Jeff Engle EnglePropertiesOnline

Making sense of the Market

On the market today:

Today, Placer county has 1236 "active" (non-short sale) listings.

• 17% are Bank Owned (REO) properties
• 61% came on the market within the past 90 days

In addition, there are 830 Short Sale properties on the market

• 581 were listed in the past 90 days
• 104 or 13% were under $200,000
• 40% of the entire inventory are Short Sale properties

What's sold in the past 90 days?

739 Sales were completed in the past 90 days (MLS Statistics)

• 360 were Bank Owned (REO) properties
• 86% of these sold within 90 days of being listed
• 379 were not Bank Owned (Active and Short Sales)
• 58% of these sold within 90 days of being listed

In addition there are 526 properties in Pending state (in escrow)

• 301 or 57% are not Bank Owned

Bottom Line

Distressed sales are still a big part of the market here, however there seems to be a shift towards more short sales.

• Buyers looking for 'bargain' prices should look beyond Bank Owned properties as regular active sales are often priced comparable to REO properties
• Short Sales should not be ignored in this market - have your Realtor do due diligence to find out the status of the seller's short sale

March Inventory Snapshot (Placer County):

• Single Family under $500k average list price: $316,267 (Median $300,000)
• Single Family Over $500k average list price: $1,018,544 (Median $770,000)
• Condo/Townhome Under $300k average list price: $186,561 (Median $199,000)

MLS Metrolist Statistics

Jeff - Http://www.EnglePropertiesOnline.com

:: Updated 2009 First Time homebuyer Tax Credit ::

Features

• Amount Of Credit: Lesser of 10% of cost of home up to $8,000 (Increased from $7,500)

• Eligible Property: Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.

• Refundable: Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.

• Income Limit:Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).

• First-time Homebuyer only:Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase.

• Revenue Bond Financing: Purchasers who utilize revenue bond financing can use credit. (Expanded from 2008 version)

• Repayment: No repayment for purchases on or after January 1, 2009 and before December 1, 2009. (Repayment required for prior version)

• Recapture: If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

• Termination: December 1, 2009

• Effective Date: January 1, 2009

Download the IRS First-Time Homebuyer Tax Credit Form 5405 (PDF)

Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual's income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 - $8000 = $1500). If you owe less than the credit, the IRS will send the home purchaser a check for the amount over the taxes owned. For example if the purchaser is eligible for an $8000 tax credit and the tax liability was $6000 the IRS would send a check for $2000.

Note that the adjusted gross income (AGI) is the final number that appears on the bottom line of the front page of IRS form1040

While the tax rebate cannot be used to fund a down payment, if you believe you will be eligible for the first time homebuyer credit you can adjust your withholding (or quarterly estimated tax payments) to accumulate cash ahead of time for the down payment.

As with any tax law change, check with a tax advisor if there are any questions regarding using this provision.

Neighborly News from Neighborly Realty

I recently attended an FHA seminar and wanted to share my notes with you all.

FHA's stated mission is to help people realize the "American Dream" of home ownership, stabilize and revitalize communities, promote economic growth and reduce defaults/preserve neighborhoods. Their goals are to educate consumers to make informed choices, enable individuals to own homes and build equity in their homes and to simplify the home buying process by removing regulatory barriers. FHA focuses on providing home ownership and home retention to the "underserved":

• First time home buyers
• Minorities
• The Elderly

Embrace innovative financing such as:

• Down Payment assistance
• Silent Second

FHA does not lend money, it only insures mortgages (similar to private mortgage insurance). This protects lenders against mortgage loss, encourages lender flexibility in loan approval by having the insurance cover additional risk and protects buyers from unfair practices.

FHA mortgage insurance is paid in two parts.

• Upfront Mortgage Insurance Premium (UFMIP)
• Monthly Mortgage Insurance Premium (MIP)

This insurance is required on all loan types and the money collected is used to pay claims.

The Upfront premium ranges between 1.5 and 3%

• Purchase Money Mortgage and Full-Credit Qualifying refinance - 1.75%
• Streamline Refinances (all types) - 1.5%
• FHASecure (Delinquent Mortgagors) - 3.0%

Annual Premiums with a loan to value ratio (LTV) of less than 95% and loans greater than 15 years are charged 50 points (1/2%) - so a $100,000 loan would have an annual premium of $500.00. Depending on your LTV and the term of the loan annual fees range from 25 points to 55 points. The mortgage insurance is paid monthly.

FHA benefits

• Ease in qualifying borrower because no credit score is required, alternative credit and self-employed is okay, manual underwriting is acceptable and qualifying debt to income rations of 31%/43% (May be higher with compensating factors)
• No prepayment penalty
• Fully assumable mortgage (credit qualifying required)
• No credit qualifying streamline refinance (FHA loan to FHA loan)
• Loss mitigation/foreclosure prevention including forbearance, loan modification, partial claim, short/compromise sale with incentives, deed-in-lieu of foreclosure

The FHA borrower

• Must occupy the property as primary residence
• Must be a legal resident - U.S. citizen, lawful permanent resident alien or non-permanent resident alien
• Must have valid Social Security Number
• Only allowed 1 FHA loan (Some exceptions)
• May be HUD approved non-profit organization or government agency
• Can hold title in Inter-Vivos (living) trust
• May be co-borrower or co-signer

FHA Property

• 1-4 Unit Dwellings
• SFR, PUD, Condo (attached, detached, high and low rise)
• Manufactured homes
• Existing or New construction
• Must meet HUD Minimum Property Requirements (M.P.R.'s)
• Owner occupancy required

More resources:

• 1-800-CALL-FHA (1-800-225-5342)
• www.fhaoutreach.gov/FHAFAQ
  • On-LIne resource to frequently asked questions
• www.fha.gov
  • On-line resource for info about FHA and FHA programs
• www.hud.gov
  • On-line resource for other types of programs, forms, press releases, etc.
• www.fhaoutreach.gov/FHAFAQ
  • FHA knowledge base

We're here to help our neighbors at Neighborly Realty

The California Association of Realtors released February 2009 home sales data.

Key takeaways:

• Unsold Inventory Index for existing, single-family detached homes in February 2009 was 6.9 months compared with 15.3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
• 30 year fixed-mortgage interest rates averaged 5.13 percent during February 2009, compared with 5.92 percent last year. Adjustable-mortgages rates dropped to 4.87% compared with 5.03% for the same time period.
• It took an average of 51.5 days to sell a home in February 2009 compared with 69.3 days last year.

DataQuick statistics which bases it's data from county records reports the following regional housing price shifts (see below). NOTE: Large changes in local median home prices typically indicate both local home price appreciation, AND often, large shifts in the composition of housing market activity. In other words, what we are seeing in today's market is a larger volume of less expensive homes being sold compared to prior year's sales. Also, note that home prices are local. And by that I mean neighborhood by neighborhood within a city or area. The Sacramento Region posted a 34.8% decline in price for February 2009 compared with February 2008. This was a .6% decline from January (less than 1%). California overall posted a 40.8% decline (Single family detached home) for February 2009 compared with February 2008.

Hello Neighbors,

This article just in from CAR (the California Association of Realtors).

If you've found yourself drowning in mortgage obligations and debt recently, you're not alone. Declining home values, overall economic malaises, job losses, and other forces are driving homeowners like you to consider options that just a few years ago were unthinkable.

While a new state law known as SB 1137 took effect in September 2008, effectively blocking lenders from initiating foreclosure proceedings until 30 days after contracting the borrower or making "due diligence" efforts to do so, many California homeowners are still in need of financial relief.

In response, the US Department of Housing and Urban Development has established a free hotline (877-HUD-1515), staffed with HUD-approved counselors to assist homeowners who are facing a reset on an adjustable mortgage, are three to six months from defaulting on their mortgage, or are experiencing health and/or employment issues.

The Options:

Some homeowners are finding relief in an option known as a loan "recasting" which involves a modification to the mortgage and typically results in reduced mortgage payments, with payments recalculated with the same interest rate and a new maturity date.
Pro: The upside to recasting is that you'll be working with your existing lender, which means no closing costs.
Con: The challenge is that not all lenders are willing to negotiate such deals

Another option is a short sale, or the negotiation of a payoff amount lower than what was originally agreed upon with your lender.

• Pro: This option allows the homeowner to sell the property without suffering the stigma of foreclosure. In addition, H.R. 1424, the Emergency Economic Stabilization Act of 2008, extended the federal income tax exemption for mortgage debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 until Dec. 31, 2012.
• Con: California does not grant this exemption any longer. Short sales of primary residence - sold after Jan 1, 2009 - can trigger taxes (depending on your income) associated with debt forgiveness, which is considered taxable income

Foreclosure is the final option and occurs when a homeowner loses the rights to his or her property, thus allowing the bank to sell the property to satisfy the debt.
Cons: This route will negatively impact your credit rating- and ability to buy or even rent another home - and wipe out any equity that you had in the home. Finally, it can also result in a tax obligation on the debt forgiveness. To learn more able the tax consequences of a short sale versus a foreclosure, visit the IRS' Web site (www.irs.gov). Before executing any of these options, consult with a certified public accountant or tax attorney.

By Bridget McCrea
Distressed Options
Home Edition/News From your Realtor
California Real Estate Magazine:March 2009

Resources:

Mortgage Workout Programs for Homeowners. To learn which lenders are recasting or offering workout arrangements visit: http://www.hud.gov/local/ca/homeownership/foreclosure.cfm

Avoiding Foreclosure in California: www.hud.gov/local/ca/homeownership/foreclosure.cfm

Consumer Home Mortgage Information: http://www.yourhome.ca.gov/mortgage-help.shtml

CALL US if you need to talk. We're here to present options.