Howard Sumner

Senate Approves Homebuyer Tax Credit Extension

By JACOB GAFFNEY
November 4, 2009 10:44 PM CST

The Senate voted today to pass an extension of the first-time homebuyer tax credit until April 2010.

In all, 98 Senators voted in favor of H.R. 3548, with zero votes against (two Senators did not vote). H.R. 3548 is a bill is primarily purposed with extending unemployment benefits.

The bill is currently amended to include the extension of an $8,000 tax credit for those buying their first homes as well as an $6,500 tax credit for some borrowers buying a home for a second time.

The move comes as no surprise, as HousingWire reported last week. The bill now requires President Obama's signature into law.

Business Roundtable, an association of CEOs of leading U.S. companies, with nearly $6trn in annual revenues and more than 12m employees, commended the vote in a statement.

"This critical program has already enabled hundreds of thousands of Americans to become first-time homebuyers," they report.

"Encouraging additional home purchases will create a cascade effect, not only boosting the housing sector, but also creating jobs and hastening broad recovery of the U.S. economy - more than 20 percent of which is tied to residential real estate and housing-related industries."

Passed as an amendment, the tax credit can still be removed from the final wording of the bill, if placed under further review. However given recent lobbying efforts in the industry and a feeling of presidential support, this remains unlikely.

Below are the numbers for Yellowstone County for the first ten months of the year. If anyone had any doubt giving people an $8,000 tax break would affect people's behavior the numbers below should put that thought to rest. Things of note as we have progressed through the year we have steadily gained on our short fall of closed transaction compared to last year. The 79% above last year for pending sales of you can thank the $8,000 tax credit for that huge increase. When you look at sales price decline with size factored in my comment is about a 3% decline in pricing to put that into perspective the market has been flat since 2007. Not bad if you compare a 50% statewide drop in home values in California in the same time period, heck Las Vegas dropped 33% just from 2008 September to 2009 September. Another item to note is by definition first time buyers are rents and you can see the impact of them buying homes in the rental softness in pricing and increase availability.

Since it seems that Washington dc will pass an extension and expansion of the tax $8,000 for first time buyers $6,500 for person moving from a home they have owned for five years get ready for the after burns to kick in till reach altitude than flame out and head back for a crash landing.

Market update at glance	10/31/2009	Year	Percentage Increase
Yellowstone County		2008	2009	or -Decrease
Residential Closed Sales Units		1738	1632		-6%
Residential Pending Sales Units	167	299		79%
Residential Active Property Units For Sale	876	844		-4%
Average sales price Single family Home	$209,697	$201,222		-4%
Average Square feet Single family Home	2326	2272		-2%
Median sales price Single family Home	$186,070	$181,200		-3%
Median Square feet Single family Home	2214	2160		-2%
Average Days on Market Till Offer Received
Single Family Home			60	65		8%
Absorption rate -	TIME IN DAYS
Time it would take for all existing		171
properties to sell with no new inventory coming
into the market place - residential
SINGLE FAMILY PERMIT ISSUED MONTH	16	21		31%
SINGLE FAMILY PERMIT ISSUED YEAR	243	199		-18%
Average Number of Rentals Advertised Sundays	301	393		31%
Average Asking Price for a Rental Home	$1,114	$1,035		-7%
Average Asking Price for a Rental Apartment	$678	$673		-1%

C. 2009 Housing Goals

The Safety and Soundness Act, as amended, includes a transitional provision for the 2009

affordable housing goals. Specifically, section 1331(c) provides that the 2008 housing goals

shall remain in effect for 2009 and directs FHFA to review the goal levels for 2009 to determine

their feasibility given current market conditions, and after seeking public comment, make

appropriate adjustments consistent with the market conditions.9

After evaluating market conditions and seeking public comment, and in light of continued

deterioration in market conditions and an unexpectedly high volume of refinance mortgages

obtained by higher-income borrowers, FHFA determined that all of the goal and home purchase

subgoal levels and the housing goal and subgoal levels should be reduced for 2009. On May 1,

2009, FHFA published a proposed rule revising the overall 2009 housing goals and the 2009

home purchase subgoals.10 Following review of the comments on the proposed rule and an

updated analysis of mortgage market conditions, on August 10, 2009, FHFA published a final

rule establishing the 2009 housing goal levels as follows: 11

 Lowered the existing low- and moderate-income goal from 56 percent to 43 percent

 Lowered the existing underserved areas goal from 39 percent to 32 percent

 Lowered the existing special affordable goal from 27 percent to 18 percent

 Lowered the existing low- and moderate-income home purchase subgoal from 47

percent to 40 percent

 Lowered the existing underserved areas home purchase subgoal from 34 percent to 30

percent

 Lowered the existing special affordable home purchase subgoal from 18 percent to 14

percent

However, because of the severe curtailment of secondary market financing for multifamily

properties from other sources, FHFA modestly increased the existing special affordable

multifamily subgoals for the Enterprises-for Fannie Mae, from $5.49 billion to $6.56 billion,

and for Freddie Mac, from $3.92 billion to $4.60 billion. The 2009 special affordable

multifamily subgoals are well below the Enterprises' actual performance on these subgoals in

recent years. However, due to conditions in the multifamily market, the subgoals will be

challenging for the Enterprises to meet.

D. 2010 Housing Goals

Sections 1331 to 1333 of the Safety and Soundness Act, as amended, require the Director to

establish for 2010 and each year thereafter, four annual single-family housing goals and one

annual multifamily special affordable housing goal, as identified in those sections.12 This

represents a significant change in the structure of the housing goals in effect from 2004 to 2009.

FHFA is currently developing a regulation through the rulemaking process to implement these

statutory requirements.

Specifically, there are no longer any overall goals covering mortgages financed for all property

types (single-family and multifamily combined), property uses (owner- and renter-occupied

combined), and purposes (purchase and refinance combined). Rather, there are separate goals

for multifamily and single-family properties, and within the single-family category, separate

goals for home purchase and refinance mortgages. Further, Enterprise purchases of mortgages

on investor-owned single-family (1-4 unit) properties are excluded from all goals, although

FHFA intends to continue to monitor Enterprise purchases of such mortgages because these units

constitute an important source of affordable rental housing.

Single-Family Goals

. Under section 1332, there are three goal categories for Enterprise

acquisitions of single-family purchase money mortgages financing units for owner-occupied

housing. These are:

 Low-income families-defined as families with incomes no greater than 80 percent of

Area Median Income (AMI).

 Families in low-income areas-defined as families residing in census tracts or block

numbering areas in which the median income does not exceed 80 percent of AMI for the

area in which such census tract or block numbering area is located, and shall include

families with incomes not greater than 100 percent of AMI who reside in minority census

tracts (defined as tracts with a minority population of at least 30 percent in the 2000

Census and a median family income of less than 100 percent of the area family median

income), and shall include families with incomes not greater than 100 percent of AMI

who reside in designated disaster areas.

 Very low-income families-defined as families with incomes no greater than 50 percent

of AMI.

In addition, section 1332 requires the establishment of a refinance goal for low-income families.

Each purchase-money and refinance goal is required to be established as a percentage of total

acquisitions of purchase money or refinance mortgages for each Enterprise. There is a further

requirement for each Enterprise to report annually on its financing of low-income rental units in

2-4 unit properties containing at least one owner-occupied unit.

Multifamily Goal

. Section 1333 requires the establishment of a multifamily goal for Enterprise

purchases of mortgages on multifamily housing that finance dwelling units affordable to lowincome

families. The goal may be established in terms of minimum dollar volume (as was the

case for the special affordable multifamily subgoals set by HUD) or in terms of minimum

number of such units financed.

Section 1333 further requires FHFA to establish "additional requirements" for the purchase by

each Enterprise of mortgages on multifamily housing that finance units affordable to very lowincome

families.

In addition, section 1333 requires each Enterprise to report on its financing of low-income units

in small multifamily properties, which may be defined as properties with 5 to 50 units or with

loan amounts of up to $5 million.

FHFA expects to issue a proposed rule on the 2010 affordable housing goals by the end of the

fourth quarter of 2009.

Foreclosures Growing in Suburbs and Secondary, says RealtyTrac

By JON PRIOR
October 30, 2009 11:53 AM CST

Foreclosures are beginning to flare up in suburban and secondary metro markets for Q309, according to a report from RealtyTrac.

Dramatic increases in foreclosures from a year ago came in suburban areas previously believed to be more stable, such as Boise, Idaho, up nearly 22% from Q209. Another area, Provo, Utah, is located a distance of 45 miles outside Salt Lake City and rose nearly 11% in the same period. RealtyTrac provides an online marketplace for foreclosure properties with more than 1.5m default, auction and REO listings.

In several states, foreclosure activities drifted toward new focal points, such as smaller towns with previously self-sustaining industries. Chico, California in Sacramento Valley, and agricultural hub, had a 98% increase in foreclosures from Q308, according to the report.

The Las Vegas metro area had the highest percentage of foreclosures among its housing units with 5.13% in Q309. Merced, Calif. - west of San Jose - had a 3.72% foreclosure rate, and Cape Coral - Fort Meyers, Fla. came in third with 3.67% of homes sliding into foreclosures, according to the report.

"You're moving from Phoenix to Prescott, you're moving from Las Vegas to Reno," Rick Sharga, the vice president of marketing at RealtyTrac, told HousingWire. "You are seeing that migration into secondary markets. You're also seeing a migration into formerly stable areas and areas that have been wracked by unemployment."

Cities in California, Florida and Nevada accounted for the 10 highest foreclosure rates in Q309 among metro areas with more than 200,000 people. However, five of those cities reported decreasing foreclosure activity from Q308, offset by many other markets reporting spikes in foreclosures, according to the report.

Sharga sees the foreclosure crisis coming in three waves, and with this new data, the market is showing signs of the second one.

"That first wave of foreclosures cratered the economy, which created job losses, which created the second wave. Now, we're seeing prime rate loans affected by unemployment. And the third wave will be really a repeat of wave one, except this time we're going to see a switch of Option ARM and Alt-A loans out for the subprime loans. It will probably be as big but somewhat shorter lived," Sharga said.

Sharga said that he expects a peak in foreclosures in 2010, only a marginal improvement in 2011 and a return to normal monthly foreclosure activity sometime in 2012.

"Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave," said James J. Saccacio, chief executive officer of RealtyTrac. "While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A Option ARMs are spreading the foreclosure flood to more metro areas in 2009."

NEW RESIDENTIAL SALES IN SEPTEMBER 2009

Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate of 402,000, according to

estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 3.6 percent (±10.2%)* below the revised August rate of 417,000 and is 7.8 percent (±12.0%)* below the

September 2008 estimate of 436,000.

The median sales price of new houses sold in September 2009 was $204,800; the average sales price was $282,600. The

seasonally adjusted estimate of new houses for sale at the end of September was 251,000. This represents a supply of 7.5

months at the current sales rate.