Need some good news? With housing prices nearly 15 percent lower than last year, the slow economy means it might be a great time to buy a house, according to Bills.com president Ethan Ewing.
"For individuals who have a steady source of income, good credit and cash in the bank, today could be an excellent time to purchase a home," Ewing said. "Low prices, a large inventory of homes for sale, low interest rates and beneficial government programs have made this year one of the best ever to buy a home, especially for first-time home buyers."
The median sales price for U.S. homes was 14.8 percent lower in January than it was a year earlier. And first-time homebuyers can benefit from the tax credits implemented as part of the 2009 American Recovery and Reinvestment Act (better known as this year's economic stimulus package).
Ewing offered these tips for individuals and families thinking of investing in a piece of America this year:
1) Know your score. Check your credit score before you make any decisions. Credit scores range from 300 to 850. The median U.S. credit score is about 693, according to Experian, one of the three main credit reporting agencies. A score below 680 usually results in a borrower being charged a higher interest rate or being denied credit. In this economy, you will need a good score to qualify for a mortgage. If your score is lagging, wait a few months. In the meantime, pay every bill on time, pay down as much debt as possible and increase income if possible to improve your chances. If possible, ask creditors for increases on your credit limits to help out the "credit available" aspect of your credit score – but do not tap into the addition.
2) Do not stretch too far. Often, borrowers are told they can qualify for a higher mortgage than they can comfortably pay. It is wise to keep housing expenses below 35 percent of your total income. Leave breathing room in your budget so that if something unplanned does occur, you will be able to keep your home. If you are not certain, wait to buy.
3) Know the full costs of buying. The down payment and principal and interest on a mortgage payment are only the beginning of home-related costs. For a typical mortgage payment, "escrow" payments, or the costs of home insurance, property taxes, and, in some cases, private mortgage insurance, can total hundreds of dollars per month in addition to principal and interest. Determine the property tax amount – the largest part of the escrow payment – by checking with your real estate agent or county property tax assessor before your buy.
Be sure to not deplete savings or cash on hand when making a down payment, since new home owners often must complete initial work on the home, such as painting, flooring, landscaping or bringing an older house up to date. After that, a rule of thumb is to budget 1 percent of the home's purchase price per year for home repairs and upkeep.
4) Understand private mortgage insurance (PMI). Mortgages with less than a 20 percent down payment require PMI in case the owner defaults on the loan. When the home owner pays the mortgage down to 80 percent or less of the home's value, the home owner can request the lender to cancel the PMI on a conventional mortgage and stop paying the additional amount. Meanwhile, PMI is tax-deductible, at least through 2010.
5) Check for prepayment penalties and other provisions. If your loan has a prepayment penalty, borrowers face hefty charges if they pay it off early. This provision also can apply to future refinancing, so be forewarned. To determine if there is a prepayment penalty, review the Truth in Lending disclosure or ask your lender to find out.
Prepayment penalties have come under increased scrutiny since the mortgage crisis began, so if you find your loan has one, voice your dissatisfaction directly and clearly to your lender or broker.
6) Consult a tax advisor. First-time home buyers -- including people who have not owned a home for at least three years -- qualify for a tax credit of up to $8,000 if they purchase a home before Dec. 1, 2009. The credit does not have to be repaid if the buyer keeps the home for at least three years. In addition, all home owners qualify for tax credits for certain home energy efficiency improvements made in 2009.
7) Buyer beware. Some of the lowest prices on homes today are "fixer-uppers" or homes sold "as is" because of foreclosure. Invest in a home inspection before agreeing to purchase any home. You may even be able to split the cost of this inspection – typically less than $400 – with the seller. The inspection will inform you of any faults in the home and help you determine the approximate cost to remedy those problems. Without an inspection, you could wind up owning a home that requires thousands of dollars of repairs.
"If you have good credit and funds available for a down payment, dot your I's and cross your T's – then take advantage of today's excellent opportunity to step onto the path of home ownership," Ewing said.
About Bills.com (www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 50,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.
Source
March 30, 2009
Mortgage rates drop as Fed opts to buy debt
Mortgage rates have fallen back to record lows on word that the Federal Reserve plans to pump nearly $2 trillion into U.S. mortgage- and Treasury-bond markets.
Home-loan rates dropped below 5 percent yesterday after the Fed announced plans to buy $1.75 trillion of mortgage bonds, U.S. Treasuries and other securities on open markets. The central bank had previously disclosed plans to purchase $600 billion of such debt.
By snapping up huge amounts of mortgage and Treasury bonds, the Fed will make hundreds of billions of extra dollars available for fresh home loans.
That prospect pushed benchmark mortgage rates down about 0.25 points yesterday to 4.875 percent - tying a record low set in January, according to local loan brokers.
Boston lender John Battaglia thinks rates could drop another eighth of a point today, but cautioned that market watchers “are still trying to determine whether this is a blip or a long-term move downward.”
However, Bankrate.com analyst Greg McBride believes the Fed’s actions will keep rates low for the rest of 2009 - good news for the struggling housing sector.
“Low mortgage rates should help bring home buyers off of the sidelines and into the marketplace,” he said.
McBride believes the Fed’s move will especially cut rates for Boston-area home buyers seeking “jumbo” mortgages, or loans above $523,750. Jumbo rates had been running as high as 8.5 percent in recent weeks amid soft Wall Street demand for buying such loans from banks.
The Fed announced yesterday’s plan in conjunction with a decision to keep the benchmark federal funds rate unchanged at a record-low zero-to-0.25 percent range.
“Information received (since) January indicates that the economy continues to contract,” the central bank said in disclosing its moves. “Job losses, declining equity and housing wealth and tight credit conditions have weighed on consumer sentiment and spending.”
Market watchers quickly endorsed the Fed’s actions.
“This will definitely lend a helping hand to Treasuries, mortgages (and other loans),” Bill Gross of bond-investing giant Pimco told CNBC. “It is a significant move.”
The U.S. central bank doesn’t usually purchase investments such as mortgage or Treasury bonds.
But the Fed must take unusual steps these days because it’s already used up its traditional economic tool: Cutting the federal funds rate.
The federal funds rate can’t go below zero percent, so there’s no room left for the central bank to cut the key rate any further.
Yesterday’s announcement sent the Dow Jones industrial average briefly rallying.
Home-loan rates dropped below 5 percent yesterday after the Fed announced plans to buy $1.75 trillion of mortgage bonds, U.S. Treasuries and other securities on open markets. The central bank had previously disclosed plans to purchase $600 billion of such debt.
By snapping up huge amounts of mortgage and Treasury bonds, the Fed will make hundreds of billions of extra dollars available for fresh home loans.
That prospect pushed benchmark mortgage rates down about 0.25 points yesterday to 4.875 percent - tying a record low set in January, according to local loan brokers.
Boston lender John Battaglia thinks rates could drop another eighth of a point today, but cautioned that market watchers “are still trying to determine whether this is a blip or a long-term move downward.”
However, Bankrate.com analyst Greg McBride believes the Fed’s actions will keep rates low for the rest of 2009 - good news for the struggling housing sector.
“Low mortgage rates should help bring home buyers off of the sidelines and into the marketplace,” he said.
McBride believes the Fed’s move will especially cut rates for Boston-area home buyers seeking “jumbo” mortgages, or loans above $523,750. Jumbo rates had been running as high as 8.5 percent in recent weeks amid soft Wall Street demand for buying such loans from banks.
The Fed announced yesterday’s plan in conjunction with a decision to keep the benchmark federal funds rate unchanged at a record-low zero-to-0.25 percent range.
“Information received (since) January indicates that the economy continues to contract,” the central bank said in disclosing its moves. “Job losses, declining equity and housing wealth and tight credit conditions have weighed on consumer sentiment and spending.”
Market watchers quickly endorsed the Fed’s actions.
“This will definitely lend a helping hand to Treasuries, mortgages (and other loans),” Bill Gross of bond-investing giant Pimco told CNBC. “It is a significant move.”
The U.S. central bank doesn’t usually purchase investments such as mortgage or Treasury bonds.
But the Fed must take unusual steps these days because it’s already used up its traditional economic tool: Cutting the federal funds rate.
The federal funds rate can’t go below zero percent, so there’s no room left for the central bank to cut the key rate any further.
Yesterday’s announcement sent the Dow Jones industrial average briefly rallying.
March 29, 2009
Stimulating Stability
The passing of the most recent stimulus package is greatly anticipated. The legislation addresses housing from a variety of angles. Most notably it looks to increase home retention by assisting homeowners is distress, avoid foreclosure and offers incentives such as tax credits to help entice prospective first time buyers to purchase a home.
- The tax credit is an integral part of the 2009 American Recovery and Reinvestment Act and has four rules or guidelines according to Bankrate.com:
- Does not have to be repaid unless the home is sold within three years.
- Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.
- Available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.
- Restricted by income; phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.
Tax credit is for up to 10 percent of the purchase price, up to a maximum of $8,000. For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.
The credit can be taken on 2008 taxes even when the purchase is made in 2009. One of the preferable benefits of the package allows for buyers of homes in 2009 to receive a credit on their 2008 tax filings - this acts as an immediate stimulus. For those considering this option, it can be achieved typically in one of three ways. Buyers can purchase their own prior to filing on April 15th, they can apply for a tax extension and purchase their home before they file or simply file an amended tax return.
As mentioned previously, another significant portion of the legislation focuses on the prevailing issue of home retention via the ‘Making Home Affordable’ program. This program looks to suspend many foreclosures until March 31st. Additionally, it includes a Home Affordable Refinance and Home Affordable Modification initiative.
The Home Affordable Refinance program is designed for homeowners that have been struggling but have made timely mortgage payments but can not refinance due to a decreased value in their home. The mortgages must be backed typically by either FannieMae or FreddieMac.
For many homeowners, a rate increase in their adjustable mortgage or a job loss has been a catalyst for economic crisis. For those, there is the Home Affordable Modification program which will allow homeowners to restructure their loan to a more affordable payment for the government backed mortgage.
For more information visit the U.S. Treasury Web site, www.financialstability.gov. Additionally, seek the consul of a reputable; HUD certified counseling agency or your mortgage servicer. Have bank statements, recent pay stubs, monthly bills, homeowner’s insurance policy, letters or communication with your lender and other documents readily available. Most importantly, is seeking help quickly before the situation festers and becomes inevitable.
Source
- The tax credit is an integral part of the 2009 American Recovery and Reinvestment Act and has four rules or guidelines according to Bankrate.com:
- Does not have to be repaid unless the home is sold within three years.
- Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.
- Available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.
- Restricted by income; phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.
Tax credit is for up to 10 percent of the purchase price, up to a maximum of $8,000. For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.
The credit can be taken on 2008 taxes even when the purchase is made in 2009. One of the preferable benefits of the package allows for buyers of homes in 2009 to receive a credit on their 2008 tax filings - this acts as an immediate stimulus. For those considering this option, it can be achieved typically in one of three ways. Buyers can purchase their own prior to filing on April 15th, they can apply for a tax extension and purchase their home before they file or simply file an amended tax return.
As mentioned previously, another significant portion of the legislation focuses on the prevailing issue of home retention via the ‘Making Home Affordable’ program. This program looks to suspend many foreclosures until March 31st. Additionally, it includes a Home Affordable Refinance and Home Affordable Modification initiative.
The Home Affordable Refinance program is designed for homeowners that have been struggling but have made timely mortgage payments but can not refinance due to a decreased value in their home. The mortgages must be backed typically by either FannieMae or FreddieMac.
For many homeowners, a rate increase in their adjustable mortgage or a job loss has been a catalyst for economic crisis. For those, there is the Home Affordable Modification program which will allow homeowners to restructure their loan to a more affordable payment for the government backed mortgage.
For more information visit the U.S. Treasury Web site, www.financialstability.gov. Additionally, seek the consul of a reputable; HUD certified counseling agency or your mortgage servicer. Have bank statements, recent pay stubs, monthly bills, homeowner’s insurance policy, letters or communication with your lender and other documents readily available. Most importantly, is seeking help quickly before the situation festers and becomes inevitable.
Source
March 28, 2009
Plan before you buy a home
buying a house.
“Even before you look at houses,” said Janice Lawhon of Home National Bank, “prospective homeowners should come in for pre-approval. It costs nothing and helps people to determine their debt to income so they can know what price of home they can best afford.”
Debt to income is the percentage of an individual’s gross monthly income that goes toward the payment of debts in addition to certain taxes, fees, insurance premiums, etc. A high ratio may indicate too large a debt load and discourage lenders.
To calculate debt-to-income ratio, go to moneycentral.msn.com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx.
Good credit is important to getting a good loan for a house.
Keep your credit in good standing and check with your bank for pre-approval,” said Cushing real estate agent Debbie Sue Young, president of the Cushing Realtors Board.
The ability of a consumer to manage credit determines the credit rating. The higher the credit score, the more willing banks are to work with you on financing.
A lower score might result in financing ineligiblility or higher interest rates.
“The minimum average credit score for home ownership is 640, which is an increase,” Lawhon said. “There are some FHA loans which will accept less.”
By law, a free annual credit report is available to consumers. To request one, go to www.annualcreditreport.com/cra/index.jsp.
HOME OWNERSHIP TIPS
• Typically, conventional loans require a minimum of 5 percent down.
• Sellers might help with closing costs if buyers ask, Lawhon said.
• As a part of the economic stimulus package, the new first-time home-buyers program offers a tax credit of 10 percent of the value of the home up to a maximum of $8,000. It is available to home-buyers who purchase between Jan. 1 and Dec. 1. First time home-buyers are defined as anyone who has not owned a home within the past three years. Additional information can be found at www.federalhousingtaxcredit.com.
• “A great pick for someone looking to buy a home and do a cosmetic update,” said Schultz, “is the FHA 203(k) loan where a homeowner can purchase a primary residence with 3.5 percent down.” This allows the handy homeowner to finance a maximum of $35,000 for permitted repair work for things like new carpet, paint, tile or cabinets.
• Little repairs are OK in houses, Smith said: “Most important is that prospective buyers should make sure the roof is sound and that there are no plumbing, water, gas or electrical system issues.” Sellers may pay for some repairs if buyers ask.
• Schultz said the Veterans Administration offers a great loan with a zero down option for qualified buyers.
• Smith suggests asking local county clerk or sheriff’s offices for a listing of pre- or foreclosure homes. A listing for Payne County can be found at www.paynecounty.org/sheriff/sales.php.
• Department of Urban Housing or HUD homes can be found at www.homesales.gov.
• The Department of Urban Housing and Development offers the 184 Program for American Indians. It is a 3 percent down program.
• Oklahoma also offers 100 percent rural development loans for people who qualify, Young said.
Source
“Even before you look at houses,” said Janice Lawhon of Home National Bank, “prospective homeowners should come in for pre-approval. It costs nothing and helps people to determine their debt to income so they can know what price of home they can best afford.”
Debt to income is the percentage of an individual’s gross monthly income that goes toward the payment of debts in addition to certain taxes, fees, insurance premiums, etc. A high ratio may indicate too large a debt load and discourage lenders.
To calculate debt-to-income ratio, go to moneycentral.msn.com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx.
Good credit is important to getting a good loan for a house.
Keep your credit in good standing and check with your bank for pre-approval,” said Cushing real estate agent Debbie Sue Young, president of the Cushing Realtors Board.
The ability of a consumer to manage credit determines the credit rating. The higher the credit score, the more willing banks are to work with you on financing.
A lower score might result in financing ineligiblility or higher interest rates.
“The minimum average credit score for home ownership is 640, which is an increase,” Lawhon said. “There are some FHA loans which will accept less.”
By law, a free annual credit report is available to consumers. To request one, go to www.annualcreditreport.com/cra/index.jsp.
HOME OWNERSHIP TIPS
• Typically, conventional loans require a minimum of 5 percent down.
• Sellers might help with closing costs if buyers ask, Lawhon said.
• As a part of the economic stimulus package, the new first-time home-buyers program offers a tax credit of 10 percent of the value of the home up to a maximum of $8,000. It is available to home-buyers who purchase between Jan. 1 and Dec. 1. First time home-buyers are defined as anyone who has not owned a home within the past three years. Additional information can be found at www.federalhousingtaxcredit.com.
• “A great pick for someone looking to buy a home and do a cosmetic update,” said Schultz, “is the FHA 203(k) loan where a homeowner can purchase a primary residence with 3.5 percent down.” This allows the handy homeowner to finance a maximum of $35,000 for permitted repair work for things like new carpet, paint, tile or cabinets.
• Little repairs are OK in houses, Smith said: “Most important is that prospective buyers should make sure the roof is sound and that there are no plumbing, water, gas or electrical system issues.” Sellers may pay for some repairs if buyers ask.
• Schultz said the Veterans Administration offers a great loan with a zero down option for qualified buyers.
• Smith suggests asking local county clerk or sheriff’s offices for a listing of pre- or foreclosure homes. A listing for Payne County can be found at www.paynecounty.org/sheriff/sales.php.
• Department of Urban Housing or HUD homes can be found at www.homesales.gov.
• The Department of Urban Housing and Development offers the 184 Program for American Indians. It is a 3 percent down program.
• Oklahoma also offers 100 percent rural development loans for people who qualify, Young said.
Source
March 27, 2009
Should I buy a Durango home this year?
When should I buy a house? That is a question on many people's minds these days.
Some markets have seen home prices cut in half (or more) over the last two years, whereas, other markets, such as Durango's, have seen home prices correct 'only' 15 percent from the peak. My answer to this question may surprise readers familiar with my column.
As I still believe home prices in Durango will continue downward until 2010, it might be worth coming off the sidelines this year to purchase a home. I say this not because I believe Durango will buck the national housing trend, but because monetary policy set at the Federal Reserve level has created a rare opportunity for borrowers.
Specifically, mortgages are in the 5 percent range, and possibly will be lower before this year is out. Additionally, I further believe the Federal Reserve is setting the nation up for significant inflation once we recover from this recession.
Historically low mortgage rates today, combined with the potential for hyperinflation (and much higher mortgage rates) within the next couple of years, could point to home ownership sooner than later.
Let me further explain my logic with a simple example. Assume a $400,000 home today, with the borrower financing 80 percent of it, or $320,000. At 5 percent mortgage rates, the monthly payment would be $1,718. Now, assume home prices fall an additional 20 percent in Durango over the next two years, but mortgage rates spike to 7 percent (still below the long-run historical average of 8 percent). This home would be selling for $320,000, with the borrower financing $256,000. The monthly mortgage payment would be $1,703. In other words, the monthly carrying cost of the home remains relatively constant with the downward move in home prices and the upward move in mortgage rates.
If people believe they will call Durango home for some time, found a house they loved and qualified for a 5 percent mortgage rate, then purchasing today would not necessarily be considered a bad decision.
In fact, it could be argued the monthly mortgage payment on this home will remain in a tight range over the next several years with a tug of war between home prices and mortgage rates.
With no one capable of perfectly timing the market and homes a historical inflation hedge, home ownership should be considered for the right type of buyer.
Let me wrap up by saying I am not unconditionally recommending home ownership. Given economic uncertainties, increased unemployment levels and the financial commitment of a mortgage, the decision to purchase a home should not be taken lightly.
Further, it should be noted anyone that 'must' sell the home he or she purchases today within the next several years, will more than likely incur a loss.
However, if you are confident you will be in your home for more than five years, then seriously consider that home with a view or close to downtown and great Durango schools.
Source
Some markets have seen home prices cut in half (or more) over the last two years, whereas, other markets, such as Durango's, have seen home prices correct 'only' 15 percent from the peak. My answer to this question may surprise readers familiar with my column.
As I still believe home prices in Durango will continue downward until 2010, it might be worth coming off the sidelines this year to purchase a home. I say this not because I believe Durango will buck the national housing trend, but because monetary policy set at the Federal Reserve level has created a rare opportunity for borrowers.
Specifically, mortgages are in the 5 percent range, and possibly will be lower before this year is out. Additionally, I further believe the Federal Reserve is setting the nation up for significant inflation once we recover from this recession.
Historically low mortgage rates today, combined with the potential for hyperinflation (and much higher mortgage rates) within the next couple of years, could point to home ownership sooner than later.
Let me further explain my logic with a simple example. Assume a $400,000 home today, with the borrower financing 80 percent of it, or $320,000. At 5 percent mortgage rates, the monthly payment would be $1,718. Now, assume home prices fall an additional 20 percent in Durango over the next two years, but mortgage rates spike to 7 percent (still below the long-run historical average of 8 percent). This home would be selling for $320,000, with the borrower financing $256,000. The monthly mortgage payment would be $1,703. In other words, the monthly carrying cost of the home remains relatively constant with the downward move in home prices and the upward move in mortgage rates.
If people believe they will call Durango home for some time, found a house they loved and qualified for a 5 percent mortgage rate, then purchasing today would not necessarily be considered a bad decision.
In fact, it could be argued the monthly mortgage payment on this home will remain in a tight range over the next several years with a tug of war between home prices and mortgage rates.
With no one capable of perfectly timing the market and homes a historical inflation hedge, home ownership should be considered for the right type of buyer.
Let me wrap up by saying I am not unconditionally recommending home ownership. Given economic uncertainties, increased unemployment levels and the financial commitment of a mortgage, the decision to purchase a home should not be taken lightly.
Further, it should be noted anyone that 'must' sell the home he or she purchases today within the next several years, will more than likely incur a loss.
However, if you are confident you will be in your home for more than five years, then seriously consider that home with a view or close to downtown and great Durango schools.
Source
March 26, 2009
Realtors(R) Say Fed Move to Buy More Securities Will Boost Housing Markets
The following is a statement by National Association of Realtors® President Charles McMillan:
"The National Association of Realtors® applauds the Federal Reserve announcement today that it would purchase an additional $750 billion in Fannie Mae and Freddie Mac mortgage-backed securities and up to $300 billion in longer term Treasury securities. This is great news for American home buyers and homeowners because mortgage interest rates will continue to remain at historic lows.
"NAR has been advocating since last fall that the Fed be more active in buying mortgage-backed securities. We are excited that the Fed acted on this provision of the stimulus plan that we offered to the government in November.
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"Greater numbers of home buyers will be able to purchase a home, and homeowners facing challenges will be able to refinance into better terms. We already are experiencing a great improvement in housing affordability due to historically low interest rates, and the Fed's move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more American buy homes and draw down inventory."
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center.
REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.
Source
"The National Association of Realtors® applauds the Federal Reserve announcement today that it would purchase an additional $750 billion in Fannie Mae and Freddie Mac mortgage-backed securities and up to $300 billion in longer term Treasury securities. This is great news for American home buyers and homeowners because mortgage interest rates will continue to remain at historic lows.
"NAR has been advocating since last fall that the Fed be more active in buying mortgage-backed securities. We are excited that the Fed acted on this provision of the stimulus plan that we offered to the government in November.
Story continues below ↓advertisement | your ad here
"Greater numbers of home buyers will be able to purchase a home, and homeowners facing challenges will be able to refinance into better terms. We already are experiencing a great improvement in housing affordability due to historically low interest rates, and the Fed's move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more American buy homes and draw down inventory."
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center.
REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.
Source
March 25, 2009
Home sales soar while median price hits floor
Foreclosure bargains continued to fuel soaring Bay Area home sales in February as the median sales price dipped below $300,000 for the first time since late 1999.
A total of 5,032 new and resale houses and condominiums changed hands in the Bay Area last month, up 26.1 percent from February 2008, according to a MDA DataQuick report released Thursday. The Bay Area's median price of $295,000 was down a record 46.2 percent from February 2008.
Throughout the Bay Area, 52 percent of existing home sales were properties that had been foreclosed at some time in the last 12 months. That's up from a revised figure of 51.9 percent in January and 22.3 percent in February 2008.
In Alameda County, 46.2 percent of existing homes sales last month were foreclosures while in Contra Costa County that number was 65.1 percent. In San Mateo County, 31.3 percent of existing home sales were foreclosures.
The rising sales and falling home prices come at a time when the Federal Reserve said this week it would buy up to $300 billion worth of long-term Treasury bonds and spend up to $750 billion to purchase additional mortgage-backed securities.
The Fed's trillion-dollar plus move is expected to keep mortgage interest rates to below 5 percent, which could make it easier to buy a home or refinance into a lower-interest rate loan. Even before the announcement, mortgage giant Freddie Mac said average rates on a 30-year fixed-rate mortgage had dropped to
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4.98 percent this week.
"(The announcement) will definitely help the market as far as purchasing and refinancing goes, provided that there is equity in the home," said Cindy Romero-Lowary, a mortgage loan consultant at Cherry Creek Mortgage in Pleasanton. While it's likely that interest rates will go lower, that doesn't necessary mean that people who want to refinance or buy a home will be able to do so, said Allan Nuttall, a San Mateo-based mortgage broker at TOPP Lending.
"Until the banks start loosening up some of those (loan qualification) requirements the average homeowner is not going to be able to qualify for that, a refinancing, or even people that have pristine credit," he said. "Banks are still not lending a lot of money."
The Fed's action should help the housing market, said Dave Stark, public affairs director for the Bay East Association of Realtors, which covers southern and eastern Alameda County.
"It's very encouraging, not only for home buyers but for home sellers, especially in the Bay Area. Even though we see home prices coming down, it's still a challenge for many buyers to purchase a home because of the difficulty in securing purchasing financing," he said.
Foreclosures sales are not the only thing that's rising in the real estate world.
Government insured Federal Housing Administration loans made up a record 24.9 percent of all Bay Area home purchase loans last month, said the DataQuick report. A year ago, FHA loans accounted for 1 percent of purchase loans.
Rates for what's referred to as an ``FHA streamline refinance'' went below 5 percent after the Fed's move, said Romero-Lowary. Borrowers who are already in an FHA loan can apply for an FHA streamline refinance.
"In the last year, we have seen a lot of FHA loans. I have clients that closed in November and December. Last year, FHA loans were at 6.5 percent and now they are below 5 percent. It's going to save them a lot of money for payment over the next 30 years," she said.
A 30-year fixed-rate loan for $300,000 with a 4.9 percent interest rate would have a monthly payment of $1592, or $305 less than the same loan with a 6.5 percent interest rate, according to a www.bankrate.com mortgage calculator.
While FHA loans are growing, just the opposite is happening with jumbo loans used to finance homes that cost above the $729,750 conforming loan limit that applies in most of the Bay Area. Last month, jumbo loans accounted for just 17.5 percent of purchase loans in the region.
Andrew LePage, an analyst with DataQuick, said the Fed's move "has the potential to spur a lot more refinancing and it could spur some additional home buying, especially if the Fed action triggers more lending in the jumbo loan range. One risk associated with the Fed effort is that it could eventually stoke inflation fears in the bond market, which could put upward pressure on mortgage rates. We're just going to have to wait and see how this plays out," he wrote in an e-mail.
A total of 5,032 new and resale houses and condominiums changed hands in the Bay Area last month, up 26.1 percent from February 2008, according to a MDA DataQuick report released Thursday. The Bay Area's median price of $295,000 was down a record 46.2 percent from February 2008.
Throughout the Bay Area, 52 percent of existing home sales were properties that had been foreclosed at some time in the last 12 months. That's up from a revised figure of 51.9 percent in January and 22.3 percent in February 2008.
In Alameda County, 46.2 percent of existing homes sales last month were foreclosures while in Contra Costa County that number was 65.1 percent. In San Mateo County, 31.3 percent of existing home sales were foreclosures.
The rising sales and falling home prices come at a time when the Federal Reserve said this week it would buy up to $300 billion worth of long-term Treasury bonds and spend up to $750 billion to purchase additional mortgage-backed securities.
The Fed's trillion-dollar plus move is expected to keep mortgage interest rates to below 5 percent, which could make it easier to buy a home or refinance into a lower-interest rate loan. Even before the announcement, mortgage giant Freddie Mac said average rates on a 30-year fixed-rate mortgage had dropped to
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4.98 percent this week.
"(The announcement) will definitely help the market as far as purchasing and refinancing goes, provided that there is equity in the home," said Cindy Romero-Lowary, a mortgage loan consultant at Cherry Creek Mortgage in Pleasanton. While it's likely that interest rates will go lower, that doesn't necessary mean that people who want to refinance or buy a home will be able to do so, said Allan Nuttall, a San Mateo-based mortgage broker at TOPP Lending.
"Until the banks start loosening up some of those (loan qualification) requirements the average homeowner is not going to be able to qualify for that, a refinancing, or even people that have pristine credit," he said. "Banks are still not lending a lot of money."
The Fed's action should help the housing market, said Dave Stark, public affairs director for the Bay East Association of Realtors, which covers southern and eastern Alameda County.
"It's very encouraging, not only for home buyers but for home sellers, especially in the Bay Area. Even though we see home prices coming down, it's still a challenge for many buyers to purchase a home because of the difficulty in securing purchasing financing," he said.
Foreclosures sales are not the only thing that's rising in the real estate world.
Government insured Federal Housing Administration loans made up a record 24.9 percent of all Bay Area home purchase loans last month, said the DataQuick report. A year ago, FHA loans accounted for 1 percent of purchase loans.
Rates for what's referred to as an ``FHA streamline refinance'' went below 5 percent after the Fed's move, said Romero-Lowary. Borrowers who are already in an FHA loan can apply for an FHA streamline refinance.
"In the last year, we have seen a lot of FHA loans. I have clients that closed in November and December. Last year, FHA loans were at 6.5 percent and now they are below 5 percent. It's going to save them a lot of money for payment over the next 30 years," she said.
A 30-year fixed-rate loan for $300,000 with a 4.9 percent interest rate would have a monthly payment of $1592, or $305 less than the same loan with a 6.5 percent interest rate, according to a www.bankrate.com mortgage calculator.
While FHA loans are growing, just the opposite is happening with jumbo loans used to finance homes that cost above the $729,750 conforming loan limit that applies in most of the Bay Area. Last month, jumbo loans accounted for just 17.5 percent of purchase loans in the region.
Andrew LePage, an analyst with DataQuick, said the Fed's move "has the potential to spur a lot more refinancing and it could spur some additional home buying, especially if the Fed action triggers more lending in the jumbo loan range. One risk associated with the Fed effort is that it could eventually stoke inflation fears in the bond market, which could put upward pressure on mortgage rates. We're just going to have to wait and see how this plays out," he wrote in an e-mail.
March 19, 2009
Indigenous housing: from rhetoric to reality
Despite spending billions of dollars, governments in Australia have failed to provide decent housing for Aborigines and Torres Strait Islander communities.
It is widely acknowledged that public housing in Aboriginal communities is poorly designed and constructed, with few of the amenities that most Australians take for granted. Inadequate maintenance and overcrowding have resulted in many of the houses becoming uninhabitable within 10 years of construction. Housing in these communities compares poorly with other public housing - not to mention the private homes enjoyed by most other Australians.
The prolonged failure of successive government attempts to improve the living conditions of Aborigines and Torres Strait Islanders in remote Australia by building new public housing suggests that alternatives, such as private home ownership, need to be considered.
The benefits of home ownership are generally well known. Homeowners tend to maintain their homes and be in regular employment. Owning a home can also encourage better saving habits and a greater sense of individual responsibility. Research shows that having a home may provide the incentive to secure a job, stay in employment, or look for a better paying position.
However, the lack of private property rights on most Indigenous land has prevented home ownership. And, banks will not provide financing for home loans without individual title over land.
Although home ownership may be considered beyond the reach of many Aborigines and Torres Strait Islanders, the choice to become a homeowner should be available to all Australians regardless of who they are or where they live. There are Indigenous families living on communal title land who could afford to become homeowners - they should be able to buy a house on their own land.
To allow individual 'ownership' of land 99-year lease schemes have been introduced in the Northern Territory and Queensland. But these lease schemes have failed to meet expectations.
Although they are being promoted as a way of facilitating private homeownership, the Commonwealth Government is largely using leases to enable more public housing to be built. Instead of 99-year leases over townships, the Rudd Government has focused on securing 'block' or 'housing' leases to establish secure title for public housing. It is not at all clear how these leases will lead to private home ownership.
Public housing may be made available for tenants to purchase as part of a rent-to-buy scheme but this does not give people much choice about the types of houses they can buy. The cost of public housing is also exorbitant. Building two new homes in the Northern Territory cost the government nearly $900,000. At this price public housing will have to be heavily subsidised if it is to be made available for the Indigenous community to purchase.
In Queensland, the expectation of new public housing is also likely to thwart home ownership plans. Particularly, as under the Queensland lease scheme - traditional owners could be charged to rent their own land. Aborigines will have the choice of living in a newly built public house and paying subsidised rent - or going through a complicated process to lease their own land. Many may choose not to bother with this hassle, particularly as the cost of servicing a mortgage is likely to be higher than the cost of renting.
Unless the disincentives for homeownership are addressed it appears unlikely that the Commonwealth Government's generous Home Ownership on Indigenous Land program (HOIL) will ever be fully implemented. Under the program potential purchasers only need to have a small deposit to access a range of concessions, including, zero interest rates for some borrowers. These concessions will enable even low income Aborigines and Torres Strait Islanders to purchase a home. But despite the merits of the Homeownership scheme - in the last three years only one (HOIL) loan has been granted.
For Aborigines and Torres Strait Islanders to have the same opportunity for homeownership as other Australians, a lease scheme that allows communities to decide how to sublet their land needs to be introduced. 'Community leases' could operate like company title with eligibility rules and conditions for membership. This way private homeownership in remote communities might actually become a reality rather than mere rhetoric.
By Sara Hudson
March 18, 2009
Last-Minute Tax Saving Tips
Make the most of changes designed to give you a break on your 2008 tax bill.
In this rocky economy, a tax refund can provide welcome relief. Congress approved more than 500 changes to the tax code in 2008 in response to the housing collapse, stock-market implosion and several natural disasters. And the passage of a new economic-stimulus package means that more breaks are on the way.
Niki Roberts, a graphic designer in Seattle, is one beneficiary of the tax-relief measures. Roberts, 35, thought that as a single woman she would never be able to afford to buy a home. But as housing prices continued to plummet, she decided to take the plunge. "I wanted to take advantage of this great opportunity," she says. Last summer, Roberts bought a two-bedroom, ranch-style house, complete with a fenced-in yard for her dog, Maggie. Now she's able to cash in on a slew of tax breaks -- including a new $7,500 credit for first-time home buyers, as well as deductions for real estate taxes, mortgage interest and private mortgage insurance -- that will result in a juicy refund check this spring.
Home Sweet Tax Break
The new tax credit for first-time home buyers is actually a tax-free loan that must be paid back to the government over 15 years -- starting two years after the year the credit is claimed. If you sell the home before you finish paying back the loan, the balance is due in full in the year of the sale. Here's how it works: You can claim a tax credit equal to 10% of the purchase price -- up to $7,500 -- if you bought a principal residence after April 8, 2008. Because a tax credit reduces your tax bill dollar for dollar, it is more valuable than a deduction, which reduces the amount of your income that is taxed.
Vacation homes and rental properties are not eligible, and you have to meet income requirements. For single taxpayers, the credit decreases as modified adjusted gross income rises above $75,000, and it disappears altogether if you earn more than $95,000. For married couples, the credit starts to decline when your modified adjusted gross income reaches $150,000, and disappears after it tops $170,000.
If you buy a home between January 1 and November 30, 2009, you can claim the first-time home-buyer credit on your 2008 or 2009 return. (The stimulus package raised the credit to $8,000 and eliminated the payback provisions for homes purchased in 2009 as long as you remain in the house for at least three years.) Use Form 1040X to amend your tax return if you have already filed or Form 4868 to delay your filing deadline until October 15. (An extension delays the deadline for filing forms but not for any payment you owe.)
Homeowners who don't itemize deductions -- such as retirees who no longer have a mortgage and new owners who buy late in the year -- also get a new break for 2008: an extra standard deduction to offset real estate taxes. Individuals can claim up to $500, and married couples up to $1,000. That's on top of the normal standard deduction of $5,450 for individuals, $8,000 for heads of household and $10,900 for joint filers.
Some homeowners affected by the foreclosure fiasco also qualify for relief. Normally, if you sell your home for less than you owe on the mortgage in a lender-approved transaction known as a short sale, or if your debt is wiped out through a foreclosure and sub-sequent sale, the amount that's forgiven is considered taxable income. But in 2007 Congress approved legislation that excludes up to $2 million of canceled debt if it is secured by a principal residence. The tax relief does not apply to vacation homes and other second homes, nor to cash-out refinancing that went toward paying for purchases other than a home. Last year, Congress extended the temporary debt-cancellation relief through 2012. File Form 982 to claim it.
Source
In this rocky economy, a tax refund can provide welcome relief. Congress approved more than 500 changes to the tax code in 2008 in response to the housing collapse, stock-market implosion and several natural disasters. And the passage of a new economic-stimulus package means that more breaks are on the way.
Niki Roberts, a graphic designer in Seattle, is one beneficiary of the tax-relief measures. Roberts, 35, thought that as a single woman she would never be able to afford to buy a home. But as housing prices continued to plummet, she decided to take the plunge. "I wanted to take advantage of this great opportunity," she says. Last summer, Roberts bought a two-bedroom, ranch-style house, complete with a fenced-in yard for her dog, Maggie. Now she's able to cash in on a slew of tax breaks -- including a new $7,500 credit for first-time home buyers, as well as deductions for real estate taxes, mortgage interest and private mortgage insurance -- that will result in a juicy refund check this spring.
Home Sweet Tax Break
The new tax credit for first-time home buyers is actually a tax-free loan that must be paid back to the government over 15 years -- starting two years after the year the credit is claimed. If you sell the home before you finish paying back the loan, the balance is due in full in the year of the sale. Here's how it works: You can claim a tax credit equal to 10% of the purchase price -- up to $7,500 -- if you bought a principal residence after April 8, 2008. Because a tax credit reduces your tax bill dollar for dollar, it is more valuable than a deduction, which reduces the amount of your income that is taxed.
Vacation homes and rental properties are not eligible, and you have to meet income requirements. For single taxpayers, the credit decreases as modified adjusted gross income rises above $75,000, and it disappears altogether if you earn more than $95,000. For married couples, the credit starts to decline when your modified adjusted gross income reaches $150,000, and disappears after it tops $170,000.
If you buy a home between January 1 and November 30, 2009, you can claim the first-time home-buyer credit on your 2008 or 2009 return. (The stimulus package raised the credit to $8,000 and eliminated the payback provisions for homes purchased in 2009 as long as you remain in the house for at least three years.) Use Form 1040X to amend your tax return if you have already filed or Form 4868 to delay your filing deadline until October 15. (An extension delays the deadline for filing forms but not for any payment you owe.)
Homeowners who don't itemize deductions -- such as retirees who no longer have a mortgage and new owners who buy late in the year -- also get a new break for 2008: an extra standard deduction to offset real estate taxes. Individuals can claim up to $500, and married couples up to $1,000. That's on top of the normal standard deduction of $5,450 for individuals, $8,000 for heads of household and $10,900 for joint filers.
Some homeowners affected by the foreclosure fiasco also qualify for relief. Normally, if you sell your home for less than you owe on the mortgage in a lender-approved transaction known as a short sale, or if your debt is wiped out through a foreclosure and sub-sequent sale, the amount that's forgiven is considered taxable income. But in 2007 Congress approved legislation that excludes up to $2 million of canceled debt if it is secured by a principal residence. The tax relief does not apply to vacation homes and other second homes, nor to cash-out refinancing that went toward paying for purchases other than a home. Last year, Congress extended the temporary debt-cancellation relief through 2012. File Form 982 to claim it.
Source
March 17, 2009
What you need to know about buying a home safe
As the nation's banking industry inhales billions of dollars in government support, the urge to hoard your cash at home might be pounding mightily.
You wouldn't be the only one, judging from the recent spike in sales of home safes.
Keeping loads of money around the house remains an ill-advised step, but a home safe can still be a way to guard against fires, floods and burglaries. Cherished old photos, legal contracts and passports can be difficult to replace.
The key to buying the right safe is knowing what threats you want to guard against. Ultimately, no safes are foolproof — they simply come with varying degrees of protection.
"Safes are like insurance — the more protection you want, the more it's going to cost," said Jim Riccardi, east coast sales manager for Gardall Safe Corp., based in Syracuse, N.Y.
You won't be the only one putting your belongings in a safe.
SentrySafe, the nation's largest safe manufacturer, said sales were up as much as 50 percent over the last five months. They've since leveled off, but were still up as much as 10 percent in the first week of March from the same time a year ago, according to the Rochester, N.Y.-based company.
But before you join the rush, here's what you need to know.
WHAT SIZE AND STYLE SHOULD I GET?
Safes come in a variety of shapes and sizes. The lightweight plastic ones you find in department stores are probably better suited for organizing rather than protecting your belongings.
To guard against burglaries, you'll want a heftier safe that can't be carted away easily. These might be the size of a microwave or even a mini refrigerator.
As a reference point, Gardall Safe Corp.'s most popular safe weighs about 85 pounds and measures roughly 17 inches on all sides. Depending on your needs, safes can be significantly larger and weigh upward of 300 pounds.
Generally, a heavier safe indicates it's made with more steel and will be harder to break into with average household tools, Riccardi said.
"But no matter how heavy the safe is, we strongly suggest you bolt it to the floor," he said. Be wary of cheaper safes that don't have the bolt-down feature, he said.
The exception is if you opt for a security box instead of a safe. These are about the size of the metal cashier boxes you might see at a bake sale or flea market. They're typically recommended only if you're looking to protect the contents from fires, rather than burglaries.
On the other end of the spectrum are the more elaborate safes that appear in movies, which can be concealed behind paintings or in the ground.
These wall or floor safes usually need to be planned for when building a home. Otherwise, it can be expensive to hire a contractor to handle the installation.
WHAT TYPE OF PROTECTION DO I NEED?
Don't assume all safes protect against fire and water damage. Those are features that should be spelled out on the packaging.
To guard against fires, look for safes tested by Underwriter Laboratories Inc. Those living in the West or other regions prone to wildfires might want the "UL 2-Hour" seal of approval, which indicates the safe can endure intense fires for up to two hours.
If your chief concern is house fires, the UL 1-Hour label might suffice, said Sondra McFarlane, a spokeswoman for SentrySafe.
Still, there's no way to predict how long a house fire will last. Frank Dwyer, a spokesman for the New York City Fire Department, points out that the duration of a house fire depends on several factors, including the size of the structure and intensity of the blaze.
SentrySafe also offers safes that protect belongings against water damage; the label should state how long a safe can withstand being fully submerged in or sprayed by water.
If you want to take it a step further, Gardall offers safes tested by Underwriter Laboratories to withstand attempted break-ins by individuals armed with crow bars, torches and other tools. These safes can set you back between $900 and $2,200.
Generally, however, a safe shouldn't cost that much.
Gardall's most popular safe, which comes with one-hour fire protection, costs $375. A search on SentrySafe's Web site for safes that provide fire and water protection turns up options costing between $210 and $530.
WHAT TYPE OF LOCKS ARE AVAILABLE?
Safes with dial combinations usually come with a set code, which can be reset by a locksmith upon request.
You can set your own code — usually three to six digits — with electronic push button safes. Both options are equally secure, Riccardi said, so it boils down to personal preference.
If you forget your combination for either, you or your locksmith can call the safe manufacturer with the safe's serial number to get the code or a reset code. The company might require a notarized request to ensure they're not giving out the code to a burglar.
Key locks can be harder to find for heavy-duty safes, since the key would have to be very long for the thick doors, Riccardi said.
WHAT ARE THE OTHER OPTIONS?
Even if you purchase a home safe, you might want to store certain valuables, such as family heirlooms, in a bank vault.
The average safe deposit box at a bank costs between $25 and $125 a year, said Dave McGuinn, president of Safe Deposit Specialists, a Houston-based financial consulting firm.
The contents of safe deposit boxes aren't insured by the bank or FDIC. To protect against fires, floods, natural disasters or robberies, you might want to add a rider to your homeowner's policy or get a separate policy altogether for the contents.
There's generally no limit on how often you can access your goods. But since your access will be limited to bank hours, consider keeping certain items at home in a safe.
"Passports if you travel regularly, medical papers you might need on a Sunday," McGuinn said. "Anything you use regularly or at a moment's notice."
Source: Associated Press
You wouldn't be the only one, judging from the recent spike in sales of home safes.
Keeping loads of money around the house remains an ill-advised step, but a home safe can still be a way to guard against fires, floods and burglaries. Cherished old photos, legal contracts and passports can be difficult to replace.
The key to buying the right safe is knowing what threats you want to guard against. Ultimately, no safes are foolproof — they simply come with varying degrees of protection.
"Safes are like insurance — the more protection you want, the more it's going to cost," said Jim Riccardi, east coast sales manager for Gardall Safe Corp., based in Syracuse, N.Y.
You won't be the only one putting your belongings in a safe.
SentrySafe, the nation's largest safe manufacturer, said sales were up as much as 50 percent over the last five months. They've since leveled off, but were still up as much as 10 percent in the first week of March from the same time a year ago, according to the Rochester, N.Y.-based company.
But before you join the rush, here's what you need to know.
WHAT SIZE AND STYLE SHOULD I GET?
Safes come in a variety of shapes and sizes. The lightweight plastic ones you find in department stores are probably better suited for organizing rather than protecting your belongings.
To guard against burglaries, you'll want a heftier safe that can't be carted away easily. These might be the size of a microwave or even a mini refrigerator.
As a reference point, Gardall Safe Corp.'s most popular safe weighs about 85 pounds and measures roughly 17 inches on all sides. Depending on your needs, safes can be significantly larger and weigh upward of 300 pounds.
Generally, a heavier safe indicates it's made with more steel and will be harder to break into with average household tools, Riccardi said.
"But no matter how heavy the safe is, we strongly suggest you bolt it to the floor," he said. Be wary of cheaper safes that don't have the bolt-down feature, he said.
The exception is if you opt for a security box instead of a safe. These are about the size of the metal cashier boxes you might see at a bake sale or flea market. They're typically recommended only if you're looking to protect the contents from fires, rather than burglaries.
On the other end of the spectrum are the more elaborate safes that appear in movies, which can be concealed behind paintings or in the ground.
These wall or floor safes usually need to be planned for when building a home. Otherwise, it can be expensive to hire a contractor to handle the installation.
WHAT TYPE OF PROTECTION DO I NEED?
Don't assume all safes protect against fire and water damage. Those are features that should be spelled out on the packaging.
To guard against fires, look for safes tested by Underwriter Laboratories Inc. Those living in the West or other regions prone to wildfires might want the "UL 2-Hour" seal of approval, which indicates the safe can endure intense fires for up to two hours.
If your chief concern is house fires, the UL 1-Hour label might suffice, said Sondra McFarlane, a spokeswoman for SentrySafe.
Still, there's no way to predict how long a house fire will last. Frank Dwyer, a spokesman for the New York City Fire Department, points out that the duration of a house fire depends on several factors, including the size of the structure and intensity of the blaze.
SentrySafe also offers safes that protect belongings against water damage; the label should state how long a safe can withstand being fully submerged in or sprayed by water.
If you want to take it a step further, Gardall offers safes tested by Underwriter Laboratories to withstand attempted break-ins by individuals armed with crow bars, torches and other tools. These safes can set you back between $900 and $2,200.
Generally, however, a safe shouldn't cost that much.
Gardall's most popular safe, which comes with one-hour fire protection, costs $375. A search on SentrySafe's Web site for safes that provide fire and water protection turns up options costing between $210 and $530.
WHAT TYPE OF LOCKS ARE AVAILABLE?
Safes with dial combinations usually come with a set code, which can be reset by a locksmith upon request.
You can set your own code — usually three to six digits — with electronic push button safes. Both options are equally secure, Riccardi said, so it boils down to personal preference.
If you forget your combination for either, you or your locksmith can call the safe manufacturer with the safe's serial number to get the code or a reset code. The company might require a notarized request to ensure they're not giving out the code to a burglar.
Key locks can be harder to find for heavy-duty safes, since the key would have to be very long for the thick doors, Riccardi said.
WHAT ARE THE OTHER OPTIONS?
Even if you purchase a home safe, you might want to store certain valuables, such as family heirlooms, in a bank vault.
The average safe deposit box at a bank costs between $25 and $125 a year, said Dave McGuinn, president of Safe Deposit Specialists, a Houston-based financial consulting firm.
The contents of safe deposit boxes aren't insured by the bank or FDIC. To protect against fires, floods, natural disasters or robberies, you might want to add a rider to your homeowner's policy or get a separate policy altogether for the contents.
There's generally no limit on how often you can access your goods. But since your access will be limited to bank hours, consider keeping certain items at home in a safe.
"Passports if you travel regularly, medical papers you might need on a Sunday," McGuinn said. "Anything you use regularly or at a moment's notice."
Source: Associated Press
March 16, 2009
K. Hovnanian and Toll Brothers offer help with mortgage if homebuyer is laid off
Plummeting prices, low mortgage rates and bigger tax credits all seem to make this a great time to buy a home. But even the greatest deal in the world comes with a mortgage payment, and workers afraid of being laid off are wary of taking the plunge.
So, some home builders with communities in New Jersey have tried to sweeten the deal: If a buyer is laid off after purchasing a home, they'll pay a chunk of the mortgage for six months.
"In today's marketplace, if you want to be successful as a builder and seller of homes, you have to eliminate objections," said Ben Jogodnik, the division senior vice president of Toll Brothers City Living in Hoboken. "One of the objections is, 'I can't buy today, because I'm concerned I may not have a job tomorrow.' This helps with that fear."
The idea is similar to ones rolled out by Hyundai and JetBlue Airways, which offered to take cars back for free or refund flights if customers are laid off.
"From an emotional standpoint, this is very powerful," said Sandy Becker, an instructor in the marketing department of Rutgers Business School. "This is a way to make consumers feel good about taking the leap, spending the money, but having a security blanket that in case things don't work out, you have an option."
Builders K. Hovnanian and Toll Brothers started offering the program this year, although it was unclear whether anyone had closed a deal on a home yet because of the offer.
Potential buyers said it certainly can't hurt.
Minnie Singh, 40, of Fair Lawn said she and her husband want to stop renting and buy a house, but she's worried about losing her job as an efficiency consultant for General Electric. She heard about the mortgage protection program last weekend as she toured a K. Hovnanian community called Hunters Brook in Hackettstown.
"It is very attractive," Singh said of the offer. "It gives you a little bit of security. It lets you know you're not going to lose the house."
Here's how it works: The builder takes out an insurance policy, which costs about $200 a year for every homebuyer. If the buyer is laid off up to two years after closing -- following a 60-day vesting period -- the policy pays up to $2,000 toward the mortgage on the K. Hovnanian program and up to $2,500 through Toll Brothers.
There are conditions to the offer. It doesn't cover people who are self-employed or independent contractors, under 18, have a 10 percent or more ownership stake in their company or know they're about to be laid off. Buyers must have been employed usually for 12 weeks before the purchase and be eligible for unemployment benefits. Also, it does not apply to people who voluntarily resigned or who were fired for wrongdoing.
And it gets even more complicated than that. If a married couple both pay the mortgage, and one of them gets laid off, the insurance only pays out proportionally. For example, if the laid-off worker contributes 25 percent of the household income, the insurance will pay 25 percent of the mortgage up to the plan's dollar limit.
The mortgage protection programs are the latest in a slew of incentives builders have rolled out to try to tempt timid buyers. Builders will pay closing costs, help buyers sell their current houses, give free upgrades or even create a standing offer to buy back the home in a few years for more than the initial purchase price. That's happening, for example, at The Savannah, a Westfield condominium building for people 55 and older. Developer Ward & O'Donnell guarantees it will offer to buy back the condo at 110 percent of the purchase price after five years. Buyers, of course, can reject the bid if they want to keep the condo or if they have a better offer.
Builders are desperate to sell homes, said Jeffrey Otteau, president of East Brunswick real estate research firm Otteau Valuation Group. For developers, the longer homes or lots sit on the market, the longer they have to wait to build more houses or purchase more land for development, while administrative and financing expenses pile up, he said.
"The longer the home goes unsold, the less money you make in building and selling it," he said. "If they can get someone in there, even if they need to pay some amount of mortgage payment subsidies, it's apparently a better alternative."
Source
So, some home builders with communities in New Jersey have tried to sweeten the deal: If a buyer is laid off after purchasing a home, they'll pay a chunk of the mortgage for six months.
"In today's marketplace, if you want to be successful as a builder and seller of homes, you have to eliminate objections," said Ben Jogodnik, the division senior vice president of Toll Brothers City Living in Hoboken. "One of the objections is, 'I can't buy today, because I'm concerned I may not have a job tomorrow.' This helps with that fear."
The idea is similar to ones rolled out by Hyundai and JetBlue Airways, which offered to take cars back for free or refund flights if customers are laid off.
"From an emotional standpoint, this is very powerful," said Sandy Becker, an instructor in the marketing department of Rutgers Business School. "This is a way to make consumers feel good about taking the leap, spending the money, but having a security blanket that in case things don't work out, you have an option."
Builders K. Hovnanian and Toll Brothers started offering the program this year, although it was unclear whether anyone had closed a deal on a home yet because of the offer.
Potential buyers said it certainly can't hurt.
Minnie Singh, 40, of Fair Lawn said she and her husband want to stop renting and buy a house, but she's worried about losing her job as an efficiency consultant for General Electric. She heard about the mortgage protection program last weekend as she toured a K. Hovnanian community called Hunters Brook in Hackettstown.
"It is very attractive," Singh said of the offer. "It gives you a little bit of security. It lets you know you're not going to lose the house."
Here's how it works: The builder takes out an insurance policy, which costs about $200 a year for every homebuyer. If the buyer is laid off up to two years after closing -- following a 60-day vesting period -- the policy pays up to $2,000 toward the mortgage on the K. Hovnanian program and up to $2,500 through Toll Brothers.
There are conditions to the offer. It doesn't cover people who are self-employed or independent contractors, under 18, have a 10 percent or more ownership stake in their company or know they're about to be laid off. Buyers must have been employed usually for 12 weeks before the purchase and be eligible for unemployment benefits. Also, it does not apply to people who voluntarily resigned or who were fired for wrongdoing.
And it gets even more complicated than that. If a married couple both pay the mortgage, and one of them gets laid off, the insurance only pays out proportionally. For example, if the laid-off worker contributes 25 percent of the household income, the insurance will pay 25 percent of the mortgage up to the plan's dollar limit.
The mortgage protection programs are the latest in a slew of incentives builders have rolled out to try to tempt timid buyers. Builders will pay closing costs, help buyers sell their current houses, give free upgrades or even create a standing offer to buy back the home in a few years for more than the initial purchase price. That's happening, for example, at The Savannah, a Westfield condominium building for people 55 and older. Developer Ward & O'Donnell guarantees it will offer to buy back the condo at 110 percent of the purchase price after five years. Buyers, of course, can reject the bid if they want to keep the condo or if they have a better offer.
Builders are desperate to sell homes, said Jeffrey Otteau, president of East Brunswick real estate research firm Otteau Valuation Group. For developers, the longer homes or lots sit on the market, the longer they have to wait to build more houses or purchase more land for development, while administrative and financing expenses pile up, he said.
"The longer the home goes unsold, the less money you make in building and selling it," he said. "If they can get someone in there, even if they need to pay some amount of mortgage payment subsidies, it's apparently a better alternative."
Source
March 14, 2009
Rent-To-Buy Pros And Cons
As home prices continue to drop, consumers are taking a harder look at rent-to-buy options, in which potential homeowners commit to a multi-year lease with a future option to buy the property.
In other words, it's nice to have an out. If property values plummet, the renter can remain a renter until the agreement expires. Should values rise, then the rental payments count toward a purchase of the home within the agreed-upon time period.
While this may seem like the perfect wait-and-see approach, it's not a situation for everyone. Among the factors to consider: your long-term job prospects, credit history, mortgage rates and fee structures.
In Depth: Rent-To-Buy Pros And Cons
Here's how it works: Instead of outright purchasing a property, a potential buyer draws up a contract with a seller in which the monthly rental payments, based on the home's value and often above going rates, count toward an eventual sale. All rental payments made pay down the principle if the renter decides to exercise the pre-paid option--typically 1% of the sale price--to buy.
The date at which the agreement expires varies by contract but is typically between two and five years. At that point, the renter can choose to buy the home at the original listed price minus the equity he or she has built. If not, then the homeowner has the option to evict them and keep all payments.
Why would a seller concede to such an agreement? Well, it's not easy to sell a home these days. Last year the National Association of Realtors reported 4.9 million transactions; at the height of the boom, in 2004, 8.5 million new and existing homes were sold. Instead of letting a home sit empty, sellers are looking for any income stream they can tap. Mix in the tight credit market that makes it difficult for anyone still thinking of buying to do so, and it's easy to understand why this particular brand of transaction looks viable.
"With the tight credit market and stricter down payment requirements, rent-to-own has emerged as a trend for people who otherwise would be home buyers," says Eric Mangan, spokesman for ForSaleByOwner.com, a real estate listing company. His company has started offering sellers the ability to list a home as rent-to-buy, given what he calls a surge in demand.
Source
In other words, it's nice to have an out. If property values plummet, the renter can remain a renter until the agreement expires. Should values rise, then the rental payments count toward a purchase of the home within the agreed-upon time period.
While this may seem like the perfect wait-and-see approach, it's not a situation for everyone. Among the factors to consider: your long-term job prospects, credit history, mortgage rates and fee structures.
In Depth: Rent-To-Buy Pros And Cons
Here's how it works: Instead of outright purchasing a property, a potential buyer draws up a contract with a seller in which the monthly rental payments, based on the home's value and often above going rates, count toward an eventual sale. All rental payments made pay down the principle if the renter decides to exercise the pre-paid option--typically 1% of the sale price--to buy.
The date at which the agreement expires varies by contract but is typically between two and five years. At that point, the renter can choose to buy the home at the original listed price minus the equity he or she has built. If not, then the homeowner has the option to evict them and keep all payments.
Why would a seller concede to such an agreement? Well, it's not easy to sell a home these days. Last year the National Association of Realtors reported 4.9 million transactions; at the height of the boom, in 2004, 8.5 million new and existing homes were sold. Instead of letting a home sit empty, sellers are looking for any income stream they can tap. Mix in the tight credit market that makes it difficult for anyone still thinking of buying to do so, and it's easy to understand why this particular brand of transaction looks viable.
"With the tight credit market and stricter down payment requirements, rent-to-own has emerged as a trend for people who otherwise would be home buyers," says Eric Mangan, spokesman for ForSaleByOwner.com, a real estate listing company. His company has started offering sellers the ability to list a home as rent-to-buy, given what he calls a surge in demand.
Source
March 12, 2009
Weigh up the cost of buying
First home buyers can apply for a raft of incentives. But is it the best time to enter the market? John Kavanagh explores.
Spurred on by falling interest rates, cheaper house prices and government handouts of up to $21,000, first home buyers are back.
But with some experts predicting house prices could fall further, is it the right time to buy?
Initial indicators show first home buyers are upbeat. In December, lenders provided finance to 14,154 first home buyers, according to the Australian Bureau of Statistics. Those loans made up 25 per cent of home loans that month - the highest rate of participation by first home buyers in more than a year. In March last year, first home buyers accounted for 16 per cent of lending. The long-term average is 20 per cent.
Fifty per cent of potential first home buyers believe it is a good time to buy, according to the latest Mortgage and Finance Association of Australia/Bankwest Home Finance Index. Almost one-third of respondents give falling house prices as their reason, 16 per cent cite lower interest rates and 8 per cent highlight the first home buyer grant. Significantly, the 43 per cent of potential first-time buyers who say it is not a good time to buy expect to see further declines in house prices.
A fall of 10 per cent on a $400,000 property means a $40,000 saving, almost double the $21,000 grant.
And while waiting may be a gamble, you also have to do the sums on renting versus making mortgage repayments to see which is a better proposition.
Property prices
Credit ratings agency Fitch Ratings is working on the assumption banks will have to deal with an increase in defaults as a result of rising unemployment and house prices will fall as a consequence.
Property information service RP Data assumes unemployment will rise to 7 per cent by the end of this year, which it considers a negative indicator for property prices.
However, offsetting this is the big fall in rates since September and an undersupply of homes in capital cities.
"Low interest rates and the continued serious undersupply of housing in Australia will continue to hold a floor under capital city residential values in the lower and middle segments of the market," says RP Data.
The interest rate strategist at Macquarie Bank, Rory Robertson, says Australian house prices are not cheap by world standards. He cites the 2008 Demographia survey of home prices compared with incomes in Australia, the US, Britain, New Zealand and Ireland. Residential property in the Sunshine Coast, Gold Coast, Sydney, Melbourne, Adelaide, Perth, Wollongong, Darwin, Townsville, Mackay, Cairns and Rockhampton were all classified as expensive, with the Sunshine Coast, Gold Coast and Sydney in the top 10.
March 10, 2009
It can pay to buy a new home now
Thinking about buying new home in today's beaten-down real estate market? You could end up with as much as $18,000 in government tax credits stemming from proposals to jump-start the economy.
A state tax credit worth up to $10,000 started Sunday as a way to encourage people to buy new homes, something they have not been doing much of in the last three years.
The credit, which was included in the recently-passed state budget, applies to new single-family houses, condominiums and townhouses that close escrow between March 1 and Feb. 28, 2010, or until funding for the $100 million program runs out.
First-time buyers who take the state tax credit can also qualify for up to an $8,000 federal income-tax credit that applies to the purchase of all homes, new and existing, foreclosed or not. The federal credit applies to homes purchased between Jan. 1 and Nov. 30, 2009.
The state credit is equal to five percent of the home's purchase price, up to a maximum of $10,000, which will be paid out over a period of three years.
Most buyers will qualify for the $10,000 credit since most home purchases in California are likely to be $200,000 and above. The $100 million in funding would be enough to provide 10,000 home buyers with a $10,000 tax credit.
"This is something that our industry has been desiring to have for quite some time," said Layne Marceau, president of the Northern California division of Shea Homes. "The whole intent
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is to stimulate sales activity."
An uptick in new homes sales would reduce a backlog of unsold new homes, which in turn lead to increased building activity that would stimulate the economy, he said.
"We believe the housing industry is the catalyst to start that," Marceau said.
A similar federal tax credit helped revive an earlier slowdown in the housing market back in 1975, he said.
The home-building industry is hoping that the tax break will prompt people to consider a new home purchase over a bargain-priced foreclosure, which accounted for 54 percent of existing home sales in January in the Bay Area.
"I think a lot of people have found they have to be very careful when playing the foreclosure market," said Marceau. "A lot of them are very discouraged either by the process of trying to secure the home at the price or ultimately the home (needs work)... We hope to see a significant increase in our traffic."
Word of the tax credit has already led to more phone calls being made to new home sales offices, said Tim Coyle, senior vice president for government affairs at the California Building Industry Association, an industry group that pushed to for the state tax credit.
"We are beginning to see interest among those people who we desperately need to have the confidence to return to the housing market," he said.
In January, only 340 new homes were sold in the Bay Area, a drop of 48.2 percent from a year ago, while the median price was $438,500, a 20.3 percent drop. (The median sale price for all homes, new and existing, was $300,000 in January, or 45.5 percent less than a year ago.)
New home sales volumes were the lowest for a January since MDA DataQuick started keeping track in 1988. Last year was the lowest on record for new housing starts in California since records were kept starting in 1954. Just under 66,000 new houses, condominiums and apartment units went up in 2008, a 68 percent drop from 2005.
While home-buying tax credits can help consumers, it will not change how KB Home set prices, said Chris Apostolopous, the builder's Northern California division president. Prices won't go up or down as a result, he added.
"It's more of a tool for the consumer to analyze if this is something that provides additional encouragement for them to purchase or not," he said. "Our pricing strategy is based on what the resale market is doing."
Dianne Crosby, a senior loan consultant at LaSalle Financial Services in Oakland, would have liked to have seen both new and existing homes qualify for the state tax credit.
"A pervasive source of malaise in the Bay Area real estate industry lies with the inventory of foreclosed and bank-owned properties," she wrote in an e-mail. "These homes, often in poor condition or abandoned, bring down the value of similar homes in the neighborhood and can be harder to finance because of their poor condition."
Source
A state tax credit worth up to $10,000 started Sunday as a way to encourage people to buy new homes, something they have not been doing much of in the last three years.
The credit, which was included in the recently-passed state budget, applies to new single-family houses, condominiums and townhouses that close escrow between March 1 and Feb. 28, 2010, or until funding for the $100 million program runs out.
First-time buyers who take the state tax credit can also qualify for up to an $8,000 federal income-tax credit that applies to the purchase of all homes, new and existing, foreclosed or not. The federal credit applies to homes purchased between Jan. 1 and Nov. 30, 2009.
The state credit is equal to five percent of the home's purchase price, up to a maximum of $10,000, which will be paid out over a period of three years.
Most buyers will qualify for the $10,000 credit since most home purchases in California are likely to be $200,000 and above. The $100 million in funding would be enough to provide 10,000 home buyers with a $10,000 tax credit.
"This is something that our industry has been desiring to have for quite some time," said Layne Marceau, president of the Northern California division of Shea Homes. "The whole intent
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is to stimulate sales activity."
An uptick in new homes sales would reduce a backlog of unsold new homes, which in turn lead to increased building activity that would stimulate the economy, he said.
"We believe the housing industry is the catalyst to start that," Marceau said.
A similar federal tax credit helped revive an earlier slowdown in the housing market back in 1975, he said.
The home-building industry is hoping that the tax break will prompt people to consider a new home purchase over a bargain-priced foreclosure, which accounted for 54 percent of existing home sales in January in the Bay Area.
"I think a lot of people have found they have to be very careful when playing the foreclosure market," said Marceau. "A lot of them are very discouraged either by the process of trying to secure the home at the price or ultimately the home (needs work)... We hope to see a significant increase in our traffic."
Word of the tax credit has already led to more phone calls being made to new home sales offices, said Tim Coyle, senior vice president for government affairs at the California Building Industry Association, an industry group that pushed to for the state tax credit.
"We are beginning to see interest among those people who we desperately need to have the confidence to return to the housing market," he said.
In January, only 340 new homes were sold in the Bay Area, a drop of 48.2 percent from a year ago, while the median price was $438,500, a 20.3 percent drop. (The median sale price for all homes, new and existing, was $300,000 in January, or 45.5 percent less than a year ago.)
New home sales volumes were the lowest for a January since MDA DataQuick started keeping track in 1988. Last year was the lowest on record for new housing starts in California since records were kept starting in 1954. Just under 66,000 new houses, condominiums and apartment units went up in 2008, a 68 percent drop from 2005.
While home-buying tax credits can help consumers, it will not change how KB Home set prices, said Chris Apostolopous, the builder's Northern California division president. Prices won't go up or down as a result, he added.
"It's more of a tool for the consumer to analyze if this is something that provides additional encouragement for them to purchase or not," he said. "Our pricing strategy is based on what the resale market is doing."
Dianne Crosby, a senior loan consultant at LaSalle Financial Services in Oakland, would have liked to have seen both new and existing homes qualify for the state tax credit.
"A pervasive source of malaise in the Bay Area real estate industry lies with the inventory of foreclosed and bank-owned properties," she wrote in an e-mail. "These homes, often in poor condition or abandoned, bring down the value of similar homes in the neighborhood and can be harder to finance because of their poor condition."
Source
March 9, 2009
More Than 8.3 Million U.S. Mortgages Are Under Water
More than 8.3 million U.S. mortgage holders owed more on their loans in the fourth quarter than their property was worth as the recession cut home values by $2.4 trillion last year, First American CoreLogic said.
An additional 2.2 million borrowers will be underwater if home prices decline another 5 percent, First American, a Santa Ana, California-based seller of mortgage and economic data, said in a report today. Households with negative equity or near it account for a quarter of all mortgage holders.
“We have way too much supply and not enough demand,” Sam Khater, senior economist for First American, said in an interview. “People aren’t going to purchase a home as long as prices keep falling, and someone who is worried about their job isn’t going to purchase a home either.”
Prices in 20 U.S. cities fell 18.5 percent in December from a year earlier, the fastest drop on record, according to the S&P/Case-Shiller index. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest since 1997, and new-home purchases plunged to the lowest since records began in 1963, the National Association of Realtors and Commerce Department said.
The total value of residential properties in the U.S. fell to $19.1 trillion by the end of 2008, down from $21.5 trillion a year earlier, First American said. California lost more than $1.2 trillion in value last year, accounting for roughly half of the national decline in housing values.
California Leads
U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January, RealtyTrac Inc. reported, and payrolls plunged by 598,000, pushing the unemployment rate to the highest since 1992, according to the Labor Department.
An average of 230,000 borrowers a month slid to negative equity in the fourth quarter of 2008, First American said. California led with 43,000, followed by Texas with 16,000, Nevada with 15,000, and Florida and Virginia each with 14,000. New negative equity borrowers may rise to 250,000 a month in the first half of the year if prices continue falling, Khater said.
President Barack Obama has proposed a $275 billion plan intended to help as many as 9 million troubled borrowers refinance or restructure their loans. About $75 billion would be used to rescue homeowners by agreeing to pay lenders for altering troubled mortgages while reducing borrowers’ interest rates as low as 2 percent.
New Guidelines
The initiative would require applicants for loan modifications to fully document their income with pay stubs and tax returns, and sign an affidavit attesting to “financial hardship,” according to documents released by the U.S. Treasury in Washington today. The second, larger part of the plan relies on government-run Fannie Mae and Freddie Mac to refinance loans.
Obama also supports revised U.S. bankruptcy rules that would let judges reduce mortgages on primary residences to fair-market value, if borrowers pay their debts under a court-ordered plan.
At least 7.6 million mortgage holders won’t qualify because they are underwater by more than the 5 percent threshold allowed in Obama’s proposals, according to an estimate by online valuation service Zillow.com.
“None of this is enough for people who are so upside down that they won’t have positive equity,” Khater said. More than 2.2 million U.S. borrowers have “severe negative equity,” or loans worth 125 percent or more of the property’s value.
Broad Geography
The geographical distribution of underwater mortgages is broadening beyond states in the U.S. West and Florida, where rapid price appreciation was fueled by subprime lending, to areas in the South and Midwest, Khater said. Cities such as Atlanta, Chicago, Dallas and Cleveland will have an increasing share of homes with negative equity if home values drop, he said.
California had the most underwater borrowers in the fourth quarter with 1.9 million, followed by Florida with 1.3 million, Texas with 497,000, Michigan with 459,000 and Ohio with 435,000, First American said.
Nevada had the highest share, at 55 percent. Michigan was second at 40 percent, followed by Arizona at 32 percent and Florida and California at 30 percent, said First American.
New York had the lowest share of underwater mortgages at 4.7 percent. Connecticut was at 9.1 percent and New Jersey was at 9.7 percent.
First American compiles its negative equity report from almost 42 million properties with mortgages and covers single- family homes, cooperatives, condominiums, town homes and attached properties up to four units. The estimates account for 85 percent of all mortgages in the U.S. and the data includes homes priced from $70,000 to $1.25 million.
Source: bloomberg
An additional 2.2 million borrowers will be underwater if home prices decline another 5 percent, First American, a Santa Ana, California-based seller of mortgage and economic data, said in a report today. Households with negative equity or near it account for a quarter of all mortgage holders.
“We have way too much supply and not enough demand,” Sam Khater, senior economist for First American, said in an interview. “People aren’t going to purchase a home as long as prices keep falling, and someone who is worried about their job isn’t going to purchase a home either.”
Prices in 20 U.S. cities fell 18.5 percent in December from a year earlier, the fastest drop on record, according to the S&P/Case-Shiller index. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest since 1997, and new-home purchases plunged to the lowest since records began in 1963, the National Association of Realtors and Commerce Department said.
The total value of residential properties in the U.S. fell to $19.1 trillion by the end of 2008, down from $21.5 trillion a year earlier, First American said. California lost more than $1.2 trillion in value last year, accounting for roughly half of the national decline in housing values.
California Leads
U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January, RealtyTrac Inc. reported, and payrolls plunged by 598,000, pushing the unemployment rate to the highest since 1992, according to the Labor Department.
An average of 230,000 borrowers a month slid to negative equity in the fourth quarter of 2008, First American said. California led with 43,000, followed by Texas with 16,000, Nevada with 15,000, and Florida and Virginia each with 14,000. New negative equity borrowers may rise to 250,000 a month in the first half of the year if prices continue falling, Khater said.
President Barack Obama has proposed a $275 billion plan intended to help as many as 9 million troubled borrowers refinance or restructure their loans. About $75 billion would be used to rescue homeowners by agreeing to pay lenders for altering troubled mortgages while reducing borrowers’ interest rates as low as 2 percent.
New Guidelines
The initiative would require applicants for loan modifications to fully document their income with pay stubs and tax returns, and sign an affidavit attesting to “financial hardship,” according to documents released by the U.S. Treasury in Washington today. The second, larger part of the plan relies on government-run Fannie Mae and Freddie Mac to refinance loans.
Obama also supports revised U.S. bankruptcy rules that would let judges reduce mortgages on primary residences to fair-market value, if borrowers pay their debts under a court-ordered plan.
At least 7.6 million mortgage holders won’t qualify because they are underwater by more than the 5 percent threshold allowed in Obama’s proposals, according to an estimate by online valuation service Zillow.com.
“None of this is enough for people who are so upside down that they won’t have positive equity,” Khater said. More than 2.2 million U.S. borrowers have “severe negative equity,” or loans worth 125 percent or more of the property’s value.
Broad Geography
The geographical distribution of underwater mortgages is broadening beyond states in the U.S. West and Florida, where rapid price appreciation was fueled by subprime lending, to areas in the South and Midwest, Khater said. Cities such as Atlanta, Chicago, Dallas and Cleveland will have an increasing share of homes with negative equity if home values drop, he said.
California had the most underwater borrowers in the fourth quarter with 1.9 million, followed by Florida with 1.3 million, Texas with 497,000, Michigan with 459,000 and Ohio with 435,000, First American said.
Nevada had the highest share, at 55 percent. Michigan was second at 40 percent, followed by Arizona at 32 percent and Florida and California at 30 percent, said First American.
New York had the lowest share of underwater mortgages at 4.7 percent. Connecticut was at 9.1 percent and New Jersey was at 9.7 percent.
First American compiles its negative equity report from almost 42 million properties with mortgages and covers single- family homes, cooperatives, condominiums, town homes and attached properties up to four units. The estimates account for 85 percent of all mortgages in the U.S. and the data includes homes priced from $70,000 to $1.25 million.
Source: bloomberg
March 8, 2009
Expanded Tax Break For First-Time Homebuyers
The Internal Revenue Service has announced that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit, “ said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations, and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before December 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year. 2-25-09
Source
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit, “ said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations, and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before December 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year. 2-25-09
Source
March 7, 2009
West sees preowned home sales surge in January
Home sales in the Western U.S. surged in January as first-time homebuyers, real estate investors and others seized on bargain-priced foreclosed homes in California, Nevada and Arizona, according to two reports released Wednesday.
A total of 74,000 existing homes and condos were sold in January in the 13-state region. Sales were up 32.1 percent from the same month in 2008, without adjusting for seasonal factors, according to the National Association of Realtors.
As has been the trend since last summer, distressed sales continued to fuel sales in the West, and that helped drag down median home prices in the region by almost 26 percent from the prior year to $220,000, the association said.
Nationally, existing home sales dropped 7.6 percent from January last year, while the U.S. median home price slid almost 15 percent to $170,300.
Las Vegas, Los Angeles, Phoenix, San Diego and San Francisco made up the top five major metro areas in the country to register an increase in home sales last month, according to the Associated Press-Re/Max Monthly Housing Report, released Wednesday. The data includes all home sales recorded in the metropolitan statical areas by all local agents, regardless of company affiliation.
Those Western cities ranked among the top 10 U.S. metros to post the sharpest median price declines last month, with San Francisco and Phoenix behind only Detroit.
Elsewhere in the West, sales declined in Honolulu, Billings, Mont., Seattle, Portland, Ore., Boise, Idaho, Albuquerque, N.M., Denver and Anchorage, Alaska, according to the AP-Re/Max report.
Of those metros, only Anchorage posted an increase in its median sales price, climbing 6.9 percent to $239,000.
Recession fears and rising unemployment kept many would-be buyers on the sidelines, but others were lured out by cheap prices and low interest rates — which briefly dipped below 5 percent last month.
"That's what's driving the first-time buyer," said Marty Rodriguez, a Century 21 broker-owner in Glendora, a Los Angeles suburb.
Home sales in the Los Angeles metro area more than doubled from a year ago while foreclosures helped push the median sales price in the metro area down more than 37 percent to $250,000.
One such first-time buyer, Bonnie Magallon, scooped up a two-bedroom, 2.5-bath tri-level townhome in Rancho Cucamonga, about 42 miles east of Los Angeles.
Magallon, 25, wasn't in a rush, figuring she would buy something by the end of this year. But shortly after getting prequalified for a loan, she saw the condo and went for it.
"It just worked out perfectly, just everything has aligned where I could afford it, it's a great area, (and) I love the condo," said Magallon, a senior secretary, who expects to close escrow on the $205,000 condo Friday.
She plans to keep the unit between three to five years and isn't worried about the possibility she could end up owing more than her home is worth if the housing downturn drags on beyond this year.
"For me, it was more (about) taking advantage of the market," she said. "I'm not scared about it because with my lifestyle and what I make, I'm fine with the payments."
Like many homebuyers these days, Magallon financed her purchase with a loan backed by the Federal Housing Administration, which requires a down payment of 3.5 percent.
Magallon also got a half-percent cut on her 5 percent interest rate for the first year that shaves off $120 a month from her monthly payment.
Another first-time buyer, Michi Crone, closed on her four-bedroom, 2.5-bath home in the Queen Creek suburb of Phoenix last month.
Crone, 33, had looked into buying a home four years ago, but the medical office worker didn't find anything she liked in her price range, which back then topped at $175,000.
The 2,400 square-foot home last sold for $213,000 during the boom. She bought it in a distressed sale for $110,000 and the bank paid the closing costs, Crone said.
"We really fell in love with this house," she said, noting that her monthly payment is $100 less than her rent was. "The market wasn't really a factor in making our decision."
Sales climbed about 68 percent in the Phoenix metro area, a hotbed of foreclosures that saw speculation-driven price increases during the housing boom. The median home price dropped about 42 percent to $129,900, according to the AP-Re/Max report.
The San Francisco metro area saw the steepest drop in median price in the West, a decline of more than 44 percent to $330,000. Sales jumped by nearly 57 percent, according to the AP-Re/Max report.
Ben Coleman, broker-owner of Century 21 Hartford Properties in San Francisco, saw a 50 percent increase from a year ago in closed transactions, he said.
"It was a great month and we'd love to see that continue on," he said, crediting first-time buyers for the largest slice of business, followed closely by investors.
"The properties that are moving the fastest are the ones that are priced probably in the $250,000 range and less," Coleman said.
Many of the homes selling in that range were distressed properties, although Coleman says he's seeing fewer foreclosures on the market.
"The asset managers that we've talked to are saying they don't have anything in the hopper for us," Coleman said.
In Las Vegas, sales more than doubled versus January 2008 and the median sales price sank more than 36 percent to $149,900.
Many buyers shopping for bank-owned homes continue to face multiple competing offers, said Brad Snyder of ZipRealty, whose transactions in January were entirely made up of distressed home sales.
Snyder's business last month easily eclipsed that of January 2008, with first-time homebuyers making up about 40 percent of transactions.
"They're coming out in droves," said Snyder. "You can get a mortgage right now for less than you pay in rent."
Still, investors, an overwhelming majority of them paying cash and hailing from states like California, outpaced first-time buyers last month, he said, adding that February looks to easily beat his year-ago sales.
"It's not like the boom by any means," Snyder said, "but it's definitely a busy, busy market."
Source
A total of 74,000 existing homes and condos were sold in January in the 13-state region. Sales were up 32.1 percent from the same month in 2008, without adjusting for seasonal factors, according to the National Association of Realtors.
As has been the trend since last summer, distressed sales continued to fuel sales in the West, and that helped drag down median home prices in the region by almost 26 percent from the prior year to $220,000, the association said.
Nationally, existing home sales dropped 7.6 percent from January last year, while the U.S. median home price slid almost 15 percent to $170,300.
Las Vegas, Los Angeles, Phoenix, San Diego and San Francisco made up the top five major metro areas in the country to register an increase in home sales last month, according to the Associated Press-Re/Max Monthly Housing Report, released Wednesday. The data includes all home sales recorded in the metropolitan statical areas by all local agents, regardless of company affiliation.
Those Western cities ranked among the top 10 U.S. metros to post the sharpest median price declines last month, with San Francisco and Phoenix behind only Detroit.
Elsewhere in the West, sales declined in Honolulu, Billings, Mont., Seattle, Portland, Ore., Boise, Idaho, Albuquerque, N.M., Denver and Anchorage, Alaska, according to the AP-Re/Max report.
Of those metros, only Anchorage posted an increase in its median sales price, climbing 6.9 percent to $239,000.
Recession fears and rising unemployment kept many would-be buyers on the sidelines, but others were lured out by cheap prices and low interest rates — which briefly dipped below 5 percent last month.
"That's what's driving the first-time buyer," said Marty Rodriguez, a Century 21 broker-owner in Glendora, a Los Angeles suburb.
Home sales in the Los Angeles metro area more than doubled from a year ago while foreclosures helped push the median sales price in the metro area down more than 37 percent to $250,000.
One such first-time buyer, Bonnie Magallon, scooped up a two-bedroom, 2.5-bath tri-level townhome in Rancho Cucamonga, about 42 miles east of Los Angeles.
Magallon, 25, wasn't in a rush, figuring she would buy something by the end of this year. But shortly after getting prequalified for a loan, she saw the condo and went for it.
"It just worked out perfectly, just everything has aligned where I could afford it, it's a great area, (and) I love the condo," said Magallon, a senior secretary, who expects to close escrow on the $205,000 condo Friday.
She plans to keep the unit between three to five years and isn't worried about the possibility she could end up owing more than her home is worth if the housing downturn drags on beyond this year.
"For me, it was more (about) taking advantage of the market," she said. "I'm not scared about it because with my lifestyle and what I make, I'm fine with the payments."
Like many homebuyers these days, Magallon financed her purchase with a loan backed by the Federal Housing Administration, which requires a down payment of 3.5 percent.
Magallon also got a half-percent cut on her 5 percent interest rate for the first year that shaves off $120 a month from her monthly payment.
Another first-time buyer, Michi Crone, closed on her four-bedroom, 2.5-bath home in the Queen Creek suburb of Phoenix last month.
Crone, 33, had looked into buying a home four years ago, but the medical office worker didn't find anything she liked in her price range, which back then topped at $175,000.
The 2,400 square-foot home last sold for $213,000 during the boom. She bought it in a distressed sale for $110,000 and the bank paid the closing costs, Crone said.
"We really fell in love with this house," she said, noting that her monthly payment is $100 less than her rent was. "The market wasn't really a factor in making our decision."
Sales climbed about 68 percent in the Phoenix metro area, a hotbed of foreclosures that saw speculation-driven price increases during the housing boom. The median home price dropped about 42 percent to $129,900, according to the AP-Re/Max report.
The San Francisco metro area saw the steepest drop in median price in the West, a decline of more than 44 percent to $330,000. Sales jumped by nearly 57 percent, according to the AP-Re/Max report.
Ben Coleman, broker-owner of Century 21 Hartford Properties in San Francisco, saw a 50 percent increase from a year ago in closed transactions, he said.
"It was a great month and we'd love to see that continue on," he said, crediting first-time buyers for the largest slice of business, followed closely by investors.
"The properties that are moving the fastest are the ones that are priced probably in the $250,000 range and less," Coleman said.
Many of the homes selling in that range were distressed properties, although Coleman says he's seeing fewer foreclosures on the market.
"The asset managers that we've talked to are saying they don't have anything in the hopper for us," Coleman said.
In Las Vegas, sales more than doubled versus January 2008 and the median sales price sank more than 36 percent to $149,900.
Many buyers shopping for bank-owned homes continue to face multiple competing offers, said Brad Snyder of ZipRealty, whose transactions in January were entirely made up of distressed home sales.
Snyder's business last month easily eclipsed that of January 2008, with first-time homebuyers making up about 40 percent of transactions.
"They're coming out in droves," said Snyder. "You can get a mortgage right now for less than you pay in rent."
Still, investors, an overwhelming majority of them paying cash and hailing from states like California, outpaced first-time buyers last month, he said, adding that February looks to easily beat his year-ago sales.
"It's not like the boom by any means," Snyder said, "but it's definitely a busy, busy market."
Source
March 6, 2009
Federal homeowner plan aims to help 7 to 9 million
President Barack Obama announced a $75 billion mortgage relief plan Feb. 18. The Homeowner Stability Initiative is aimed to help as many as seven to nine million distressed families threatened by foreclosure, stay in their homes by making it easier to refinance and adjust mortgage payments, according to an article by MSNBC. The plan was announced in Arizona, one of the states that has been most affected by the negative housing market.
Fortunately for those living in Texas, the housing market has not seen as much impact as the rest of the United States.
"Waco hasn't been hammered like the rest of the country," Waco Community Development Center Representative Mike Stone said. "We've seen effects, but not that way. The main effect for us is the tightening of the lending rules. Texas' lending laws are a lot tighter than that, some people call them antiquated, but we haven't been hit by all of that. It kept us out of trouble."
According to Moody's Economy.com, out of roughly 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth.
"In the end, all of us are paying a price for this home mortgage crisis," Obama said at a high school outside Phoenix. "And all of us will pay an even steeper price if we allow this crisis to deepen."
More than one million people in the U.S. have lost their homes in the housing crisis, and Obama said a further six million homes were at risk of foreclosure.
Due to the fact that different states have different laws concerning loans and interest rates, it is easy to spot where the housing crisis has had the most effect. California and Florida have the highest foreclosure rates out of the entire country. When this is combined with the extremely high cost of living in these places, it makes it difficult to live comfortably there.
"Forty percent of foreclosures were in those two states," Stone said. "The last I heard, their housing values had depreciated by 25 percent. There were a lot of folks in those states that got some really crazy loans, and they had clauses in their loans that if the values decreased below a certain magic number, they would reset. A lot of them are resetting right now, because their values have gone down."
Obama plans to take an existing housing incentive, put in place by former President George W. Bush, and make it even more beneficial to those who wish to purchase a home.
"Bush passed that tax credit for first-time home buyers and I've heard that they're talking about making that into a grant instead of a tax credit. So that's a good thing for home buyers. It's not something they can use at closing. But it is something that can help them once they've moved into a house," Stone said.
According to an article published by the Associated Press, $3.7 billion was given to repeal a requirement that an $8,000 first-time home buyer tax credit must be paid back over time for homes purchased from Jan. 1 to Aug. 31, unless the home is sold within three years.
With this changing from a credit to a grant, first-time buyers will not have to pay back the amount, allowing them to spend the money on other necessities associated with a new home.
Considering the housing and loan situation in the country, some local people have been afraid to invest in a home at this time. While it is true that other states are suffering from the high cost of living, the current local interest rates are low, at least compared to the high interest rate, which cycled over the last two years.
"A lot of families are concerned about buying a house right now because there's a lot of scare going on, so families are reluctant to buy a house," Stone said. "I think that's affected the market a little bit."
But opinions vary about this issue. Andrea Danford, a local real estate agent at RE/MAX, said that while the housing package is still pending, the stimulus package is already having an effect.
"The new stimulus package has been a godsend," said Danford. "Because of it, my business has gone back to normal, and more people are buying homes now."
Danford said more people are less afraid to buy homes now that they know the stimulus package will help protect their jobs.
She says that new home buyers will be getting back twice as much as they are putting down now.
"Now all that needs to happen is for the banks to give out more loans to people, and then things will go back to being normal," she said.
Students are beginning to realize the toll it will take on their lives also.
"I really hope there is an end to the things going on with loans and housing," Tyler sophomore Kyle Harropp said. "If things stay the way they are, it will make it really hard for our generation to own homes and start families."
Source
Fortunately for those living in Texas, the housing market has not seen as much impact as the rest of the United States.
"Waco hasn't been hammered like the rest of the country," Waco Community Development Center Representative Mike Stone said. "We've seen effects, but not that way. The main effect for us is the tightening of the lending rules. Texas' lending laws are a lot tighter than that, some people call them antiquated, but we haven't been hit by all of that. It kept us out of trouble."
According to Moody's Economy.com, out of roughly 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth.
"In the end, all of us are paying a price for this home mortgage crisis," Obama said at a high school outside Phoenix. "And all of us will pay an even steeper price if we allow this crisis to deepen."
More than one million people in the U.S. have lost their homes in the housing crisis, and Obama said a further six million homes were at risk of foreclosure.
Due to the fact that different states have different laws concerning loans and interest rates, it is easy to spot where the housing crisis has had the most effect. California and Florida have the highest foreclosure rates out of the entire country. When this is combined with the extremely high cost of living in these places, it makes it difficult to live comfortably there.
"Forty percent of foreclosures were in those two states," Stone said. "The last I heard, their housing values had depreciated by 25 percent. There were a lot of folks in those states that got some really crazy loans, and they had clauses in their loans that if the values decreased below a certain magic number, they would reset. A lot of them are resetting right now, because their values have gone down."
Obama plans to take an existing housing incentive, put in place by former President George W. Bush, and make it even more beneficial to those who wish to purchase a home.
"Bush passed that tax credit for first-time home buyers and I've heard that they're talking about making that into a grant instead of a tax credit. So that's a good thing for home buyers. It's not something they can use at closing. But it is something that can help them once they've moved into a house," Stone said.
According to an article published by the Associated Press, $3.7 billion was given to repeal a requirement that an $8,000 first-time home buyer tax credit must be paid back over time for homes purchased from Jan. 1 to Aug. 31, unless the home is sold within three years.
With this changing from a credit to a grant, first-time buyers will not have to pay back the amount, allowing them to spend the money on other necessities associated with a new home.
Considering the housing and loan situation in the country, some local people have been afraid to invest in a home at this time. While it is true that other states are suffering from the high cost of living, the current local interest rates are low, at least compared to the high interest rate, which cycled over the last two years.
"A lot of families are concerned about buying a house right now because there's a lot of scare going on, so families are reluctant to buy a house," Stone said. "I think that's affected the market a little bit."
But opinions vary about this issue. Andrea Danford, a local real estate agent at RE/MAX, said that while the housing package is still pending, the stimulus package is already having an effect.
"The new stimulus package has been a godsend," said Danford. "Because of it, my business has gone back to normal, and more people are buying homes now."
Danford said more people are less afraid to buy homes now that they know the stimulus package will help protect their jobs.
She says that new home buyers will be getting back twice as much as they are putting down now.
"Now all that needs to happen is for the banks to give out more loans to people, and then things will go back to being normal," she said.
Students are beginning to realize the toll it will take on their lives also.
"I really hope there is an end to the things going on with loans and housing," Tyler sophomore Kyle Harropp said. "If things stay the way they are, it will make it really hard for our generation to own homes and start families."
Source
March 5, 2009
Existing Home Sales Lowest Since 1997
Stocks drop to session lows as a dismal existing home sales report hits the wires at 10:00 AM ET, Feb. 25.
January existing homes sales dropped to a seasonally adjusted annual rate of 4.49 million from 4.74 million, which was well short of the 4.79 million consensus estimate. This marks a decline of 5.3% compared to last month and 8.6% compared to the previous year Consumers remain hesitant to buy homes in the face of declining wealth and plummeting home prices. At the same time, credit standards are tighter, so fewer people that want to purchase a home are able to obtain financing.
Many of the sales were distressed, which is foreclosed properties or a short-sale. Nationwide, the National Association of Realtors said 45% of January sales were distressed. This contributed to a 14.8% year-over-year drop in the median home price. The month's inventory supply rose only slightly to 9.6 months from 9.4 months, but that is only because more people gave up on trying to sell their homes.
Overall housing inventory levels are at historic highs, according to Q4 census bureau data, so it's likely that the housing market will remain weak for an extended period of time.
Real estate services stocks are down 10.6%.
Just reported, oil inventories rose by 717,000 barrels, which was smaller than the expected build of 1.3 million. Oil prices rose following the release, currently up 2.4% to $40.88 per barrel.
Source
January existing homes sales dropped to a seasonally adjusted annual rate of 4.49 million from 4.74 million, which was well short of the 4.79 million consensus estimate. This marks a decline of 5.3% compared to last month and 8.6% compared to the previous year Consumers remain hesitant to buy homes in the face of declining wealth and plummeting home prices. At the same time, credit standards are tighter, so fewer people that want to purchase a home are able to obtain financing.
Many of the sales were distressed, which is foreclosed properties or a short-sale. Nationwide, the National Association of Realtors said 45% of January sales were distressed. This contributed to a 14.8% year-over-year drop in the median home price. The month's inventory supply rose only slightly to 9.6 months from 9.4 months, but that is only because more people gave up on trying to sell their homes.
Overall housing inventory levels are at historic highs, according to Q4 census bureau data, so it's likely that the housing market will remain weak for an extended period of time.
Real estate services stocks are down 10.6%.
Just reported, oil inventories rose by 717,000 barrels, which was smaller than the expected build of 1.3 million. Oil prices rose following the release, currently up 2.4% to $40.88 per barrel.
Source
March 4, 2009
Housing prices fell 6.58% last year in Utah
Utah housing prices depreciated 6.58 percent last year, just above the national average, according to the Federal Housing Finance Agency.
The agency's House Price Index, released Tuesday, showed home prices in the 50 states and the District of Columbia posted record declines in the fourth quarter of 2008. Nationwide, home prices fell 8.27 percent during 2008, the report said.
Among Utah metro areas, Logan was the only city with positive appreciation, ranking 32nd, with prices increasing 1.92 percent last year. St. George ranked 248 out of 292, with prices decreasing 13.28 percent in 2008, the report said.
Ogden-Clearfield ranked 141, with prices decreasing 1.54 percent. Salt Lake City came in at 171, as prices fell 3.37 percent during the year, and Provo-Orem ranked 191, as prices depreciated 4.54 percent.
Nationally, the seasonally adjusted purchase-only index was based on data from home sales. The report said the 3.4 percent drop from the third quarter of 2008 to the fourth quarter was the largest decline in the purchase-only index's 18-year history. Over the past year, seasonally adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth quarter of 2008. read more
The agency's House Price Index, released Tuesday, showed home prices in the 50 states and the District of Columbia posted record declines in the fourth quarter of 2008. Nationwide, home prices fell 8.27 percent during 2008, the report said.
Among Utah metro areas, Logan was the only city with positive appreciation, ranking 32nd, with prices increasing 1.92 percent last year. St. George ranked 248 out of 292, with prices decreasing 13.28 percent in 2008, the report said.
Ogden-Clearfield ranked 141, with prices decreasing 1.54 percent. Salt Lake City came in at 171, as prices fell 3.37 percent during the year, and Provo-Orem ranked 191, as prices depreciated 4.54 percent.
Nationally, the seasonally adjusted purchase-only index was based on data from home sales. The report said the 3.4 percent drop from the third quarter of 2008 to the fourth quarter was the largest decline in the purchase-only index's 18-year history. Over the past year, seasonally adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth quarter of 2008. read more
March 3, 2009
First-time home buyers and their $8000 credit
Many of my peers are excited about the $8000 tax credit for home which that is part of the stimulus package. Prospective buyers that I�m meeting are not. They just do not see this as the stimulus of their decision to buy. Makes sense to me. If you understand this credit, you know that this $8000 credit will go for improvements, furniture, or towards replenishing your reserves. Economic stimulation for contractors or retailers, maybe. It doesn't make or break the ability to buy a home.
Would-be buyers, here is an outline of the new program (thanks again to Eric Heinrich from Mortgage Master, Inc., who sent the first copy. Posted is the NAR page on it.)
Before leaping in, consider these things:
1. It is a grant, not a loan; that�s great. But, it�s a tax rebate, so it is tied to your annual tax refund. The funds are not available as part of your down payment or closing costs.
2. There are income limits. If you fall within the income limits for the rebate, you also fall within these limits for your loan.
Realistic ratios for borrowing should be 28 percent of gross monthly income for housing expense and 36 percent for housing plus credit debts.
(I used gross income here, $75,000 and $150,000. Your actual earnings can be higher, since the program is based on MAGI. I chose an interest rate of 5.25 percent. I used an average tax for properties in the towns west and north of Boston.)
A single person with a $75,000 income has a monthly gross income of $6250. 28 percent of that is $1750. (36 percent is $2250, so there is $500 set aside for other long-term debt such as car or student loans.) That $1750 must cover principal, interest, tax and insurance. So, this borrower can take a loan for about $240,000, depending on taxes and condo fees for the property he/she chooses. With a 10 percent down payment of $24,000, the purchase is $264,000. That $8000 is roughly 3 percent of the purchase price.
A couple with a $150,000 income has a monthly gross income of 12,500. 28 percent of that is $3500. (This leave $1000 more set aside for other long-term debt within the 36 percent total debt limit.) That $3500 covers principal, interest, tax and insurance for a loan of about $500,000, depending on the taxes and condo fees on the property they choose. With a $50,000 down payment, that $8000 is roughly 1.5 percent of the purchase price of $550,000.
In markets where $100,000-$150,000 will purchase a home, this government program can make the difference between buying and renting. There, first-time home buyers can reach for a down payment of $10-15,000, wait for the rebate, and then stabilize their home ownership with the rebate funds. Here in eastern Massachusetts, I just don�t see it. Down payments are still too high. Prices are still too high.
If you are buying this year in eastern Massachusetts, your decision should be based on more than this rebate. Sorry if I rained on your parade. Some of you were waiting for this stimulus to get you into your first home.
First-time buyers, you are not being bailed out. You are getting cash back to paint your boat...next year.
Source
Would-be buyers, here is an outline of the new program (thanks again to Eric Heinrich from Mortgage Master, Inc., who sent the first copy. Posted is the NAR page on it.)
Before leaping in, consider these things:
1. It is a grant, not a loan; that�s great. But, it�s a tax rebate, so it is tied to your annual tax refund. The funds are not available as part of your down payment or closing costs.
2. There are income limits. If you fall within the income limits for the rebate, you also fall within these limits for your loan.
Realistic ratios for borrowing should be 28 percent of gross monthly income for housing expense and 36 percent for housing plus credit debts.
(I used gross income here, $75,000 and $150,000. Your actual earnings can be higher, since the program is based on MAGI. I chose an interest rate of 5.25 percent. I used an average tax for properties in the towns west and north of Boston.)
A single person with a $75,000 income has a monthly gross income of $6250. 28 percent of that is $1750. (36 percent is $2250, so there is $500 set aside for other long-term debt such as car or student loans.) That $1750 must cover principal, interest, tax and insurance. So, this borrower can take a loan for about $240,000, depending on taxes and condo fees for the property he/she chooses. With a 10 percent down payment of $24,000, the purchase is $264,000. That $8000 is roughly 3 percent of the purchase price.
A couple with a $150,000 income has a monthly gross income of 12,500. 28 percent of that is $3500. (This leave $1000 more set aside for other long-term debt within the 36 percent total debt limit.) That $3500 covers principal, interest, tax and insurance for a loan of about $500,000, depending on the taxes and condo fees on the property they choose. With a $50,000 down payment, that $8000 is roughly 1.5 percent of the purchase price of $550,000.
In markets where $100,000-$150,000 will purchase a home, this government program can make the difference between buying and renting. There, first-time home buyers can reach for a down payment of $10-15,000, wait for the rebate, and then stabilize their home ownership with the rebate funds. Here in eastern Massachusetts, I just don�t see it. Down payments are still too high. Prices are still too high.
If you are buying this year in eastern Massachusetts, your decision should be based on more than this rebate. Sorry if I rained on your parade. Some of you were waiting for this stimulus to get you into your first home.
First-time buyers, you are not being bailed out. You are getting cash back to paint your boat...next year.
Source
Congress Has Made it $8,000 Easier to Buy a Home
In its efforts to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers.
But time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and on or before November 30, 2009 are eligible.
The Web site www.FederalHousingTaxCredit.com explains in detail the provisions of the new tax credit. The basic provisions include:
* Provides a tax credit equal to 10 percent of the sale price of the home, up to an $8,000 maximum. Is a true tax credit. It does not need to be repaid, unless the home owner sells the home within three years of the purchase.
* Can only be used with the purchase of a home that will be the buyer's principal residence. It cannot be claimed for the purchase of a vacation home or property to be used as a rental.
* Available to first-time home buyers only. A first-time home buyer is defined as someone who has not owned a principal residence for three years or more.
* Applies to homes purchased by qualified buyers between Jan. 1 and Nov. 30, 2009. The purchase date is the date when closing occurs and the title transfers.
"This new tax credit provides an unprecedented opportunity for people looking to buy their first home," said Brown County Home Builders Association (BCHBA) President Ron Thiesfeldt. "Not only will they receive an $8,000 tax credit, they also will be taking advantage of record-low interest rates, a large selection of homes to choose from and competitive home prices."
House hunters will also find that many builders have inventory that is "move-in ready," and may offer upgrades or other incentives to seal the deal. Also, owners of existing homes who are looking to trade-up or relocate are ready to bargain. And, as a long-term investment, homeownership still remains a solid investment for Americans.
Thiesfeldt warns, however, that this opportunity won't be around forever. "Keep in mind that you have to purchase your house on or before Nov. 30 of this year."
For more resources to help you understand the process of financing and buying a home, visit www.nahb.org/forconsumers or www.bchba.org today.
The BCHBA is made up of dedicated professionals who provide excellence in housing through education and innovation for the betterment of members and our local community. For more information, please visit www.bchba.org
Source
But time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and on or before November 30, 2009 are eligible.
The Web site www.FederalHousingTaxCredit.com
* Provides a tax credit equal to 10 percent of the sale price of the home, up to an $8,000 maximum. Is a true tax credit. It does not need to be repaid, unless the home owner sells the home within three years of the purchase.
* Can only be used with the purchase of a home that will be the buyer's principal residence. It cannot be claimed for the purchase of a vacation home or property to be used as a rental.
* Available to first-time home buyers only. A first-time home buyer is defined as someone who has not owned a principal residence for three years or more.
* Applies to homes purchased by qualified buyers between Jan. 1 and Nov. 30, 2009. The purchase date is the date when closing occurs and the title transfers.
"This new tax credit provides an unprecedented opportunity for people looking to buy their first home," said Brown County Home Builders Association (BCHBA) President Ron Thiesfeldt. "Not only will they receive an $8,000 tax credit, they also will be taking advantage of record-low interest rates, a large selection of homes to choose from and competitive home prices."
House hunters will also find that many builders have inventory that is "move-in ready," and may offer upgrades or other incentives to seal the deal. Also, owners of existing homes who are looking to trade-up or relocate are ready to bargain. And, as a long-term investment, homeownership still remains a solid investment for Americans.
Thiesfeldt warns, however, that this opportunity won't be around forever. "Keep in mind that you have to purchase your house on or before Nov. 30 of this year."
For more resources to help you understand the process of financing and buying a home, visit www.nahb.org/forconsumers
The BCHBA is made up of dedicated professionals who provide excellence in housing through education and innovation for the betterment of members and our local community. For more information, please visit www.bchba.org
Source
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