3-year descent in home prices appears to be at end #realestate #VRN #VA

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According to recent reports and forecasts by housing analysts, the three-year descent in home prices appears to be at an end. Eight cities, including San Francisco, showed price increases in May, up from four in April, and one in March, according to Standard and Poor’s/Case-Shiller Index. For the first time since early 2007, the index of 20 major cities was virtually flat, rather than down.

KEEP THIS IN MIND

• Earlier reports show that sales of existing homes nationwide rose last month for the third consecutive month, while sales of new homes increased in June by the largest percentage in eight years, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR) and the U.S. Commerce Dept., respectively.

• Although some skeptics believe the market is pausing before home prices decline further, the median price in California’s housing market appears to be stabilizing. June marked the fourth consecutive month of rising home prices and the second largest gain on record for the month of June, based on statistics dating back to 1979. The year-to-year decline in June also was the smallest in the past 16 months.

• The S&P/Case-Shiller price index for 20 cities showed a half-percent gain when May was compared with April. It was the first month-over-month increase in the index in 34 months. “It is very possible that years from now we will say that April 2009 was the trough in home prices,” said Maureen Maitland, vice president for index services at Standard & Poor’s.

• One explanation for the increase in median prices is the rise in demand from buyers, especially first timers taking advantage of the $8,000 federal tax credit, which expires in December. The NATIONAL ASSOCIATION OF REALTORS® (NAR) is lobbying for the tax credit to be extended and to be replaced with a $15,000 credit for all buyers.

• Another factor in the market’s resurgence is the prevalence of foreclosures, which make up about a third of all existing home sales. “Although another surge of foreclosures is expected later this year, demand remains strong, so the market may be able to absorb more distressed properties without significantly impacting the median price,” said C.A.R.’s Chief Economist Leslie Appleton-Young.

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Recession Shopping: 10 Things to Buy Right Now – Housing

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Bargains in a Bad Economy:
By DAN KADLEC
We all know the story. Housing got way too hot a few years ago, and when the bubble burst it took down the whole economy. Well, as housing recovers so too will everything else. Dire forecasts persist. Some argue that home prices will not begin to recover before 2011. But this is a long-term investment. What’s a few years — especially if you can drive a hard bargain now? Besides, there are modest signs that the turn could come much sooner, and when it does the deals will go away. Prices have fallen by 50% or more in parts of Florida, Nevada and Arizona. That’s a stunning discount which when coupled with low mortgage rates makes housing today more affordable than it has been in many years. You can now buy the median house with 37% less income than you needed two years ago. Meanwhile, the government is offering up to $8,000 in tax credits this year for first-time buyers — an amount that would cover nearly half of a standard down payment on a typical home priced at $165,600. You can get below-market financing on new homes from builders like Toll Bros. (recently offering a 3.99% 30-year fixed rate mortgage) and Lennar (3.625%), and you can find deep discounts in the foreclosure market. Vacation properties have undergone an equally dramatic decline. Beach houses that once cost $3 million are now available for $1.5 million, according to the National Association of Realtors. The typical second home now runs $150,000, down from $204,100 at the peak, NAR reports.

Blogger says: The best thing in the meantime is to protect your credit rating and check your credit as often as possible.

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New Foreclosure Alternatives Program (FAP)

Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure.

Borrowers (Homeowners): Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

Incentives: Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

Standardized Documents: The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

Property Valuation by Appraisal or BPO: Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

Timeline: In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

Commissions: The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

No Borrower Fees: Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

Program Expiration: The program is in effect through 2012.

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Greenspan Says Fed Isn’t to Blame for Housing Bubble

By BRIAN BLACKSTONE

WASHINGTON — Former Federal Reserve Chairman Alan Greenspan Tuesday brushed back critics who contend that easy monetary policy fueled the housing bubble and ensuing bust, saying, “I respectfully disagree; they’re wrong.”

Mr. Greenspan was asked after a speech to a National Association of Realtors conference whether, in hindsight, he thought interest rates should have risen more when he was chairman earlier this decade.

He responded that housing activity is driven by long-term rates, and not the overnight rates set by the Fed. The housing boom, he added, actually began in 2000, one year before the Fed started cutting interest rates in 2001.

“I think there is a recalibration of financial history that I find very puzzling,” Mr. Greenspan said.

In his speech, Mr. Greenspan said he is starting to see “seeds of bottoming” in the U.S. housing market, though that isn’t reflected yet in home prices.

He called home prices the “Achilles’ heel” of the U.S. economy, “which is otherwise running extraordinarily well in recent weeks.”

The economy could withstand a further 5% drop in home prices, Mr. Greenspan said. But if they fall much beyond that, more conventional mortgages will be underwater, he warned.

Commenting on the global nature of the financial and economic crisis, Mr. Greenspan said one surprising feature is how uniform the downturn has been. “For the first time I can recall, the U.S. looked like everybody else,” he said.

Mr. Greenspan added that his “fear” is that “we will draw in our horns” with protectionist trade policies.

Write to Brian Blackstone at brian.blackstone@dowjones.com

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Feeling For the Bottom: “April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house.”

By Les Christie, CNNMoney.com staff writer
Last Updated: May 4, 2009: 1:59 PM ET

NEW YORK (CNNMoney.com) — Is the housing meltdown ending?

• Buyers defy expectations with an increase in sales contracts signed during March.

Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago.

The consensus forecast of industry experts polled by Briefing.com had predicted no increase in the index.

It may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed, according to Lawrence Yun, NAR’s chief economist. And, the upturn may have been boosted by the first-time homebuyers tax credit, a temporary measure that will lapse in December.

“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Yun. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment.”

The index is understood to be a forward indicator of home sales trends since it measures contracts signed, not completed sales. The up-tick may indicate that home prices have fallen low enough for buyers to get off the fence.

• Feeling for the bottom

Yun is not calling a bottom yet, however, because the index is still at a relatively low level. Instead, he’s looking toward the summer selling season to determine what direction the market will take. Plus, he would like the number of homes on the market to drop to a more normal level of six to seven months of supply.

“If inventory goes down – it’s at just under 10 months now – to below eight months, that would mean we’re on the way to a sustainable recovery,” Yun said.

Anecdotal evidence indicates that trend may be happening. Realtors and other industry insiders are seeing rising open house attendance and multiple bids on some particularly desirable properties. Plus, pricing has become sharper, according to Sherry Chris, the CEO of Better Homes and Gardens Real Estate.

“Overpricing seems to be ending,” she said. “Properties are coming onto the market and selling quickly.”

And buyers are feeling a little more urgency, she added. In many markets, buyers have not felt any pressure to make an offer. “They said to themselves, ‘I don’t have to act immediately. It will still be on the market two weeks from now,'” she said.

Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house.

They don’t, however, believe there will be price increases soon; three of four buyers think prices will stabilize or even decline in their areas over the next 12 months, according to Gallup.

Pat Newport, a real estate analyst for IHS Global Insight, is putting less emphasis on pending home sales than he once did for his housing market analyses. There has been a disconnect lately, he said, between the number of properties going into contract (pending home sales) and the number that actually close (existing home sales).

He speculates that this is because buyers are making offers and signing contracts but, because of financing problems, many deals are falling through.

• Regional differences

The South saw the largest gain of any region, with pending home sales jumping 8.5%. Pending sales are 7.7% higher there compared with a year ago.

The Midwest gained 3.9% from February and 1.7% year-over-year. Northeast sales fell 5.7% and are off 24.1% compared with March 2008. The West dropped 1% for the month but are up 8.2% year-over-year.

Low home prices continued to help to drive sales, although NAR’s affordability index actually fell 2.3% from February, when it hit a historic high. This index is based on family income, home prices and mortgage rates.

“Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” said NAR President Charles McMillan, in a prepared statement. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable.

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The skinny on Short Sales

When a lender allows a property to be sold for less than the remaining balance on the mortgage loan to facilitate a sale by a financially distressed owner, it’s called a short sale.

 

A short sale can be a winning situation for a buyer looking for a house listed below market value. Mortgage companies typically want to work with buyers and sellers to prevent foreclosures. That’s why, if a seller is current on the loan and the value of the property has fallen, a lender may consider a discounted payoff.

 

However, here’s what you need to know before jumping headlong into a short sale: Lenders have a deluge of foreclosed properties and short sales on their books and, consequently, it can take several weeks to three months for a lender to agree to a short sale offer. Short sales can be frustrating, especially if the lender refuses your bid, pushes back with possible renegotiations, or receives a higher bid. In the event that a second or third lien holder (i.e., entity holding a form of security interest granted over the property to insure the payment of a debt) is not being cooperative, it helps to have a little extra cash on hand to meet unanticipated demands for a larger payoff balance and expedite the process.

 

A REALTOR® experienced in short sales can protect your interests, guide you through each step, check important details, and provide advice when you encounter a speed bump.

One Buyer’s Story

>> William and Mary Ellen Veitschegger submitted an offer in July 2008 for an investment property in Folsom, and their escrow closed in September.

“It is important to research your market. Buyers need to realize the short sale price is only a baseline figure,” adds Mary Ellen Veitschegger. “Our patience was tested during the last stages of the deal when the lender learned there was a second mortgage [a loan holder behind a senior first loan] on the property. They [the second lien holder] wanted us to pay $8,800 more to satisfy them. We were so upset and declined at that point. Fortunately, our real estate agent and the seller’s agent lowered their commissions in order to make the sale happen. We ended up paying $3,000 instead of $8,800.”

Working with a REALTOR® who knew the current housing market was an advantage, says Veitschegger. He explained the pros and cons of the process. “We feel he had our best interests at heart,” she says.

Was the short sale worth it?

“I think we got a slightly lower price, but only ‘time’ will tell,” says Veitschegger.

Resources

>> The National Short Sale Center: While this group focuses on the needs of homeowners, it provides resources on the process, especially under the heading “Press.” See www.shortsalecenter.com .

Good to Know:

• The success rate of short sales is about 50 percent, according to anecdotal reports from lenders and REALTORS®. That percentage should increase as lenders streamline the process.

• A short sale does not involve a foreclosed property. However, the owner of a property can fall into default—and foreclosure—during a lengthy approval process.

 

California Association of Realtors launches new program for first-time buyers ( #CAR )

This Thursday, April 2, the California Association of Realtors will launch a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss and subsequently being unable to meet their monthly mortgage obligations.

Through the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million to the program this year, and estimates that as many as 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:

Be a first-time home buyer – someone who has not owned a home in the last three years

Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009.

Use a California REALTOR® in the transaction

Purchase the property in California

Be a W-2 employee (cannot be self-employed or military personnel)

First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®. For applications and other information on this exciting new program, go to www.car.org/aboutus/hafmainpage/ or contact Monica Rodriguez at (213) 739-8380 or monicar@car.org.

The Mortgage Protection Program is a proactive approach by C.A.R. to address consumers’ concerns about the real estate market and their ability to make their mortgage payments should they loose their jobs. There is no cost to participate.

 

extracted from a letter written by James Liptak – 2009 C.A.R. President – March 31, 2009.

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