Helen Oliveri

If you look at the latest Case-Shiller home price index numbers, which showed prices up in seventeen of the twenty markets it tracks and the fourth straight month of gains, you'd have to say: wow, how things have changed!

Even the gloomiest of the major indexes is now documenting month after month that housing not only bottomed out earlier this year, but is steadily racking up price gains.

But hold on, this week's numbers get better than that: According to the National Association of Realtors, resales of existing homes jumped sharply last month, up a very robust 9.4 percent during September.

Sales around the country were 9.2 percent higher than they were during September of 2008 -- pushed this year by first-time home purchasers looking to nail down contracts to qualify for the $8,000 tax credit that's scheduled to end in less than four weeks.

Still more good news: Inventories of unsold homes fell just about everywhere, averaging about an eight month supply in September, down from a 9 month supply in August. A six to seven month supply is considered a balanced market … so we're almost there.

Add in mortgage rates averaging 5 percent for a 30 year fixed mortgage and four and a half percent for a 15 year loan, and you can see why applications for new loans to purchase houses were up by nearly five percent last week, according to the Mortgage Bankers Association's national survey.

And as icing on the cake -- GDP or gross domestic product -- the barometer measuring the nation's overall economic health -- grew by three and a half percent in the third quarter, thereby officially ending the "great recession" we've been suffering through for the past two years.

So absolutely, there's a lot of positive news out there this week.

But not all the news has been good. As we've said here at Realty Times before, the marketplace is complex -- and the arrows usually don't ALL point in one direction.

And that is certainly true this week: New home sales dropped unexpectedly by more than three and a half percent in September. And consumer confidence dropped for the second straight month, according to the Conference Board, mainly because of fears about continuing job losses.

Both of those are troubling developments, no question, and the unemployment situation is obviously a major drag on the economy and housing.

But, as the reports on prices, mortgage rates, GDP and existing home sales show -- there's plenty of action out there, and the housing recovery is well underway -- even if it sputters here and there.

K. Harney

Don't bet all your money on it quite yet, but it looks more and more likely that Congress will extend the housing tax credit beyond its scheduled termination date - and maybe even open it up to people who already own homes.

Late last week a bipartisan plan emerged in the Senate that would continue the $8,000 credit for first time purchasers beyond November 30, but would create a new, smaller credit of $6,500 for people who've owned and lived in their houses for five consecutive years and now want to buy another as their principal residence.

Under one version of the Senate plan, which reportedly has the support of top Democrats including Majority Leader Senator Harry Reid, the current $8,000 credit for first-timers would effectively be extended through next June 30.

However, buyers would need to have their contracts signed by April 30 and closed by July 1.

The credit program would also be opened up to a restricted segment of current home owners, those with at least five years in their current residences, but with the maximum tax credit amount capped at $6,500.

That would still be enough, sponsors of the plan believe, to encourage people now on the sidelines to get into the market for new and existing homes in early 2010 -- and thereby help stimulate the economy and create jobs.

The Senate plan would also raise household incomes limits for the credit to $125,000 for single buyers and $250,000 for married couples - far more generous than the current $75,000 and $150,000 maximums.

Extending the $8,000 credit, as it is now, has heavy bipartisan support on the House side as well. But key Democratic leaders there -- and at the Obama White House -- are concerned about the costs.

The current $8,000 credit costs the Treasury about a billion dollars a month in lost tax revenues, according to Congressional budget estimates. Opening up the program to existing home owners - even in a restricted way -- would add to that cost.

On the other hand, limiting any extension to six months would be less expensive than a full-year extension, as advocated by major housing lobbies, including the National Association of Realtors and the National Association of Home Builders.

So the issue on Capitol Hill appears to boil down to this: It's not so much a question of whether to extend the credit. Absent a political train wreck, the credit should survive beyond November 30

But for how long, and for whom, are the questions still not nailed down?

We'll keep you up to date.

K. Harney

Don't bet all your money on it quite yet, but it looks more and more likely that Congress will extend the housing tax credit beyond its scheduled termination date - and maybe even open it up to people who already own homes.

Late last week a bipartisan plan emerged in the Senate that would continue the $8,000 credit for first time purchasers beyond November 30, but would create a new, smaller credit of $6,500 for people who've owned and lived in their houses for five consecutive years and now want to buy another as their principal residence.

Under one version of the Senate plan, which reportedly has the support of top Democrats including Majority Leader Senator Harry Reid, the current $8,000 credit for first-timers would effectively be extended through next June 30.

However, buyers would need to have their contracts signed by April 30 and closed by July 1.

The credit program would also be opened up to a restricted segment of current home owners, those with at least five years in their current residences, but with the maximum tax credit amount capped at $6,500.

That would still be enough, sponsors of the plan believe, to encourage people now on the sidelines to get into the market for new and existing homes in early 2010 -- and thereby help stimulate the economy and create jobs.

The Senate plan would also raise household incomes limits for the credit to $125,000 for single buyers and $250,000 for married couples - far more generous than the current $75,000 and $150,000 maximums.

Extending the $8,000 credit, as it is now, has heavy bipartisan support on the House side as well. But key Democratic leaders there -- and at the Obama White House -- are concerned about the costs.

The current $8,000 credit costs the Treasury about a billion dollars a month in lost tax revenues, according to Congressional budget estimates. Opening up the program to existing home owners - even in a restricted way -- would add to that cost.

On the other hand, limiting any extension to six months would be less expensive than a full-year extension, as advocated by major housing lobbies, including the National Association of Realtors and the National Association of Home Builders.

So the issue on Capitol Hill appears to boil down to this: It's not so much a question of whether to extend the credit. Absent a political train wreck, the credit should survive beyond November 30

But for how long, and for whom, are the questions still not nailed down?

We'll keep you up to date.

K. Harney

I clicked a link to the Wall Street Journal's market data chart, called the Hagerty's Quarterly Housing Report and was really taken aback by what they are reporting in the Washington, D.C. area (my home base).

Again, they have labeled our market as a "buyers" market and reported that more foreclosures are on the way. The problem I have with both those statements is that

* they are created out of data provided by the real estate industry; and

* they are accurate, but not truly reflective.

The real estate industry is its worst enemy when it comes to reporting sales data to the media and, ergo, the public. The reporters call, asking for the latest sales information and that's exactly what we hand them, latest solds, the houses that actually settled in the last month.

Then the media take that report and extrapolate a trend (in their minds) of what's going to happen in the local markets. The problem is they are usually wrong. The Journal's report is a good example. While they are reporting that the Washington, D.C. market has a 6.4 months supply (considered a normal to buyer market) any agent working the Washington suburbs will tell you that is far from the truth. We are sitting on hardly any inventory and in many of our pocket markets, we have just a few days' supply, much less weeks.

Split it up by price range, and some communities have less than 7 days' supply. The houses come on and sell in a day at or above listing price. The challenge for the media (or something they refuse to really look at) is that when they go to these "local" MLS organizations that serve a particular metropolitan area, they just lump it all in the same bowl and come out with one large biscuit and label it Chicago; or Washington, DC; or Big City Name here.

If you know the geography of Washington DC, then you'll probably be a little confused when you find out what's included in our MLS: Parts of Pennsylvania, Delaware and West Virginia. If those areas are included, then, yes, the DC market has a 6.4 months' supply.

In Pennsylvania there's an absorption rate of 13.5 months currently. In W.Va., it's a 10.8 months' supply and in Delaware, those good people have a 12.7 months' supply.

Right around the Beltway, however, which is DC-proper, the absorption rate is at 2.8 months. (That would be only Active properties, divided by pending sales written in the last 30 days). A buyer can see all the homes in their price range in about 15 minutes because there just aren't enough houses on the market.

So when the consumers around Washington (or Miami, Chicago, New York, etc.) read about the months' supply on Hagerty's Quarterly Housing Report in the Wall Street Journal – what's an agent to do? Who's the buyer going to believe – the Wall Street Journal, or the agent driving them around trying to sell them a house and earn a commission.

I mean, hey, what would the agent know? They just look at me as a big fat commission check, right? The market is turning in many metropolitan areas around the country – DC is at the head of the curve and many will follow. (In fact, at this writing, foreclosures make up only 18 percent of Fairfax County – one of the larges suburban markets in the DC area – 82% are regular sales.) But before you swallow the charts from the Big Media about absorption rates, talk with the agent who's actually working the area.

M. Anthony Carr

Question: Our homeowner association has 30 single family detached homes. Our governing documents were basically written for townhomes. One of the bothersome issues is that the governing documents state that the HOA is responsible for replacing roofs, painting, gutters and other things that are commonly done with condominiums. Many owners object to building up a reserve fund to pay for repairs that may be as much as 20 years or more down the road.

The covenants also state that the board cannot special assess for anything other than common area improvements. So that leaves us with pretty much the options of building up the reserve fund or changing the governing documents. Can you provide us some sample wording for a single family home HOA that would allow homeowners to pay for major repairs themselves but would allow the board architectural control of those repairs?

Answer: While it's unusual for a single family HOAs to do exterior maintenance, repairs and replacements, it's not unheard of. I doubt that the developer made a mistake on this since it's a huge issue. And it's doubtful that you can muster the votes to change this which may take 100% of the owners to approve it including their mortgagees. You need to consult with a knowledgeable attorney to determine the requirements. If it is possible, the attorney can assist the board with the proper wording of the amendment.

So barring you pulling off a major governing documents amendment, yes, you need a reserve plan that includes a funding plan to collect money systematically from each owner every year. The 20-year-down-the-road thinking is flawed. While a reserve event like a roof may take place 20 years down the road, the reserve plan will only charge each owner a share of the future cost directly proportional to the benefit received. For example, if a particular owner owns for five years and sells, he would only pay 5/20ths of the future roof cost. He only pays for the benefit received and not a penny more. It's like refilling the tank of a rental car. This is the fairest way to fund future costs.

Question: Our board is being badgered by a delinquent owner because his account was turned over to collection. In hard economic times, should the board back off of collections?

Answer: As long as the board is enforcing collections uniformly, consistently and fairly, it is the board's responsibility to enforce the Collection Policy regardless of circumstance or economic climate. There is no government bail-out for HOAs.

Question: Is there an average that HOA management companies charge for managing a homeowner association? How do they base their fees ... by size, number of units, expectations, etc.? Do they usually charge a flat fee or percentage? How do they charge for maintenance, as a flat fee, by the job, etc.?

Answer: Percentages are not used to determine HOA management fees. Commonly, the management fee is expressed as the cost "per door." But behind the per door concept is an analysis of how much time it takes the management company to execute the routine duties described in the Management Agreement. This can vary a lot from HOA to HOA. And within the fee structure, there is usually several levels and costs of service included in the routine duties like management, accounting and general office services (mailing, making copies, etc.).

Maintenance and repairs are charged over and above the basic duties on an hourly or bid basis. So, for a management company to make a profit, an annual estimate of all the levels of service multiplied by their hourly charges multiplied by the number of hours for each plus a profit margin equals the annual cost of management. Keep in mind, however, that most Management Agreements provide for extra charges for non-routine tasks like assisting in insurance claims, arranging contractor bids and performing special tasks or investigations requested by the board.

R. Thompson