples are still great, so be sure to scoot over the hill soon and pick up a stash. Shauna has put her takings to good use and made an apple pie with Gruyere backed into the crust, as well as apple tarts, which were a great way to use up the "scraps" from the pie. She'd be happy to share the recipe as well.
Happy apple picking!
Wednesday, October 22, 2008
AOPA Article about Alamos Airlift
Here is a link to the article AOPA did on their website about the relief effort supported by the Baja Bush Pilots:
http://www.aopa.org/aircraft/articles/2008/081021alamos.html
The article gives an overall description of the effort and the hurricane.
http://www.aopa.org/aircraft/articles/2008/081021alamos.html
The article gives an overall description of the effort and the hurricane.
Tuesday, October 21, 2008
Alamos Airlift
Ten days ago Hurrican Norbert tore through central western Mexico, leaving a lot of destruction in its path. Through the concerted effort of the Baja Bush Pilots a relief effort was put together to bring much needed supplies or food and clothing to the victims of Norbert.
The small town of Alamos was hit hard in the middle of the night on the 11th, leaving many homeless and sadly many lives were taken as well. David got involved with this incredible relief effort and we, along with 33 other pilots, packed our plane to the brim with supplies and headed to Mexico at 06:30 on Friday morning, and returned shortly thereafter at 16:30 (4:30pm) on Saturday afternoon.
Below are pictures of the rubble and river that runs through town, which flooded and took bridges and buildings with it. It was heartwarming to see so many people pull together in a private effort to help make a difference in the lives of this small community.
The small town of Alamos was hit hard in the middle of the night on the 11th, leaving many homeless and sadly many lives were taken as well. David got involved with this incredible relief effort and we, along with 33 other pilots, packed our plane to the brim with supplies and headed to Mexico at 06:30 on Friday morning, and returned shortly thereafter at 16:30 (4:30pm) on Saturday afternoon.
Below are pictures of the rubble and river that runs through town, which flooded and took bridges and buildings with it. It was heartwarming to see so many people pull together in a private effort to help make a difference in the lives of this small community.
Monday, September 29, 2008
Saturday, September 20, 2008
What a week
Well it had to happen sooner or later.
I am not going to hash out what the press has been saying, suffice it to say that the seriousness of the situation should give all pause to think. Reno, Sparks, Northern Nevada and our entire state have been affected for the last 2.5 years by the greed that entered the financial markets in the early part of this decade. Forbes just did a nice short and to the point piece on what has happened.
Is it time to panic? Actually, it's really not.
People need to go on with their lives, yes, saving would be a good idea, spending less than you make and putting off a few trips to the mall to shop for what you do not need is also a good idea. As bad as Wall Street has treated the American public there is still a lot right and our basic functioning economy is moving along, albeit slowly we are not negative.
Positive thoughts are very helpful in these situations and dreaming up the worst is not going to help anyone.
From my perspective this week I have been very busy on Thursday, Friday and today as I write this portion of the blog. I am showing properties and I expect two offers before the weekend is over.
Buyers are buying and homes are selling.
We are a strong country and lets put our backs into this and think clearly with a bit less emotion and work for our future.
Heck, we have two days left of summer, get out and enjoy yourself!
I am not going to hash out what the press has been saying, suffice it to say that the seriousness of the situation should give all pause to think. Reno, Sparks, Northern Nevada and our entire state have been affected for the last 2.5 years by the greed that entered the financial markets in the early part of this decade. Forbes just did a nice short and to the point piece on what has happened.
Is it time to panic? Actually, it's really not.
People need to go on with their lives, yes, saving would be a good idea, spending less than you make and putting off a few trips to the mall to shop for what you do not need is also a good idea. As bad as Wall Street has treated the American public there is still a lot right and our basic functioning economy is moving along, albeit slowly we are not negative.
Positive thoughts are very helpful in these situations and dreaming up the worst is not going to help anyone.
From my perspective this week I have been very busy on Thursday, Friday and today as I write this portion of the blog. I am showing properties and I expect two offers before the weekend is over.
Buyers are buying and homes are selling.
We are a strong country and lets put our backs into this and think clearly with a bit less emotion and work for our future.
Heck, we have two days left of summer, get out and enjoy yourself!
Wednesday, September 10, 2008
Reno Air Races
This is the week of the Reno Air Races. It is some what ironic that last week was the Great Reno Balloon Races and this week are the Reno Air Races. Within two weeks Reno hosts the Great Reno Balloon Race and the Reno Air Races. From the age of un-powered flight to powered flight back to back.
Love it!
I have been fortunate to have been going to the races on and off for over 30 years. I remember living in the dorms at the University of Nevada, Reno and hearing the sound of P-51's and P-38's flying out to Stead for the air show and the races. If you have never gone to the Reno Air Races treat yourself to something special.
Air Races at one time were common across the country but over the years these very special races have gone into the history books but today in Reno one can see at one time a collection of history dating back to the first world war. Not only can you see history that made the 20th century. You can watch history fly! Many of these planes are now worth well over $1 million dollars and in Reno you can hear and watch these planes actually fly. Over the years planes from the WW1 years, the 20's, 30's, 40's, 50's to F22 are all here and you can actually touch many of them. Ever wanted to stand next to a Mig 15 and a F-86 and a F-117 and talk to the men and women that have flown them? Then come out this week and experience a stunning event.
When you go, not "if", go. Take a hat, take a light coat, sunscreen, be prepared for wind, sun, hot and cold, heck, this is Nevada! Bring good walking shoes (the runway is over a mile long and you can easily walk from one end to the other and back again. Bring a camera (but save the film on the actual racing and the air show, the planes are too far away and too fast to get a good shot, just enjoy the show) and get a pit pass and walk the planes and take your photos. The crews love to talk about their planes and still today you can stand next to a gentlemen that is old, grey and maybe even needing some help walking . Listen and he will tell you about being 22 and flying that plane into harms way.
Listen to the stories that the Reno Air Races bring to life. Talk with you soon.
Love it!
I have been fortunate to have been going to the races on and off for over 30 years. I remember living in the dorms at the University of Nevada, Reno and hearing the sound of P-51's and P-38's flying out to Stead for the air show and the races. If you have never gone to the Reno Air Races treat yourself to something special.
Air Races at one time were common across the country but over the years these very special races have gone into the history books but today in Reno one can see at one time a collection of history dating back to the first world war. Not only can you see history that made the 20th century. You can watch history fly! Many of these planes are now worth well over $1 million dollars and in Reno you can hear and watch these planes actually fly. Over the years planes from the WW1 years, the 20's, 30's, 40's, 50's to F22 are all here and you can actually touch many of them. Ever wanted to stand next to a Mig 15 and a F-86 and a F-117 and talk to the men and women that have flown them? Then come out this week and experience a stunning event.
When you go, not "if", go. Take a hat, take a light coat, sunscreen, be prepared for wind, sun, hot and cold, heck, this is Nevada! Bring good walking shoes (the runway is over a mile long and you can easily walk from one end to the other and back again. Bring a camera (but save the film on the actual racing and the air show, the planes are too far away and too fast to get a good shot, just enjoy the show) and get a pit pass and walk the planes and take your photos. The crews love to talk about their planes and still today you can stand next to a gentlemen that is old, grey and maybe even needing some help walking . Listen and he will tell you about being 22 and flying that plane into harms way.
Listen to the stories that the Reno Air Races bring to life. Talk with you soon.
Thursday, September 4, 2008
Mt. Rose
In many ways this has nothing to do with real estate and everything to do with real estate. After many, many years of looking up at Mt. Rose, all 10,770 feet and being too busy to take the hike to the top this week I finally hiked to the top of the mountain.
If I had known just how hard the last 2 miles and 2,200 feet was going to be maybe I would of been a bit less enthusiastic and put it off for another year. As I started my climb and crossed ice at the edge of the creeks I knew that the morning was going to be interesting. By the time I got to the summit it was very cold and windy but the view of Reno, Tahoe, Truckee, Donner lake and out across eastern Nevada were just stunning. I still hurt today but I look forward to another summit!
Even though I was really exhausted by the time I got back to my car the feeling of success was just terrific. Going back to work the next day was a pleasure and I have to admit this has been a great week.
OK, back to real estate news next time.
If I had known just how hard the last 2 miles and 2,200 feet was going to be maybe I would of been a bit less enthusiastic and put it off for another year. As I started my climb and crossed ice at the edge of the creeks I knew that the morning was going to be interesting. By the time I got to the summit it was very cold and windy but the view of Reno, Tahoe, Truckee, Donner lake and out across eastern Nevada were just stunning. I still hurt today but I look forward to another summit!
Even though I was really exhausted by the time I got back to my car the feeling of success was just terrific. Going back to work the next day was a pleasure and I have to admit this has been a great week.
OK, back to real estate news next time.
Wednesday, September 3, 2008
Join us in the Fight Against Breast Cancer
REMAX International is a huge sponsor of the Susan G. Komen Race for the Cure and this year we are working hard to put together the biggest team we've ever had! Everyone in the David Morris Group has signed up to participate on race day and we would love to see you there too.
You can walk, run, or even sleep-in for the cure! If you're not able to join us on October 5th, then your generous donations to the cause are much appreciated and very welcome. Please visit the following link to donate or join. When you arrive at the site, follow the link on the main page that says "join my team" in order to join Team REMAX, or feel free to donate on our page.
Thank you for your support!
https://www.kintera.org/faf/donorReg/donorPledge.asp?ievent=274384&lis=0&kntae274384=CE9A1109B13848EA9B1E06A65A32F61D
You can walk, run, or even sleep-in for the cure! If you're not able to join us on October 5th, then your generous donations to the cause are much appreciated and very welcome. Please visit the following link to donate or join. When you arrive at the site, follow the link on the main page that says "join my team" in order to join Team REMAX, or feel free to donate on our page.
Thank you for your support!
https://www.kintera.org/faf/donorReg/donorPledge.asp?ievent=274384&lis=0&kntae274384=CE9A1109B13848EA9B1E06A65A32F61D
We're Getting a Face Lift!
OK, not an actual face lift, but we are changing our image. You'll start to see our new DMG logo on our email signatures and advertising as well as our stationary, which is coming soon. Of course, in the essence of being resourceful and Earth-friendly, you'll see some stragglers of the old logo we are phasing out.
Overall, don't fear the change, it's still the same great DMG that has been working hard for you for years! We hope you like our new look.
Thursday, August 21, 2008
Brief details on the "New" housing bill
I want to take just a moment and cover the primary changes in the bill HR 3221, with 800 pages I am going to only make comments on 5 points:
On Sept 30th 2008 DPA (Down Payment Assistance) programs will end. What does that mean?
Today a buyer can write an offer and ask the seller to up to 6% of the purchase price to be applied to the buyers recurring and non recurring closing costs/down payment. This has allowed a large group of credit worthy buyers to buy today. No more as of the end of Sept!
FHA Loan to Value decrease:
Buyers will need 3.5% cash to buy, up from 3.0%. Sounds small but combined with the end of DPA more buyers are going to be locked out of the market.
FHA MIP (Mortgage Insurance Premium" will increase:
Rate will go up from 2.25% to 3.00%. The loan insurance will go up slightly (this insurance for the loan is usually less than 4 years in duration).
$7,500 Tax Credit:
First Time Buyers (that is anyone who bought and did not won a home in the prior 3 years) can get a $7,500 tax credit if they purchase a home from April 9th 2008 to July 1st 2009. Look at this as an interest free loan for 15 years paid back at $500 per year.
Hope for Home Owners:
Upside down on the loan and want to keep the home? IF you qualify the lien holder will work the the borrower to write down the mortgage to no more the 90% of the appraised value. Example: if a borrower owes $300,000 but the home is worth $200,000 the borrower will receive a new loan for 90% of $200,000, which equals $180,00. The $120,000 is forgiven.
That is all for today.
On Sept 30th 2008 DPA (Down Payment Assistance) programs will end. What does that mean?
Today a buyer can write an offer and ask the seller to up to 6% of the purchase price to be applied to the buyers recurring and non recurring closing costs/down payment. This has allowed a large group of credit worthy buyers to buy today. No more as of the end of Sept!
FHA Loan to Value decrease:
Buyers will need 3.5% cash to buy, up from 3.0%. Sounds small but combined with the end of DPA more buyers are going to be locked out of the market.
FHA MIP (Mortgage Insurance Premium" will increase:
Rate will go up from 2.25% to 3.00%. The loan insurance will go up slightly (this insurance for the loan is usually less than 4 years in duration).
$7,500 Tax Credit:
First Time Buyers (that is anyone who bought and did not won a home in the prior 3 years) can get a $7,500 tax credit if they purchase a home from April 9th 2008 to July 1st 2009. Look at this as an interest free loan for 15 years paid back at $500 per year.
Hope for Home Owners:
Upside down on the loan and want to keep the home? IF you qualify the lien holder will work the the borrower to write down the mortgage to no more the 90% of the appraised value. Example: if a borrower owes $300,000 but the home is worth $200,000 the borrower will receive a new loan for 90% of $200,000, which equals $180,00. The $120,000 is forgiven.
That is all for today.
Thursday, August 7, 2008
Wait and Rent or Act and Buy?
This is the rent versus buy example mentioned in the newsletter:
For the buyer here is a sale that closed on 7/28/08 and a buy now vs. a rent and buy and wait for the market to drop scenario:
2,500 square foot home rental value $1,500 per month x 12 months = $18,000 rent plus an extra move for $2,500 for a total out of pocket of $20,500 (if you do this for 2 years the numbers the cost is about $38,500). Purchase today with 10% down or $31,000 your P.I. payment will be fixed @ $1,730 per month.
Now in one year assume that the home has lost 10% value and rates have moved as expected .5% up the new P.I. will be $1,665 per month. You saved by waiting to buy 1 year $63.00 per month but you spent $18,000 to rent so you could get a “real deal”. The landlord said thank you and you will need 23 years to recoup your $63 that you saved by waiting for the market to “drop”. What if rates do not change? It will still take you over 10 years to get even for renting for a year.
Oh, on the same subject which is a better buy? A bank owned home or an upgraded owner occupied home competing with the banks to sell? I think that as a personal home or an investment, you are selling yourself very short by only buying on price today and not looking at the inherent value of upgraded owner occupied homes. As an investor some of the REO’s are clearly great buys but again, if you are buying for the long run, really take the time to look at your long term rental growth or costs to upgrade by looking at some of the owner occupied homes with their upgrades (many of the foreclosed home’s lack upgrades and improvements as the buyers were buying the minimum stripped down homes in many cases). The value of better located homes and better upgraded homes in the future can be counted on to return a better value/rent. Always keep in mind that money is in fact cheap and an extra $10 per day can make the difference between a plain Jane home and a really nice home.
For the buyer here is a sale that closed on 7/28/08 and a buy now vs. a rent and buy and wait for the market to drop scenario:
2,500 square foot home rental value $1,500 per month x 12 months = $18,000 rent plus an extra move for $2,500 for a total out of pocket of $20,500 (if you do this for 2 years the numbers the cost is about $38,500). Purchase today with 10% down or $31,000 your P.I. payment will be fixed @ $1,730 per month.
Now in one year assume that the home has lost 10% value and rates have moved as expected .5% up the new P.I. will be $1,665 per month. You saved by waiting to buy 1 year $63.00 per month but you spent $18,000 to rent so you could get a “real deal”. The landlord said thank you and you will need 23 years to recoup your $63 that you saved by waiting for the market to “drop”. What if rates do not change? It will still take you over 10 years to get even for renting for a year.
Oh, on the same subject which is a better buy? A bank owned home or an upgraded owner occupied home competing with the banks to sell? I think that as a personal home or an investment, you are selling yourself very short by only buying on price today and not looking at the inherent value of upgraded owner occupied homes. As an investor some of the REO’s are clearly great buys but again, if you are buying for the long run, really take the time to look at your long term rental growth or costs to upgrade by looking at some of the owner occupied homes with their upgrades (many of the foreclosed home’s lack upgrades and improvements as the buyers were buying the minimum stripped down homes in many cases). The value of better located homes and better upgraded homes in the future can be counted on to return a better value/rent. Always keep in mind that money is in fact cheap and an extra $10 per day can make the difference between a plain Jane home and a really nice home.
Friday, July 25, 2008
Housing bill has Somthing for nearly everyone
Today if all goes well the Senate will vote on the new housing bill and by next week may be law.
If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.
Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:
RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.
Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.
If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.
FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.
In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.
Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.
ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.
REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.
Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.
REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.
VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.
This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.
Have a great day!
If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.
Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:
RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.
Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.
If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.
FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.
In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.
Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.
ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.
REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.
Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.
REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.
VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.
This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.
Have a great day!
Thursday, July 24, 2008
Housing Sales Up and Prices Flat
On Tuesday the front page of the Reno Gazette-Journal had the headline "Housing Sales Up as Prices Stay Flat," while the Wall Street Journal and other sources say sales are down in June. So who do you believe?
As the author of this blog entry, my issue is with how information is given to you, the consumer. What is right, what is wrong and what to believe.
Heck, I'm all for good news but let's make it real. The Wall Street Journal is in fact correct, sales are down in June and probably in July as well.
My numbers only reflect the resale market and new home sales that are included in the MLS system. I do this because I feel that it is in fact the resale market that is our reality check on what is going on in the real estate market. Selling new homes is great for developers but as a home owner the question is, can you sell your home and for how much in what given period of time? All new homes sales quickly become possible sellers in the resale market over time, so what happens in the resale market is critical to the health of our business.
In the first quarter of 2007 838 homes sold and in the second quarter 1,013 homes sold for an increase in activity of 18%.
In the first quarter of 2008 597 homes sold and in the second quarter 991 homes sold for a increase in activity of 40%.
I realize that I am drawing from one set of numbers but from what I see, we have positive growth and that needs to be publicized, this is GREAT news!
Unfortunately, the press seems to want to make extremes out of news, either stating things worse than they are or better than they are. My issue is that when one pumps up the good news it opens the door to the next reporter to make the negative news look worse than it is.
The fact is that as of today, July of 2008 is running 30% behind July of 2007. So does that mean that we have fallen down?
The fact is that our market did well in the first six months of this year despite all that we are dealing with and we ARE working out our issues slowly but surely. The REO/short sale market is not unlimited and unless, as a buyer, you only want to buy within a fairly restricted area of the market, the depressed prices elsewhere will stabilize sooner than you realize. No, I did not say prices are going to rise but prices are going to stabilize sooner than you think. For sellers, all this means is that to sell you need to price to the real numbers that are being reported and to wait out this market, and get substantial returns for waiting, is going to be a very, very long wait.
Let's focus on the good news that we're seeing positive growth in the market and keep working in the right direction. The combined efforts of agents, buyers and sellers will help make this "adjustment" a thing of the past.
As the author of this blog entry, my issue is with how information is given to you, the consumer. What is right, what is wrong and what to believe.
Heck, I'm all for good news but let's make it real. The Wall Street Journal is in fact correct, sales are down in June and probably in July as well.
My numbers only reflect the resale market and new home sales that are included in the MLS system. I do this because I feel that it is in fact the resale market that is our reality check on what is going on in the real estate market. Selling new homes is great for developers but as a home owner the question is, can you sell your home and for how much in what given period of time? All new homes sales quickly become possible sellers in the resale market over time, so what happens in the resale market is critical to the health of our business.
In the first quarter of 2007 838 homes sold and in the second quarter 1,013 homes sold for an increase in activity of 18%.
In the first quarter of 2008 597 homes sold and in the second quarter 991 homes sold for a increase in activity of 40%.
I realize that I am drawing from one set of numbers but from what I see, we have positive growth and that needs to be publicized, this is GREAT news!
Unfortunately, the press seems to want to make extremes out of news, either stating things worse than they are or better than they are. My issue is that when one pumps up the good news it opens the door to the next reporter to make the negative news look worse than it is.
The fact is that as of today, July of 2008 is running 30% behind July of 2007. So does that mean that we have fallen down?
The fact is that our market did well in the first six months of this year despite all that we are dealing with and we ARE working out our issues slowly but surely. The REO/short sale market is not unlimited and unless, as a buyer, you only want to buy within a fairly restricted area of the market, the depressed prices elsewhere will stabilize sooner than you realize. No, I did not say prices are going to rise but prices are going to stabilize sooner than you think. For sellers, all this means is that to sell you need to price to the real numbers that are being reported and to wait out this market, and get substantial returns for waiting, is going to be a very, very long wait.
Let's focus on the good news that we're seeing positive growth in the market and keep working in the right direction. The combined efforts of agents, buyers and sellers will help make this "adjustment" a thing of the past.
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