Peter Middleton

http://www.middletonandassociates.com/

Formal guidelines from the Federal Housing Administration ...

.... have been issued regarding the first time homebuyer tax credit worth up to $8000. Many had hoped FHA would allow lenders to give the 3.5% down payment to buyers in the form of a 2nd loan on the property.

The 2nd loan would have then been paid off when the buyer received their tax credit. Unfortunately, FHA has decided not to allow what they consider a "no down payment" loan.

However, the good news is FHA will allow the tax credit to be used for closing costs and any additional down payment, which can help buyers to obtain a lower interest rate. FHA allows parents, employers and other government agencies to contribute towards the 3.5% down payment.

There are also a number of state housing finance agencies offering down payment assistance loans that can be used to meet FHA minimum down payment requirements. The FHA down payment can also come in the form of a 100% gift as long as it is from a blood relative and the monies need not be paid back.

You can give our office a call and I would be happy to discuss your options regarding FHA loan programs! Call 858-922-3377

Selling your home an easy process

Selling a home in a declining market starts with a proper attitude and finding the right Realtor® who is optimistic and knows the right sales techniques in this tough market. Even though most people and economists are down on the housing market (feel it is depressed, that the economic recovery isn't going to happen in the next few months, and consumer confidence is down), it doesn't mean that you can't sell your home.

The truth of the matter is many people will sell their homes between now and this summer. While many sellers and real estate agents take a reactive approach to market conditions, those sellers who take a more proactive and realistic approach to the market will be the ones who sell their homes. These are the sellers who take advantage of this market and move up to their dream home! First, be honest about appraising the condition of your home.

The key to successful selling in a 'declining market' is pricing your home at today's market value, having your home in tip-top condition and being able to work with a prospective buyer on financing needs and terms. Don't let your ego or pride get in the way when determining a price for your home. Put yourself in the buyer's shoes and walk across the street. Curb appeal to a new buyer is a very important and is many-times overlooked.

Secondly, take a leisurely walk through your home jotting down the little things you might do to spruce it up. New carpeting, a fresh coat of paint, new light fixtures, mirrors, etc., are items that will give your home more emotional appeal and does not cost too much. Put away the clutter throughout the home. Rooms free of clutter will appear bigger and the new buyer can visually 'move into' your home much easier. Remember, new buyers are not buying your furniture.

Finally, be patient. The real estate market has changed considerably since the last run-up where homes sold in hours or days. We are now experiencing a more "normal market" where homes take 90-120 days to sell. Remember, inventories are at an all-time high right now. Bank foreclosures are all around you and many buyers will have difficulty qualifying for a new loan. Lenders also have very strict guidelines now and consumer confidence is very low. Allowing for a normal marketing period will do a lot to alleviate your impatience when you have few showings of your home or a lack of offers to review.

A good Realtor® will keep you abreast of market changes, activity on your home and others in the neighborhood, while maintaining a "teamwork" concept that is paramount for a successful sale. Properties need ample time to be exposed to the public and finding the right buyer requires a good understanding of the market as well as sales values. In all honesty, there are no easy answers but one thing is for certain, even in the worst markets, there are people selling homes and taking their equity!

Start Looking for your home here

Signed home-purchase agreements in the U.S. rose in June to the highest monthly level in two years, according to the National Association of Realtors' pending home sales index that was released on Aug. 4.

Pending home sales, considered a leading indicator because closings typically follow a month or two later, rose 3.6% in June, compared to May-the fifth consecutive monthly increase. That's the longest streak of increases in six years. The index has also surpassed its level when Lehman Brothers collapsed last September and unemployment began to skyrocket. Pending home sales were also up 6.7% compared to June 2008, and were higher than in any month since June 2007.

The index rose 0.4% in the Northeast, compared to the previous month, and climbed 0.8% in the Midwest, 7.1% in the South, and 2.9% in the West.

The pending home sales figure is only the latest indication that the housing market might be close or at a bottom. New home sales and resales were also up in June on a month-over-month basis, according to recent reports. While that's good news, economists say it's far too early to celebrate.

Overall Sales Still Down, Foreclosures Up

Paul Dales, U.S. economist for Capital Economics in Toronto, said sales of homes are down about 75% from the peak of a few years ago, and-even if the pending sales translate to closings-these numbers roughly represent a mere 15% recovery.

Meanwhile, sales prices continue to fall and foreclosures are climbing.

"It does sound good, but if you draw a chart and see how far it fell, it doesn't look like much of an improvement at all," Dales said. "This would have reversed a very small part of the plunge."

Another thing to consider is that pending home sales in recent months haven't been such a reliable indicator of closed sales because many contracts are falling through. The National Association of Realtors attributes this to appraisers coming up with valuations that are below the negotiated sales prices.

The group's president, Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said in a prepared statement that Freddie Mac (FRE) and Fannie Mae's (FNM) guideline revisions last month-which require lenders to use professional appraisers with local expertise-could help bring pending home sales in line with resales.

A Long Slow Recovery, Then Inflation?

The Appraisal Institute, however, says the appraisals are accurate. "The fact that the value reflected in the appraisal does not match the sales price is not the fault of the appraisal but a result of the market today," the appraisal group said in a recent statement in response to the Realtors' association.

Dennis Torres, executive director of real estate operations at Pepperdine University's Graziadio School of Business & Management, says the rise in pending home sales is an encouraging sign. But Torres expects a long, slow recovery because of weak unemployment and new foreclosures in the pipeline. Prices will likely rise no more than 3% to 5% a year for the next few years, he said. Beyond that, he added, inflation could soar, driving up home prices.

Low interest rates, home prices, and government incentives make this the ideal time to purchase a primary home

Find a fantastic Agent here

Finding a good real estate agent / broker is essential to enjoying a painless real estate transaction. The saying is agents do 80% of the business," and it is true. The question is how can you find a good real estate agent? The best agent for you doesn't necessarily work at the largest brokerage, close the most transactions or make the most money. The best agent for you is an experienced professional who will listen to you, conduct his or herself in an ethical manner and knows your market.

Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors and coworkers. Ask the people around you who they have used and ask them to describe their experiences with this real estate agent. Successful agents make customer satisfaction their number one priority and put their customers' needs before their own. Try to find an agent who goes above and beyond her responsibilities. She'll be the agent whose praises your friends sing loudest.

Pay attention to the listing signs in your neighborhood. Make note of the day they go up and when the sold sign appears. The agent who sells listings the fastest might be better for you than the agent with the largest number of "for sale" signs. Results speak volumes.

More Americans signed sales contracts to buy homes in June than in May, the fifth consecutive month of increases, according to a report released Tuesday.

The National Association of Realtors said its Pending Home Sales Index rose 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003..

The report followed several other recent pieces of good news for the housing industry, including a substantial rise in new home sales, a jump in existing home sales and the first home price increase in nearly three years.

The jump was also much higher than expected. A consensus of industry experts put together by Briefing.com had forecast an increase of just 0.7%

"Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who've been on the sidelines," said NAR chief economist Lawrence Yun.

"It's not unlike the Cash for Clunkers program," added David Crowe, chief economist for the National Association of Home Builders. "It's pushing people off the fence."

Low-end sales have been the strongest segment of the market, an indication that the first-time homebuyers tax credit, worth up to $8,000, is contributing to the rise. The clock, however, is quickly running out on this offer and may have buyers stepping up their shopping to get their purchases in under the wire.

"Because it may take as long as two months to close on a home after signing a contract," Yun said, "first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by Nov. 30."

Crowe also acknowledged that the tax credit could be pushing home sales forward, leading to a later downturn. But he does not forecast a significant drop in housing activity, just a "stickiness" in buyers who won't feel as much urgency to "get off the fence" as they do with the credit in effect.

Affordability on the decline

Housing affordability declined slightly in June, according to NAR's Housing Affordability Index, but remains favorable. The affordability index was 159.2 in July, pushed down from recent record peaks by increased mortgage rates. But it remains 36.6 percentage points higher than 12 months earlier

To purchase a home in June, the average family would have to devote 15.7% of its gross income to mortgage principal and interest, well below the 25% many experts recommend.

Looking to the future

Mike Larson, a real estate analyst for Weiss Research, says all of these factors indicate continued market progress, although he sees no imminent return to the "glory days" of the mid-2000s in housing.

"Frankly, that's a good thing," he said. "I'd much rather see steady, consistent gains in sales; steady, consistent reductions in the rate of price depreciation; and steady, consistent declines in home inventory. That's exactly what is happening, and what should continue to happen as long as mortgage rates don't spike too sharply and/or unemployment doesn't worsen materially from here."