The Real Estate Bloggers

Are FHA Loan Limits Increasing $100,000?

November 20th, 2009 • Tom Royce • 0 comments • Related • Filed Under

Fhalogo Buried at the bottom of a New York Times article on the trouble FHA housing loans are in is this tidbit, Congressman Barney Frank of Massachusetts wants to raise the lending limits of an FHA loan $100,000.

A few weeks ago, Congress extended the higher lending limits for another year. Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that he planned to introduce legislation next year raising the maximum F.H.A. loan by $100,000, to $839,750. via the NY Times

Now I do not know about you, but this is another level of madness that fits right in the pattern of how are Federal Government has been running lately. They have a program that is losing money hand over fist, the FHA is close to needing a handout in the first time in it’s history, and they are thinking of increasing the risk to the program substantially.

Barney Frank has done this before by forcing Fannie Mae and Freddie Mac to be an instrument of social change instead of fulfilling it’s mandate to be just a financial institution. Now it is a shell of it’s former self and being run by the government. The FHA is a fully run government entity that now is being used to prop up a fragile housing market in many cities by making loans that banks will not.

Let us hope that it also does not turn into a money pit that is propping up values and distorting the market. Oh wait, I think we are too late for that.

Top 10 Most Affordable Real Estate Markets in 2009

November 19th, 2009 • Tom Royce • 0 comments • Related • Filed Under

If you are looking to move to someplace affordable, we have the list for you. The criteria that the National Association of Home Builders uses is if the home is affordable for families living at the median income of $64,800.

So while these cities are not the top of most folks hit parade, they do provide the ability to live within ones means.

Top 10 Most Affordable Real Estate Markets in 2009

1. Kokomo, IN                           96.7
2. Springfield, OH                      96.1
3. Bay City, MI                         96.0
4. Mansfield, OH                        95.7
5. Elkhart-Goshen,IN                    95.2
6. Indianapolis-Carmel, IN              94.5
7. Canton-Massillon, OH                 94.4
8. Youngstown-Warren-Boardman, OH-PA    93.9
9. Lima, OH                             93.8
10.Davenport-Moline-Rock Island, IA-IL  93.0

via NAHB

7 Million More Foreclosures To Hit The Market?

November 19th, 2009 • Tom Royce • 1 comment • Related • Filed Under

Bailout How scary is that number, 7 Million. If it was the deficit, it would not even scratch the surface. But it is the number of homes that are essentially in a foreclosure backlog.

These 7 million foreclosures represent those that are being negotiated, ones lenders are just plain ignoring, ones that are being worked out, or those that because of different moratoriums are not being acted upon.

Now we all know that they will not hit the market at one time, but they are the ticking time-bomb of the housing industry.

These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.

About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.

“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.”

Lowes See Home Improvement Market Improving In Hard Hit Areas

November 17th, 2009 • Tom Royce • 2 comments • Related • Filed Under

Moneyhousemedium The housing downturn also took a big chunk out of the profitability of the home improvement stores. Think about it, who wants to invest in a home that is losing value or that you may have to turn over to the bank. When you can not pay the mortgage, preventative maintenance is not a priority.

That is why today’s announcement that Lowe’s is seeing a turn around in the hard hit areas of the country shows that people are reinvesting in their home. A small sign maybe, and perhaps an optimistic reading of the tea leaves, but still a hopeful sign.

If people are investing in their homes, odds are they feel that these same homes have value and opportunity for the future.

Even as the hard-hit home improvement industry is beginning to stabilize at home, Lowe’s Cos. will open its first units in Mexico in the fourth quarter, executives said at the company’s third quarter conference call.

The company plans to open 13 new units in the quarter, including two in Monterrey, said Bob Hall, CFO. And despite an overall sales decline, some markets are starting to bounce back somewhat, noted Robert A. Niblock, chairman and CEO.

“Some of the biggest improvements have come in areas hardest hit by the housing downturn,” including California, Florida and the Southwest, he said.

Sales for the quarter declined 3% to $11.4 billion, down from $11.7 billion in the third quarter of 2008. Comparable store sales for the third quarter declined 7.5%. Net earnings were $344 million, down 29.5% from year-ago quarter.

Commercial Real Estate Seeing Bottom

November 16th, 2009 • Tom Royce • 6 comments • Related • Filed Under

After a few years of following real estate, it is interesting to see the difference between the residential real estate market and the commercial markets.

For the residential market, real estate is home, a major investment, personal, and passionate. Decisions are not logical and are driven by status and desire.

The commercial market is all about the money, with a dash of prestige thrown in to make people stupid at the top end. But these same people know that when the going gets tough, they get out quickly.

That is why the commercial market rose quickly, prestige and the chance to make a profit of the dollars that were chasing real estate, and dropped just as fast. Bad deals were quickly recognized as bad deals and the owners sold, took their loss, and left the table with their tails between their legs.

We see more boom and bust in the commercial market, but the residential folks are jealous that a bottom can be reached quickly and that the market remains moving.

Asked why we’re seeing these institutional players doing deals now as opposed to the first half of the year, Haddigan said, “They’ve gone through the five stages of grieving — denial, anger, bargaining, depression and acceptance. Earlier in the year, there was all this buzz about Obama and TARP and TALF. It’s hard to know how deep and prolonged the downturn would be. So what I’m seeing now is a lot more acceptance from owners. I think there’s just more sobriety out there than there was a while back. People were willing to hold on six months ago, but at this point, they don’t see any light at the end of the tunnel and decide they need out.” via CoStar

First Time Home Buyers Account For Nearly Half of Home Sales

November 16th, 2009 • Tom Royce • 5 comments • Related • Filed Under

Great news, the new home owner stimulus package did work. Nearly half of all homes sold between July 2008 and June 2009 were by first time home buyers. Average price was $156,000 and the median income of the household making the purchase was $61,600.

And the last piece of good news is that the government has renewed the new home buyers program.

But think for a second. That means that people moving up are not really moving up that much. Suburbia Only 53% of sales were by current home owners. So if they are not moving up, they are not moving out, and they are not selling their homes.

So we know now that much of the inventory being sold is vacant, either new construction or foreclosures. And the average purchase price would not buy an outhouse in many of the more expensive markets in the country.

So if you are selling in the low end of the market and absorbing young upwardly mobile renters, you probably had a good year. If your trying to sell a mid priced or expensive home you are fighting an uphill battle. The buyers are not looking in your direction yet.

We are still absorbing inventory folks and flushing out the large range of foreclosures on the market. This is not a healthy real estate market yet.

First-time buyers accounted for a record 47 percent of home sales between July 2008 and June this year, up from 41 percent in the prior-year period, according to the survey conducted by the National Association of Realtors.

The annual survey gleans details on everything from how buyers came up with down payments to how long it took sellers to unload their homes. The latest results were derived from more than 9,000 responses, the trade association said.

…

First-time buyers had a median age of 30 and reported a median income of $61,600, the survey shows. The typical first-time buyer paid $156,000 for their home, about $9,000 less than in the Realtors’ 2008 survey.

Repeat buyers were typically a few years older, 48, and earned a bit more than first-timers: $88,100. They also said they planned to stay in the home for 12 years. via Yahoo News

FHA Running Out Of Money

November 13th, 2009 • Tom Royce • 7 comments • Related • Filed Under

The Federal Housing Administration is nearly broke. Or in their parlance, dangerous low in cash reserves.

Yes, this is the same FHA that has provided loans to those who are unable to come up with the down payments that most banks are requiring or that loans for those with credit blemishes.

The same FHA that has provided some life to the housing market the past year.

Anyone gulping yet?

Now it is not that glum, they have the ability to be bailed out by the government so that pipeline to funding for prospective buyers is not shut off yet, but still it is a bit disconcerting to think that the only lender left in the near term could be banks that would rather not lend to housing unless the loan is guaranteed in blood with a first born as collateral.

The agency, which guarantees loans for many first-time homebuyers, could be hit if housing prices lose ground or if a new wave of mortgage defaults, triggered by double-digit unemployment, crashes into the market in the coming months.

If the FHA runs into financial trouble, it could make it more difficult for borrowers to get loans, particularly first-time buyers.

Housing Secretary Shaun Donovan said while an independent audit showed that the FHA burned through its backup fund as defaults and foreclosures spiked during the mortgage crisis, the analysis also showed that the agency should remain solvent under “most economic scenarios,’’ including higher unemployment and mortgage defaults. via Boston.com

Digital Assets For Real Estate Professionals

November 13th, 2009 • Tom Royce • 4 comments • Related • Filed Under

Money The past couple of weeks I have spent working and talking with people outside of the real estate industry about their web presence. It really brought home the point of how advanced many real estate agents, mortgage professionals, and those in the industry are.

We have domains that can be worth a great deal of money that others may be interested in. We also have information that is crucial to doing business tied up in our email, banking, and other accounts. But the question I have for you is what happens to these assets if you die or are incapacitated?

The question is winding it’s way through the courts and is really not determined. If you do not have a plan where the accounts are identified and the passwords are not recorded in a place where your heirs and executors can get them, you may lose some significant assets that can be passed down to your family.

Here is an example.

You are an agent and own the domain MyCityRealEstate.com. Well you have invested a great deal of time in developing the site, it has a high page rank, and gets a ton of traffic. You run your real estate business through it.

You pass away and the domain sits there till the domain registration runs out. Some yahoo registers it for $9.95 and gets the benefit of your hard work. Well that sucks.

Your heirs could have sold that to another agent for thousands of dollars and that money could have remained in your family. Odds are if you have 1 great domain you have a dozen pretty good ones. They are all worth good money quickly and easily.

We are in a brave new world. The legal profession is just starting to realize the value of online assets but the old forms and methods are not focused on recovering them. Take the time to make sure it is brought to their attention either in your will or in instructions to protect your assets.

So take the time to record these assets in a safe place and that if something happens to you your family will have the chance to profit from your hard work.

Who Is Watching Fannie And Freddie? Answer Nobody Now. Internal Auditor Fired

November 11th, 2009 • Tom Royce • 1 comment • Related • Filed Under

Foxinhenhouse Who is watching the hen-house full of 6 trillion dollars? If you are thinking about Fannie Mae and Freddie Mac, today the answer is nobody. The agencies inspector general must have been getting too close to the truth as he has been fired in a complicated bureaucratic maneuver and now there is no oversight of the administrators of the government run lending fund.

In a stunning expose, the Huffington Post laid out how with a slight of hand and a friendly Department of Justice Office of Legal Counsel the new entity running Freddie Mac and Fannie Mae was able to get the Inspector General removed and his investigation into fraud at the agencies ended.

Hey, how important is 6 trillion dollars and the primary lending vehicle for a shaky housing industry? Another scandal will not hurt our weak economy, will it?

In September, the Department of Justice ruled that FHFA Inspector General Ed Kelley did not have authority to investigate wrongdoing or other abuses related to the agency, according to an internal DOJ Office of Legal Counsel memo signed by Deputy Assistant Attorney General Daniel Koffsky.

The ruling was made on complicated technical grounds. The current agency was created by a 2008 act that abolished the Federal Housing Finance Board and replaced it with the FHFA. FHFB employees automatically became FHFA employees and retained their “same status, tenure, grade, and pay.”

Read the whole article at the Huffington Post

Folks, let me put it plainly, the more we put in the hands of our government officials, the more we open ourselves up to graft, corruption, and incompetence.

Third Quarter Existing Homes Sales Increase 11.4 Percent, Prices Drop 11.2 Percent

November 10th, 2009 • Tom Royce • 4 comments • Related • Filed Under

With stimulus provided by the new homeowners tax credit, we saw an increase in home sales in the 3^rd Quarter of 2009. That is the good news. The bad news, prices dropped 11.2 percent from 2008 levels, ones anyone who watches real estate know were anemic.

Prices did rise in 30 of the 153 metro areas so that is a glimmer of hope, but the overall sales were on the lower end of the marketplace and directly related to the stimulus. That is the good news, the okay news is we have a new stimulus. The bad news is many of these sales are ones pulled forward and that we will have a market dip when the government supported gravy train ends.

Of course, inflation may be rampant then so housing prices may increase with the weaker dollar. I know, color me an optimist.

During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2 percent below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales – foreclosures and short sales – accounted for 30 percent of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes. via NAR.