Real Estate Information

Senate panel OKs extension for home buyers’ credit

WASHINGTON – Oct. 29, 2009 – Senators reached a compromise to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.

Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.

Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, the sources said. The measure still faces votes in the full Senate and the House.

The current tax credit did little for the new-home market in September, the Commerce Department reported – news that took many industry analysts by surprise. Sales fell 3.6 percent from August and 7.8 percent from September 2008.

Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers – credited with 357,000 sales of previously owned homes so far this year – would do the trick.

Instead, sales of typically more expensive newly built houses slipped.

“The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand,” said Michael Feder, president of Radar Logic Inc., of New York, which tracks the market.

“Big deal,” said Joel L. Naroff, of Naroff Economic Advisors, of Holland, Bucks County. “Since hitting rock bottom in March, demand is up 20 percent.”

For Naroff, the robust rise in existing-home purchases – 9.2 percent year over year in September – indicated that the housing market was not faltering.

“Maybe the issue is supply, which fell to its lowest level in 27 years,” he said. “Builders, at least those left standing, have been making sure they don’t have any houses sitting around, and they have been very successful in controlling inventories.”

IHS Global Insight Inc. economist Patrick Newport echoed that, noting new-home inventories “sank for the 29th straight month to their lowest level since November 1982.”

Naroff maintained housing had recovered enough to stand without the tax credit. But Newport said he believed that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.

Until the Senate compromise today, the extension of the credit seemed mired in what National Association of Home Builders vice president Jerry Howard called “a game of partisan chicken.”

Howard’s take on the lower September numbers: It was too late to sign a contract on a house that would be completed by the current Nov. 30 deadline, and many buyers were concerned the credit would not be extended.

The credit has helped, acknowledged Marshal Granor, a principal in Granor Price Homes, of Horsham. But he added, “I’d love for it to go away, for a month.”

“People who believe there is no rush aren’t buying, they are waiting for more bargains from more squeezed sellers,” Granor said.

Still, said Feder of Radar Logic, lower home prices have carried “buyers further into the autumn than we would expect, based on historic patterns.”

Declining inventory means builders will have to ramp up production, Newport said.

As the Senate worked on the compromise, third-quarter data were released showing that the burden of foreclosure filings in the post-bubble market continued to shift from the subprime-ridden “sand” states (California, Nevada, Florida and Arizona) to areas with rising levels of unemployment and adjusting rates on the “exotic” mortgages prevalent in high-cost metropolitan markets.

Yet Las Vegas remained the toxic-loan capital, according to the third-quarter survey by RealtyTrac Inc., of Irvine, Calif. – its rate of foreclosure filings was seven times higher than the national average.

Senators differ on extending homebuyer tax credit

WASHINGTON (AP) – Oct. 27, 2009 – Top Democrats in the Senate are pressing a plan that would extend a popular tax credit for first-time homebuyers but gradually phase it out over the course of next year.

The proposal, by Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., would extend the $8,000 tax credit – which expires Nov. 30 – through March 31. Its value would drop by $2,000 for each of the subsequent three quarters of 2010.

The plan, which could face a vote in the Senate this week, appears aimed at countering a far more generous $17 billion bipartisan plan that would extend the $8,000 credit through June 30, 2010, boost the income cap for eligibility and open the credit to all buyers, rather than first-timers.

Senators are maneuvering to add the homebuyer tax credit extension to legislation to extend unemployment benefits by up to 20 weeks. That bill faces a key test vote on Tuesday.

Supporters say the tax credit has helped revive the housing market and say that if it’s cut off as scheduled at the end of next month, home sales could drop off.

Reid sought to schedule a vote on the competing measures on Monday but was blocked by top Senate Republican Mitch McConnell of Kentucky, who is demanding votes on unrelated GOP proposals.

One such proposal would require people receiving unemployment insurance to be processed through the E-Verify program to prove legal immigration status and would require all federal contractors to use E-Verify. E-Verify is an Internet-based system that employers use to check on the immigration status of new hires.

The Democratic plan also would extend the ability of money-losing businesses to claim refunds on taxes paid during profitable times up to four years ago. All businesses could take advantage of the credit; when passed in February it was limited to smaller companies with annual revenues of $15 million or less.

The provision is especially popular with homebuilders who made huge profits in the housing boom but are struggling today. Critics say it’s a giveaway to some of the very companies that helped build up the housing bubble years ago.

If you know of anyone in trouble with their house, please have them contact me.   Did you know over 50% of all foreclosures have no visible means of intervention?   A persons credit can be saved with a short sale vs. a foreclosure and you would be able to buy another house in as little as two years vs. five plus with a foreclosure.  WE CAN HELP !

Being a CDPE means we have become well versed in short sales - or selling a home for less than what is owed to the bank - as this has become more and more commonplace in today's market.  In fact, on a national level some 51% of all sales in September were distressed sales, and in badly hurt markets such as Florida, Nevada and Arizona its as much as 90%. 

Foreclosures rise 5 percent from summer to fall

WASHINGTON (AP) – Oct. 15, 2009 – The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.

The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate — now at a 26-year high of 9.8 percent — isn’t expected to peak until the middle of next year.

Mortgage companies sometimes allow unemployed homeowners to defer three to six months of payments while they are looking for a job. But there’s little else they can do.

“The sheer scale of the problem is preventing the loan modification programs from having the kind of impact we’d all like,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.

Last week, the Obama administration hailed a milestone in its mortgage relief effort, reporting that 500,000 homeowners have received help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.

Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration’s program. Analysts, however, forecast that many of those homeowners won’t qualify, and foresee a new wave of foreclosed properties hitting the market next year. That’s likely to further depress home prices.

Some homeowners are in such a massive financial hole that it’s hard to design a modification that will actually provide lower payments. And some have avoided paying their monthly bills for a long time.

Carlos Estrada, 57, of Tulare, Calif., for example, hasn’t made a mortgage payment since February 2008. The construction jobs that kept him working more than 40 hours a week during the housing boom have all but vanished.

Earlier this year, he turned down a modification offer from Bank of America because it would have incorporated his unpaid balance and raised his monthly bill. But a bank spokeswoman said Wednesday that Estrada’s foreclosure sale had been postponed until late next month while the bank reviews whether he can qualify for help.

“I’m still here waiting for them to help me resolve this situation,” Estrada said in Spanish.

According to the RealtyTrac report, there were nearly 344,000 foreclosure-related filings last month, down 4 percent from a month earlier but still the third-highest month since the report started in early 2005.

It was the seventh-straight month in which more than 300,000 households received a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes.

Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.

On a state-by-state basis, Nevada had the nation’s highest foreclosure rate in the July-September quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois.

Banker: Foreclosures, unemployment to peak in 2010

SAN DIEGO (AP) – Oct. 15, 2009 – Foreclosures will peak by the end of next year and unemployment will climb above 10 percent as the housing market and U.S. economy grapple with the aftermath of the recession, the Mortgage Bankers Association’s chief economist said Tuesday.

Jay Brinkmann’s forecast, released at the trade association’s annual convention and expo in San Diego, envisions a slowly growing economy and improving housing market, with home price declines abating and fixed mortgage interest rates remaining below 6 percent.

But the strength of any rebound will hinge on whether consumers – many still concerned about job security – will ramp up spending, the economist noted.

“The recession is behind us but the effects of the recession will linger for some time in the form of higher unemployment and lower levels of business investment and home construction,” Brinkmann said.

The economist forecasts economic activity will slow again in the first half of next year but pick up in the second half. That won’t be enough to slow unemployment, which is expected to peak at 10.2 percent by mid-2010 and not fall below 8 percent until late 2012.

At a panel session on Monday, Charles Haldeman Jr., CEO of mortgage giant Freddie Mac, noted that the speed at which businesses are rehiring is lagging. Unemployment is the main reason homes are now being lost to foreclosure, as borrowers struggle without income and lenders are left with fewer options for reworking troubled loans.

Haldeman stressed that lenders’ efforts to modify mortgages to help stave off foreclosure must continue, despite some signs this year that the housing market is stabilizing.

“I think it would be a real mistake for the industry to take some of the glimmers of hope that some might be pointing to in terms of housing prices and housing activity and reduce our efforts,” he said. “I think we ought to assume that there’s no improvement, that we don’t have enough certainty about what might happen.”

Many lenders have issued a moratorium on foreclosures, causing a drop in the number of discounted, bank-owned properties hitting the market this year. But some economists expect that a wave of foreclosed properties could hit the market in 2010, dampening home prices again.

Those delayed bank-owned properties aside, rising unemployment will lead to a growing number of foreclosures at least through the end of next year, Brinkmann said.

Foreclosures have helped power sales in many ravaged markets, particularly in the West and Florida.

“We still see a concentration in the lower end of the market,” Brinkmann said. “The entry level homes are in demand.”

Brinkmann forecasts home resales will increase by about 11 percent over 2009 levels. He sees sales of new homes, which bottomed out in the first quarter of this year, climbing about 21 percent.

The forecast calls for median home prices for existing homes to decline in the next two quarters, reaching $164,200 in the first quarter of next year.

David Stevens, commissioner of the Federal Housing Administration, echoed that outlook while speaking on a panel of government executives on Monday.

“We’re forecasting about another 10 percent, roughly, price decline between now and the first quarter next year,” he said.

Mortgage rates, meanwhile, will average about 5 percent through the end of this year, then rise to 5.6 percent by the end of 2010. That should help fuel a 12 percent increase in home mortgages next year, but home refinancing will decline as mortgage rates edge higher, he said.

“We’re assuming, in a sense, weak or little inflation here,” Brinkmann said.

Mortgage plan gaining steam

WASHINGTON – Oct. 9, 2009 – The Obama administration touted progress on its foreclosure-prevention program Thursday after hitting an interim target of signing up 500,000 borrowers three weeks ahead of schedule. But in a report to be released Friday, a congressionally appointed oversight panel questioned whether reaching that goal would be enough to slow down the foreclosure crisis.

The program, known as Making Home Affordable, got off to a bumpy start when it was launched in March with homeowners and consumer advocates complaining about the difficulty of reaching lenders, long telephone wait times and documents that were repeatedly lost. But senior administration officials said Thursday that the program is now gaining momentum.

Under the $75 billion government program, lenders are paid to lower borrowers’ mortgage payments; the administration has said the program was aimed at helping up to 4 million borrowers before expiring in 2012. It is part of a larger government effort to revive the housing market that senior administration officials said has also kept mortgage rates low and prompted millions of borrowers to refinance their loans.

“The broad signs that you see in the housing market … are encouraging,” said Treasury Secretary Timothy F. Geithner. It is still early, and “we’re still living with some risks that housing is going to be a source of weakness for the broader economy and that you still face a … large number of families across the country still at risk of losing a home they can afford to stay in.”

The industry trumpeted its progress so far. Wells Fargo nearly doubled the number of modifications it started last month to 62,989, or about 20 percent of its delinquent borrowers eligible for the program, according to government data released Thursday. Bank of America helped about 95,000, or 11 percent of its eligible borrowers, and company officials said the bank is on track to help 125,000 by November.

“We feel really good about the momentum,” said Steve Bailey, Bank of America’s home retention strategies and policy executive.

Despite the recent progress, economists expect millions of borrowers to lose their homes over the next few years. The government program has likely reduced the number of foreclosures by about 7 percent to 8 percent during the past six months, said Paul Dales, U.S. economist for Capital Economics. But some of the borrowers helped by the program may have been able to avoid foreclosure on their own while others may still default on their loans later, said Dales.

“What it won’t do is stop foreclosures from rising,” Dales said. “It will just rise by less.”

A draft report by the Congressional Oversight Panel, which is monitoring the government’s Troubled Assets Relief Program, noted that the foreclosure effort is not set up to tackle two of the most pressing causes of mortgage delinquencies: rising unemployment and risky home loans known as option adjustable-rate mortgages, which reset to significantly higher payments. Over the next few years, millions of those loans are scheduled to shift to potentially higher interest rates, creating the prospect of a new wave of foreclosures.

“It increasingly appears that [the government program] is targeted at the housing crisis as it existed six months ago, rather than as it exists now,” the report said. Acknowledging the Treasury’s near-term goal of reaching 500,000 borrowers, the report said, “The achievement is relatively small in relation to the magnitude of the foreclosure crisis.”

The modifications started so far have lowered borrowers’ median interest rates to about 2 percent from 6.85 percent, according to the report, and reduced their payments by $500, to $849.31.

In a statement, Treasury spokeswoman Meg Reilly said “constructive feedback” from the panel is welcome and noted that the administration is already studying more ways to help unemployed homeowners. “The housing crisis was never going to be fixed overnight. Instead, it requires a comprehensive strategy focused on providing sustained support for American homeowners,” she said. “We believe that the Making Home Affordable program is an important part of that strategy.”

Not all parts of the government program are operational. After announcing in April that borrowers with a second mortgage could see payments on those loans reduced significantly as part of the program, the administration has yet to sign contracts with lenders to implement it. Homeowners and consumer groups continue to complain that qualified borrowers are being rejected by lenders and that there isn’t a clear appeals process.

The government program “had many obstacles, problems, and operational and technological challenges getting started and . . . is just now gaining momentum,” Richard H. Neiman, superintendent of banks for the New York State Banking Department, said in a statement included in the report.

It is also unclear how many borrowers will make enough payments to survive the trial period of a modification, the first three months, or might redefault on their loans later. The conversion rate to permanent modifications has been low so far, according to the report, and the Treasury has not released data on how many redefaults it expects.

“Redefaults mean that foreclosures have been delayed, rather than prevented,” the report said.

Florida’s existing home, condo sales up in August 2009

ORLANDO, Fla. – Sept. 24, 2009 – Florida’s existing home sales rose in August – marking a full calendar year (12 months) that sales activity increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.

Existing home sales rose 28 percent last month with a total of 13,850 homes sold statewide compared to 10,813 homes sold in August 2008, according to Florida Realtors. The state association also reported a 45 percent increase in last month’s statewide sales of existing condos compared to the previous year’s sales figure.

Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in August; 18 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 14 consecutive months.

“For a year now, statewide sales of existing single-family homes in Florida have increased each month compared to the year-ago figures,” says 2009 Florida Realtors® President Cynthia Shelton, CCIM, CRE, a broker and director of investment sales with Colliers Arnold in Orlando. (CCIM stands for Certified Commercial Investment Member and CRE is the Counselor of Real Estate designation). “This is encouraging news, and while it shows the beginnings of recovery, the housing market still needs time to continue its gradual absorption of housing inventory that will help stabilize home prices. That is why it is critical for Congress to extend the first-time homebuyer tax credit into 2010. And, because it’s now taking longer to finalize a home sale, first-time buyers who want to take advantage of the $8,000 federal tax credit need to act quickly, or they may miss the closing deadline of Nov. 30, 2009.”

Florida’s median sales price for existing homes last month was $147,400; a year ago, it was $188,500 for a 22 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in July 2009 was $178,300, down 14.6 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $310,000 in July; in California, it was $285,480; in Maryland, it was $273,769; and in New York, it was $205,000.

Signs point toward continued positive momentum in the housing sector, according to NAR’s latest industry outlook. NAR Chief Economist Lawrence Yun predicts existing home sales will rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”

In Florida’s year-to-year comparison for condos, 4,674 units sold statewide compared to 3,222 units in August 2008 for a 45 percent increase. The statewide existing condo median sales price last month was $107,500; in August 2008 it was $158,100 for a 32 percent decrease. The national median existing condo price was $178,800 in July 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.19 percent last month, down significantly from the average rate of 6.48 percent in August 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Daytona Beach MSA reported a total of 686 homes sold in August compared to 573 homes a year earlier for a 20 percent increase. The market’s existing home median sales price last month was $132,700; a year ago it was $164,200 for a 19 percent decrease. A total of 135 condos sold in the MSA in August, up 27 percent over the 106 units sold in August 2008. The existing condo median price last month remained level compared to a year ago at $184,300.

© 2009 Florida Realtors®