Members of the U.S. military, foreign service and intelligence communities have another year to purchase a home and claim the home buyer tax credit.
Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.
The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.
Source: The National Association of Home Builders (04/26/2010)
Wednesday, April 28, 2010
Thursday, April 22, 2010
How Delinquencies Impair Your Credit Score
Fair Isaac, which developed FICO scores, used a comparison between two people to explain how mortgage delinquencies affect credit scores.
Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.
The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.
After a mortgage delinquency, the two scores would look like this:
• After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.
• After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.
• After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.
• After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.
Source: CNN, Les Christie (04/22/2010)
Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.
The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.
After a mortgage delinquency, the two scores would look like this:
• After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.
• After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.
• After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.
• After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.
Source: CNN, Les Christie (04/22/2010)
Tuesday, April 20, 2010
Five Costly Mistakes First-time Buyers Make
Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
Source: CNNMoney.com, Les Christie (04/19/2010)
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
Source: CNNMoney.com, Les Christie (04/19/2010)
Thursday, April 15, 2010
New California Tax Credit May Go Fast...
The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.
C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available.
REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.
For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.
Source: CAR Realegal (04/15/10)
C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available.
REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.
For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.
Source: CAR Realegal (04/15/10)
Tuesday, April 13, 2010
No More State Tax on Forgiving Debt
Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.
"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.
"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.
Monday, April 12, 2010
5 Signs a Home has Potential
The best deals on homes these days are often on properties that aren’t perfect.
Home shoppers looking for a great deal should keep these factors in mind when they are looking for a place with potential:
· Location, location, location. It’s still true that you get a better deal when you buy the worst house in a great neighborhood than you do when you buy a fancy house in a not-so terrific neighborhood.
· Less than 50 years old. Properties older than a half decade are likely to have more fundamental problems — like aging wiring, inadequate plumbing and sagging foundations.
· Livable floor plan. Buyers should select a home with a basic design they can live with. Once they start moving walls, they’re into big money.
· Light. Houses with the most potential have plenty of natural light.
· Good storage. Adding storage isn’t cheap, so it’s smart to choose a property that already has it.
Source: MSN.com, Marilyn Lewis (04/12/2010)
Home shoppers looking for a great deal should keep these factors in mind when they are looking for a place with potential:
· Location, location, location. It’s still true that you get a better deal when you buy the worst house in a great neighborhood than you do when you buy a fancy house in a not-so terrific neighborhood.
· Less than 50 years old. Properties older than a half decade are likely to have more fundamental problems — like aging wiring, inadequate plumbing and sagging foundations.
· Livable floor plan. Buyers should select a home with a basic design they can live with. Once they start moving walls, they’re into big money.
· Light. Houses with the most potential have plenty of natural light.
· Good storage. Adding storage isn’t cheap, so it’s smart to choose a property that already has it.
Source: MSN.com, Marilyn Lewis (04/12/2010)
Wednesday, March 31, 2010
$18,000 in Combined Homebuyer Tax Credits for a Limited Time
Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.
Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.
For more information, visit Tax Credit
Source: California Association of Realtors (03/31/10)
Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.
For more information, visit Tax Credit
Source: California Association of Realtors (03/31/10)
Tuesday, March 30, 2010
FHA Loan requirements are about to change...
The FHA's move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower's closing costs.
Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that "this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA's assistance to purchase a home." He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.
Source: Memphis Daily News, Eric Smith (03/30/10)
Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that "this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA's assistance to purchase a home." He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.
Source: Memphis Daily News, Eric Smith (03/30/10)
Monday, March 29, 2010
Understanding New Appraisal Processing
Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules.
In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.
If you have any questions, feel free to contact myself or the provider of this article: Steve Snyder of RPM Mortgage, Inc. (925) 552-3572. ssnyder@rpm-mtg.com
In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.
If you have any questions, feel free to contact myself or the provider of this article: Steve Snyder of RPM Mortgage, Inc. (925) 552-3572. ssnyder@rpm-mtg.com
Thursday, March 25, 2010
Govenor signs New Tax Credit Bill
Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.
Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.
This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.
To learn more about the California Home Buyer Tax Credit,
Click Here
Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.
This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.
To learn more about the California Home Buyer Tax Credit,
Click Here
Monday, March 08, 2010
HOAs seek association fees from banks
Condominium and home owners associations desperate for money are experimenting with a tactic called “reverse foreclosure” to force banks to pay association fees.
The process works like this: When a borrower stops paying the mortgage, banks often delay taking the property into foreclosure. When banks delay, neither the former home owner nor the bank is paying association fees.
To remedy this, the association files its own foreclosure notice, taking over the title. The association can’t sell the property because of the bank’s lien on it. So the association goes to court, renounces the property and asks the judge to give the title back to the bank.
When the judge does so, the bank has to pay the fees. Experts say this technique is becoming very popular in parts of the country where there are a lot of foreclosed condos.
Source: Miami Herald, Rachael Lee Coleman (03/07/2010)
The process works like this: When a borrower stops paying the mortgage, banks often delay taking the property into foreclosure. When banks delay, neither the former home owner nor the bank is paying association fees.
To remedy this, the association files its own foreclosure notice, taking over the title. The association can’t sell the property because of the bank’s lien on it. So the association goes to court, renounces the property and asks the judge to give the title back to the bank.
When the judge does so, the bank has to pay the fees. Experts say this technique is becoming very popular in parts of the country where there are a lot of foreclosed condos.
Source: Miami Herald, Rachael Lee Coleman (03/07/2010)
Tuesday, March 02, 2010
HARP Receives a One-Year Extension
The Home Affordable Refinance Program (HARP), which was supposed to expire June 10, will be extended for another year, the Federal Housing Finance Agency said in a statement.
Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.
This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.
Source: Reuters News, Corbett B. Daley (03/01/2010)
Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.
This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.
Source: Reuters News, Corbett B. Daley (03/01/2010)
Wednesday, February 24, 2010
IRS Clarifies What's Needed to Claim Tax Credit
The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Source: Washington Post (02/20/2010)
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Source: Washington Post (02/20/2010)
Thursday, February 18, 2010
San Francisco condo resales stay steady
San Francisco's median resale condominium prices from November through January stayed steady from the same period a year ago, leading some analysts and real estate agents to conclude that values have settled into a range where they are likely to remain for some time.
According to city data analyzed by the Polaris Group, a San Francisco real estate firm that crunches housing numbers, the median price for a resale condo in the city - as opposed to a newly built unit - was $638,000 in the threemonth period ending Jan. 31.
That figure was essentially the same as the three-month period ending in January 2009 and was the first time since September 2008 that the median price has not experienced a year-over-year decline.
Analysts believe that housing prices across the Bay Area generally have begun to stabilize, but could be derailed by several factors, including a new wave of foreclosures, mortgage interest rate hikes and the Federal Reserve ending a program to buy mortgage-backed securities.
Chris Foley, a principal at Polaris, said that another big price dip is not likely to happen in San Francisco, given the city's relative shortage of existing housing inventory and a dearth of new construction coming onto the market. Prices currently are about where they were in 2004, he noted.
"Barring a cataclysmic event, either financial or natural, like an earthquake, we believe we are at the bottom and won't see great price appreciation for a while," said Foley. "There's no inventory overhang and there won't be any new construction for a while."
Foley said condo resales are a credible market indicator because they represent the biggest percentage of sales. Owners also generally are not under as much pressure to sell units as quickly as developers of new buildings, who are attempting to pay off construction loans, he said.
Foley said he believes that the market stabilization resulted from sellers becoming more realistic about prices the market would bear and buyers taking advantage of low interest rates and a lull in prices.
Some San Francisco real estate brokers say the market feels much improved from a year ago. They are seeing building owners return units to the market as condos that had been built in the past couple of years, but which had been rented out as apartments because sales were weak.
"The stock market crash in 2008 really changed things for a while and the beginning of last year was slow, but buyers are coming out again," said Realtor Eileen Bermingham.
Figures from another real estate research firm, DataQuick Information Systems, shows that resale condo prices are indeed back in the 2004 range. That year, the median price was $610,000. One year later, the median had jumped to $714,500.
A noticeable change in values started in 2004, when after three straight years in the $500,000 bracket, prices climbed another $100,000. The market hit its peak in May 2007, at $826,000.
Condo resales have seen less fluctuation than new units - particularly the ones at luxury downtown locales. Those buildings, many of them high-rises, started coming on the scene nearly a decade ago and sold briskly into 2008.
The 60-story Millennium Tower at 301 Mission St., for example, started selling units in November 2007 for an average of $2.5 million. By February of 2009, the Millennium had slashed prices by as much as 15 percent.
Waning interest in expensive new properties, in conjunction with banks reluctant to approve construction loans, has brought residential building in San Francisco to a near standstill.
As a result, it's likely that future construction will lag well behind an improved economy and job growth.
Source: SFGate.com; by: Robert Selna
According to city data analyzed by the Polaris Group, a San Francisco real estate firm that crunches housing numbers, the median price for a resale condo in the city - as opposed to a newly built unit - was $638,000 in the threemonth period ending Jan. 31.
That figure was essentially the same as the three-month period ending in January 2009 and was the first time since September 2008 that the median price has not experienced a year-over-year decline.
Analysts believe that housing prices across the Bay Area generally have begun to stabilize, but could be derailed by several factors, including a new wave of foreclosures, mortgage interest rate hikes and the Federal Reserve ending a program to buy mortgage-backed securities.
Chris Foley, a principal at Polaris, said that another big price dip is not likely to happen in San Francisco, given the city's relative shortage of existing housing inventory and a dearth of new construction coming onto the market. Prices currently are about where they were in 2004, he noted.
"Barring a cataclysmic event, either financial or natural, like an earthquake, we believe we are at the bottom and won't see great price appreciation for a while," said Foley. "There's no inventory overhang and there won't be any new construction for a while."
Foley said condo resales are a credible market indicator because they represent the biggest percentage of sales. Owners also generally are not under as much pressure to sell units as quickly as developers of new buildings, who are attempting to pay off construction loans, he said.
Foley said he believes that the market stabilization resulted from sellers becoming more realistic about prices the market would bear and buyers taking advantage of low interest rates and a lull in prices.
Some San Francisco real estate brokers say the market feels much improved from a year ago. They are seeing building owners return units to the market as condos that had been built in the past couple of years, but which had been rented out as apartments because sales were weak.
"The stock market crash in 2008 really changed things for a while and the beginning of last year was slow, but buyers are coming out again," said Realtor Eileen Bermingham.
Figures from another real estate research firm, DataQuick Information Systems, shows that resale condo prices are indeed back in the 2004 range. That year, the median price was $610,000. One year later, the median had jumped to $714,500.
A noticeable change in values started in 2004, when after three straight years in the $500,000 bracket, prices climbed another $100,000. The market hit its peak in May 2007, at $826,000.
Condo resales have seen less fluctuation than new units - particularly the ones at luxury downtown locales. Those buildings, many of them high-rises, started coming on the scene nearly a decade ago and sold briskly into 2008.
The 60-story Millennium Tower at 301 Mission St., for example, started selling units in November 2007 for an average of $2.5 million. By February of 2009, the Millennium had slashed prices by as much as 15 percent.
Waning interest in expensive new properties, in conjunction with banks reluctant to approve construction loans, has brought residential building in San Francisco to a near standstill.
As a result, it's likely that future construction will lag well behind an improved economy and job growth.
Source: SFGate.com; by: Robert Selna
Monday, February 08, 2010
Are interest rates about to rise?
Federal Reserve Bank of New York President William Dudley says the central bank will scale back its purchases of mortgage-backed securities late next month. While interest rates likely will climb when the program ceases, the extent of the rise remains to be seen.
Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.
Source: Inman News (02/08/10)
Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.
Source: Inman News (02/08/10)
Friday, January 29, 2010
Fannie to Offer Closing Cost Aid on Foreclosures
Fannie Mae, the largest provider of residential home funding in the United States, announced Friday that it would pay the closing costs on purchases of foreclosed homes in its inventory.
The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.
The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.
"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.
Source: Reuters News, Al Yoon (01/28//2010)
The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.
The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.
"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.
Source: Reuters News, Al Yoon (01/28//2010)
Friday, January 22, 2010
6 Surprising Facts About the Buyer Tax Credit
The homebuyer tax credit is not as simple or straightforward as you might think.
Here are some nuances that will affect homebuyers who plan to use it.
* To qualify for the move-up tax credit, a home owner must have occupied the same principal residence for five of the last eight years consecutively.
* Buyers can elect to claim the credit on either their 2009 or their 2010 tax return, whichever is best for them.
* Buyers who claim the credit in 2009 can’t file electronically because the Internal Revenue Service hasn’t put the required forms on line. The wait for a refund is three or four months.
* The home can be a mobile home or travel trailer that is fixed to land owned or leased by the home owner. A mobile home or travel trailer that is actually mobile doesn’t qualify.
* The home can’t be purchased from a close relative, including a parent, spouse, child, grandparent or grandchild.
* A buyer who earns no taxable income or doesn’t owe any federal income tax can qualify for the tax credit and file a tax return just to claim it.
Source: Bankrate.com, Marcie Geffner (01/21/2010)
Here are some nuances that will affect homebuyers who plan to use it.
* To qualify for the move-up tax credit, a home owner must have occupied the same principal residence for five of the last eight years consecutively.
* Buyers can elect to claim the credit on either their 2009 or their 2010 tax return, whichever is best for them.
* Buyers who claim the credit in 2009 can’t file electronically because the Internal Revenue Service hasn’t put the required forms on line. The wait for a refund is three or four months.
* The home can be a mobile home or travel trailer that is fixed to land owned or leased by the home owner. A mobile home or travel trailer that is actually mobile doesn’t qualify.
* The home can’t be purchased from a close relative, including a parent, spouse, child, grandparent or grandchild.
* A buyer who earns no taxable income or doesn’t owe any federal income tax can qualify for the tax credit and file a tax return just to claim it.
Source: Bankrate.com, Marcie Geffner (01/21/2010)
Thursday, January 21, 2010
FHA Flipper Rules Waived - Starting February 1st
An excerpt from a HUD Release January 15, 2010 #10-011:
On 2/1/2010 there will be a one-year waiver of the regulation that prohibits insuring a mortgage on a home that has been owned for less than 90 days. There are some restrictions such as no reverse mortgages, must be arms-length and there are specific conditions if the sales price is 20% more than the purchase price.
Why this new rule? HUD says, “In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts that willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.”
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
For more information HUD No. 10-011.
Source: Duane Gomer (www.duanegomer.com)
Wednesday, January 20, 2010
FHA To Toughen Down Payment Rules
The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.
Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.
The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.
Source: Reuters News, Corbett B. Daly (01/19/2010)
Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.
The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.
Source: Reuters News, Corbett B. Daly (01/19/2010)
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