Will FHA Rule Change Benefit Condo Market?
RISMEDIA, November 16, 2009—(MCT)—The Federal Housing Administration (FHA) is giving the condo market something it hasn’t had for a while—a little breathing room.
The FHA, the federal agency that insures low-down-payment home loans for private lenders recently said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.
“The best way to bring back some level of security is to get new buyers into those vacant units. You can’t do that until new homeowners have access to financing,” said Meg Burns, director of the FHA’s single-family program development. The new rules—which are temporary—come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.
“This might be an entree for traditional and conventional lenders to return to the marketplace. Symbolically, it’s a pretty significant move,” said Peter Zalewski, a condo market analyst and broker with Condo Vultures in Bal Harbour, Fla.
The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.
Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.
Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even “scared” to lend money, prompting the agency to step in as a way of calming nerves. “We’re coming in and saying we’ll approve the projects and back them so you will feel confident and comfortable lending in this environment,” Burns said.
Securing the blessing of the FHA is important because it allows borrowers to get loans that require down payments of only 3.5% and qualify under less burdensome terms. Most conventional loans now require 20% down, keeping creditworthy borrowers on the sidelines. In some new projects, lenders have asked for down payments of as much as 40 to 50%.
Among the new, temporary rules is a measure extending a deadline allowing lenders to submit mortgage loans for spot approval in buildings that have not been approved for FHA lending. The administration had said the so-called spot loans would be eliminated by the end of the year but the new deadline is February 2010.
The new guidelines also:
-Increase from 30% to 50% the number of units in a project that can be financed with FHA loans. FHA, however, will make exceptions, even allowing up to 100%, when buildings meet an additional set of more stringent criteria.
-Require at least 50% of units in a complex to be owner-occupied or sold to owners who plan to live in the units. Bank-owned units may be disqualified from the percentage calculation.
-Reduce a presale requirement in new construction to 30%, compared to 70% for loans from conventional lenders.
“This temporary guidance represents incredible leniency in terms of financing standards and loan standards,” Burns said. It’s hard to say how many buildings may benefit from the new rules, but mortgage brokers and real estate observers applauded the reprieve. “This should really help some of the stalled projects if they can get their buildings approved,” said Grant Stern, a mortgage consultant in Bay Harbor Islands, Fla., who specializes in Fannie Mae and FHA guidelines. “A lot of these buildings looking to sell out the rest of their inventory should be able to get FHA approval to close out the projects.”
But there will be more hurdles to overcome beginning Dec. 7. That’s when a bevy of additional regulations take effect, including a provision that withholds approval from buildings where more than 15% of unit owners are past due on association fees.
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RISMEDIA, November 12, 2009—RealtyTrac one of the leading online marketplaces for foreclosure properties, released its October 2009 U.S. Foreclosure Market Report, which shows foreclosure filings—default notices, scheduled foreclosure auctions and bank repossessions—were reported on 332,292 U.S. properties during the month, a decrease of 3% from the previous month but still up nearly 19% from October 2008. The report also shows one in every 385 U.S. housing units received a foreclosure filing in October.
“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the fundamental forces driving foreclosure activity in this housing downturn—high-risk mortgages, negative equity, and unemployment—continue to loom over any nascent recovery. And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.”
Nevada, California, Florida post top state foreclosure rates
Despite a 26% decrease in foreclosure activity from the previous month, Nevada continued to document the nation’s highest state foreclosure rate—one in every 80 housing units received a foreclosure filing in October. A total of 13,842 Nevada properties received a foreclosure filing during the month, a 4% decrease from October 2008 and the first ever year-over-year decrease in Nevada since RealtyTrac began tabulating the year-over-year change in January 2006. Nevada default notices were down 10% from October 2008, and scheduled foreclosure auctions were down 6% from October 2008, while bank repossessions were up 8% from October 2008. A new foreclosure mediation program implemented by state law (AB 149) in July may be slowing the inflow of distressed properties into the foreclosure pipeline.
With one in every 156 housing units receiving a foreclosure filing in October, California posted the nation’s second highest state foreclosure rate for the second month in a row. A total of 85,420 California properties received a foreclosure filing during the month, a decrease of 1% from the previous month but still nearly 50% above the total reported in October 2008. The state’s default notices and scheduled foreclosure auctions were up 120% and 73% respectively from October 2008, when California foreclosure activity was in the midst of a three-month trough after a law (SB 1137) requiring lenders to give distressed homeowners extra notification before initiating foreclosure took effect in September 2008.
Florida posted the third highest state foreclosure rate, with one in every 168 housing units receiving a foreclosure filing in October. A total of 51,911 Florida properties received a foreclosure filing during the month, a nearly 6% decrease from the previous month and a decrease of 4% from October 2008. It was the first year-over-year decrease in overall Florida foreclosure activity since July 2006.
Other states with foreclosure rates ranking among the nation’s 10 highest were Arizona, Idaho, Illinois, Michigan, Georgia, Maryland and Utah.
Four states account for more than 50 percent of national total
Four states accounted for 52% of the nation’s total foreclosure activity in October: California, Florida, Illinois and Michigan.
Illinois posted the third highest state total after California and Florida, with 19,946 properties receiving a foreclosure filing in October—a 56% spike from the previous month and the highest monthly total for Illinois since RealtyTrac began issuing its report in January 2005. The state’s foreclosure rate jumped from No. 11 in September to No. 6 in October, and it was the only state with a foreclosure rate in the top 10 to post a monthly increase in foreclosure activity. A recent state law (SB 2513) that gives distressed homeowners an extra grace period to seek counseling to help avoid foreclosure may have created some pent-up foreclosure activity in the state. After the law went into effect in April, Illinois foreclosure activity decreased for three straight months before beginning to climb again.
Michigan registered the fourth highest state foreclosure activity total despite a nearly 2% decrease from the previous month. A total of 16,468 Michigan properties received a foreclosure filing in October, an increase of nearly 45% from October 2008.
Other states with totals among the 10 highest in the country were Nevada (13,842), Arizona (13,345), Georgia (12,468), Texas (11,798), Ohio (11,646) and New Jersey (7,435).
Three states account for all top 10 metro foreclosure rates
Despite a 27% decrease in foreclosure activity from the previous month, Las Vegas continued to document the nation’s highest foreclosure rate among metropolitan areas with a population of at least 200,000. One in every 68 Las Vegas housing units received a foreclosure filing in October—more than five times the national average.
Seven of the top 10 metro foreclosure rates were in California, led by Vallejo-Fairfield at No. 2 and Modesto at No. 3, both with one in every 81 housing units receiving a foreclosure filing. Other California cities in the top 10 were Riverside-San Bernardino-Ontario at No. 4 (one in 83), Bakersfield at No. 6 (one in 97), Merced at No. 7 (one in 100), Stockton at No 8 (one in 116), and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 130).
Metro areas in Florida accounted for the remaining two spots in the top 10: Cape Coral-Fort Myers at No. 5 (one in 92) and Orlando-Kissimmee at No. 9 (one in 117).
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Homebuyer Tax Credit Update
TAX CREDIT OVERVIEW
Who Gets What?
What are the New Deadlines?
What are the Income Caps?
What is the Maximum Purchase Price?
How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
Who is Eligible fort FTHB Tax Credit?
How Much are Current Home Owners Eligible to Receive?
Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Are There Other Restrictions to Taking the FTHB Credit?
Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
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Though many people may try and avoid it, there are some very good reasons to purchase real estate in a down market. Real estate investment has always been an interest for people looking to put their money into something secure. When the market is distressed it can be the perfect time to purchase real estate.
The real estate market said to be in a down market state, or a distressed state, when the value of property is falling. Many factors can contribute to a distressed market, but the main reason is typically that the market is flooded with houses for sale and with limited buyers.
Some people avoid investing in real estate, but there are many good reasons to purchase real estate in a down market. Real estate investment is always worthwhile, if done well. There are many different avenues to purchase real estate in a down market. If you research carefully and exhibit patience, the potential for you to profit can be well worth any risk.
Buy Low, Sell High
Real estate investment is all about making sound buying decisions at the right time. The fundamental reason to purchase real estate in a down market is the price. Many great real estate bargains can be found during times that the real estate market is in decline.
If you want to purchase property to resell, assuming that you can hold on to the property until the market recovers, you can really maximize your return on investment by purchasing property in a down market.
If you want to invest in rental property, the best time to buy is when the market is low. The smaller your initial investment in rental properties, the sooner you will be able to realize profits as a result of your investment.
Research Market Conditions
As with any other type of investment, research is the key to good real estate investing, regardless of the market condition. If the market is expected to continue to decline even further for a long period of time, purchasing property for resale might not be the best idea. Properties close to the San Diego coast like Del Mar, Carmel Valley , La Jolla & Encinitas tend to hold there value better even in a down market.
However, for example, if new industry is set to come to town within a few years, it is very likely that property values will increase. This type of information can help you make sound investing decisions. Finding out everything you can about your prospective investments before you purchase real estate is the key to doing well.
When you purchase real estate in a down market, it is important to have patience. The market may continue to fall after you buy your real estate investment. Sticking with your investment is the best way to make money from it. In a market that has been through a decline, there is plenty of money to make with your real estate investment. With the right research and a little patience, you can be well rewarded when you invest in real estate in a down market.
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RISMEDIA, October 26, 2009—Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®. Existing-home sales–including single-family, townhomes, condominiums and co-ops–jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2% higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.
Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”
Early information from a large annual consumer study to be released November 13, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows that first-time home buyers accounted for more than 45% of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29% of transactions in September.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said.
Total housing inventory at the end of September fell 7.5% to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0% below a year ago.
“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06% in September from 5.19% in August; the rate was 6.04% in September 2008. The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.
Single-family home sales rose 9.4% to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7% above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1% below a year ago. Existing condominium and co-op sales jumped 9.7% to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7% above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7% from September 2008.
Northeast
Regionally, existing-home sales in the Northeast increased 4.4% to an annual level of 950,000 in September, and are 11.8% higher than September 2008. The median price in the Northeast was $234,700, down 7.0% from a year ago.
Midwest
Existing-home sales in the Midwest jumped 9.6% in September to a pace of 1.25 million and are 7.8% above a year ago. The median price in the Midwest was $147,600, which is 1.0% below September 2008.
South
In the South, existing-home sales rose 9.0% to an annual level of 2.06 million in September and are 10.8% higher than September 2008. The median price in the South was $153,500, down 7.6% from a year ago.
West
Existing-home sales in the West surged 13.0% to an annual rate of 1.30 million in September and are 5.7% above a year ago. The median price in the West was $219,000, which is 15.0% below September 2008.
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If you are a 1st time Home Buyer, Real Estate Investor or just need to prepare your home to sell quickly please allow me to help you through your Real Estate transaction.Visit www.SanDiegoHomeSold.com
You will find me to be a careful listener, a prudent advisor, a shrewd negotiator and very familiar with what is currently happening in the real estate market in the San Diego area. I approach each transaction with dedication, integrity and a sense of humor. I work in partnership with each client to ensure his or her success.
I have lived and worked in San Diego for over 25+ years. I currently live in Carmel Valley ,CA and hava an office on Prospect Street in La Jolla. Keller Williams Realty office locations in La Jolla, UTC, Carmel Valley, Rancho Bernardo, Escondido, Carlsbad , Mission Hills, El Cajon & La Mesa. As a local area expert with knowledge of the communities, my objective is to work diligently to assist you in meeting your real estate goals. I'm a standing member with these real estate organizations:
Not only have I learned to work smart in this business I'm not afraid of working hard to achieve my Goals!
San Diego encompasses a large area with many communities. I live in Camel Valley but I do sell homes in these other San Diego County Beach communities: La Costa, Carmel Valley , Cardiff ,Del Mar, Torrey Pines, Rancho Santa Fe, Solana Beach, La Jolla, Fairbanks Ranch all the way up to Carlsbad. My home is right off the highway 56 so I also cover these Golf communities of Rancho Bernardo, Carmel Mountain Ranch, Poway & Rancho Penasquitos. My office is on 848 Prospect in La Jolla. Although I do sell high-end homes I have been currently working with investors and 1st time home buyers to help them buy pre-foreclosure propertys, fixers and Short Sale homes in San Diego County. Some of these investors turn the properties for profit others keep them for the rental income.
Most of my business is by referral so If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call or e-mail me
"Donna and I really enjoyed working with Gary Giffin. He made us feel at ease knowing that the sale of our home was in good hands with a qualified real estate expert. Keller Williams and Gary took care of everything, advertising, holding open houses, displaying the proper "For Sale" signs, following up with prospective buyers and of course selling our home. Escrow was a breeze because Gary handled it all! I would highly recommend Gary Giffin and Keller Williams for the sale of your home."
Mike & Donna Krytek ~ 2221 Vita Rodeo, El Cajon CA ~ Sellers
THE ENGLISH RESIDENCE
THIRTY-SIX O-FIVE-DASH-TEN SAN DIEGO, CA~ Buyers
GARY, JUST A FEW WORDS OF THANKS FOR THE WAY YOU TOOK CARE OF ALL MY NEEDS DURING THE PURCHASE OF MY HOME. YOU WERE ALWAYS READY TO HEAR WHAT I WANTEDAND LET ME CHOOSE THE HOME FROM THE ONES THAT YOU TOOK ME TO VIEW. I KNOWTHAT YOU TOOK CARE OF A HUGE AMOUNT OF THE BURDEN KNOWING THE LACK OF TIME IHAD TO COMMIT TO THE DETAILS. YOU HELPED MY BROKER GET THE HELP THAT HENEEDED TO GET THE LOAN APPROVED AND CLOSED. THE ADDED SURPRISE OF SPONSORINGA HOUSE WARMING RIGHT DOWN TO THE DECORATIONS WAS A TRUE EXAMPLE OF YOURPROFESSIONALISM. MY THANKS TO BOTH YOU & APRIL FOR YOUR COMMITMENT TO MYHOME LIFE AND I LOOK FORWARD TO OUR FUTURE AS FRIENDS AND ASSOCIATES.
MY SINCERE THANKS,
PATRICK ENGLISH
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