Real Estate - Homes for Sale - Houses.

January 2010 News about Real Estate in America.

Prices for Homes

The Standard & Poor's/Case-Shiller home price index released Tuesday December 29, 2009 edged up 0.4 percent to a seasonally adjusted reading of 145.36 in October. The index was off 7.3 percent from October last year. Prices in the housing sector stalled, breaking a five-month string of gains. It is a buyers market.

Homebuyer Credit Expanded and Extended

From the IRS we learn, "The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts.

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return." This is the $8,000 tax credit for first time home buyers. We've been given more time to buy a new home and receive a very large tax credit.

A $6,500 tax credit for current homeowners!

"The Worker, Homeownership, and Business Assistance Act of 2009" has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010). Here's the URL http://www.federalhousingtaxcredit.com/faq2.php

This is a TAX CREDIT, not a tax deduction. The difference is, for example, if you paid $10,000 in taxes for 2009, and you qualified for the full $6,500 tax credit, you would only owe, $3,500 !!! It is a credit against the amount of tax you owe. This is huge! A tax deduction, on the other hand, reduces the amount you owe by reducing the taxable income for the year. Do you qualify?

Rates Tumble

WASHINGTON (AP) -- The interest rate for a 30-year mortgage dropped to a record low of 4.125 percent (according to one lender), pushed down by an aggressive government campaign to reduce borrowing costs some say. We seached the internet and could only find rates in the 4.8% range even with an 715+ FICO. So finging a 4.125% loan rate might not be achieveable. That said, rates in the 4.75% or even 5% range is very very low indeed.

Building permits on the rise but only slightly.

That's the good news and the bad. Good because someone is spending money on new homes. Bad news because it lessens the number of repossessed or vacated "jingle" homes that already exist bringing even more homes on the market when we least need those. We need to see less homes on the market before prices begin to rise. So you see the problem? New housing permits mean the economy is picking up but that same news might pull it in the wrong direction by making too many homes on the market.

Foreclosures everywhere

For the first time, more than half the problem-mortgages are of the prime, fixed-rate variety rather than the sub-prime, variable-rate type. The Mortgage Bankers' Association announced that 14.4% of all mortgages are either delinquent or in default!

A rising number of foreclosures are hitting good borrowers, those that qualified for loans, traditional loans. They had good credit ratings, good track records, good jobs. Jobs, that's where the foreclosures are starting to come from at least 33% of them are, that's up from 21% last year. Not jobs, but from the loss of jobs. Loans backed by the Federal Housing Administration also show increasing signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure. Is it over? Hardly. Look for better bargain prices on housing in most of America still ahead. Yes we've seen some recovery this past year, but without jobs pickup and smaller amounts of "on the market" homes, it's unlikely we'll see an improvement in home evaluation. Most foreclosures are due to job loss not poor lending practices. Most of the sub-prime loans have completed litigation. So is it a good time to buy? Well, it's a lot better than the last 2 years but the bottom may not be here yet! But if you find that dream home you've always wanted, and it's right priced, you can get the loan for a low rate, jump on it.

From RealtyTrac: There are "2,015,812 Foreclosure Homes," rising with a $180,566 Average Foreclosure Sales Price and continuing now to fall. More homes foreclosed on at a lower sales price.

And according to RealtyTrac, one in every 87,263 housing units (1 in 365) received a foreclosure filing in November 2009. Is this big? IT'S HUGE! It's 1,047,156 per year! OMG. California, Florida, Arizona and Michigan being hit hardest.

WHAT ARE INTEREST RATES NOW

They're great! Interest rates are back in the 4's again. Not everywhere but in many places because in the last few days (couple weeks really) the rates have fallen to the lowest we've seen in months --- around 4.750%. 4.50% may be coming soon. So for those of you who are buying, this is cheap money if you can qualify. And qualify is the important task you have. Qualify for a loan, a conventional loan, and the interest rate could be very low. Conventional loan? That's where you have a 20% down payment, good credit, a job you can prove you have and the list goes on. Lenders used to include "CHARACTER" as a component to getting a loan, although how that was quantified I don't know. Without these you'll be talking about higher rates albeit today, still low.

Housing market up or down where you live?

We are realist at the Real Estate of America. We look at the data and talk about it like it is. Not like someone wants it to be. If we were real estate agents, or builders or someone else who makes their money selling or buying real estate we'd have a different way of characterizing the state of the housing economy. We see everyday in blogs, articles from home owners associations and so many others how the decline is less than expected, or business is picking up here and there and the list goes on. The case of recovery can be made in some areas of the country and there are a handfull that are not "suffering", but by in large a reported 10% drop in sales from a year ago is not encouraging. This is the largest decline in 20 years. OK ... but since the rise in the last 20 years has also been historic, does it mean everything is in the toilet? No. But the results of sales, reposessions, delinquencies tells us there is something smelly in the industry. The smelly part is simple. Mostly greed, speculation and bad law! On the part of nearly everybody that could participate. After all it's the American way ... get what you can when you can and get out of town. I want it all and I want it now! Does it make you wonder why there's so much regulation from the Feds? Well, there you have it and even though the housing pullback may be just another bubble that will eventually regain its rightful place as a good investment, the government will take the opportunity of writing more law, hopefully not like the Fair Housing Act. Now there's a whole lot of folks that took mortgages that now can't afford them because of the belief real estate always goes up. Obviously not. Nevertheless, folks need help. And now they say we need more regulations! And it might be so. I hate that part as it slims down options ... lessens our choices.

Who qualifies for help from the Feds on mortgages?

HUD will make some headway in getting help to those who qualify for federal help when variable rate loans or ARMS reset in the coming months. Who qualifies?

That depends when the government is involved. But there's real good news for some. "An estimated 240,000 families can avoid foreclosure by refinancing their mortgages using the new FHASecure plan. FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing." says HUD. Visit your city page for a selectable link to HUD. Strong credit history refers to the fact qualifiers have been paying their mortgage but with the rise in rates, those new payments are beyond their means now. There'll be controversy over this because some will say borrowers proved they could afford the loan earlier, now they have to prove they can't pay for it. What a mess.

From the Census Bureau

Housing Starts and Building Permits for December 2009

"Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 653,000. This is 10.9 percent (±2.4%) above the revised November rate of 589,000 and is 15.8 percent (±2.9%) above the December 2008 estimate of 564,000. Single-family authorizations in December were at a rate of 508,000; this is 8.3 percent (±1.2%) above the revised November figure of 469,000. Authorizations of units in building with five units or more were at a rate of 127,000 in December. An estimated 571,600 housing units were authorized by building permits in 2009. This is 36.9 percent (±1.0%) below the 2008 figure of 905,400.

Privately-owned housing starts in December were at a seasonally adjusted annual rate of 557,000. This is 4.0 percent (±9.3%)* below the revised November estimate of 580,000, but is 0.2 percent (±11.5%)* above the December 2008 rate of 556,000. Single-family housing starts in December were at a rate of 456,000; this is 6.9 percent (±8.5%)* below the revised November figure of 490,000. The December rate for units in buildings with five units or more was 92,000. An estimated 553,800 housing units were started in 2009. This is 38.8 percent (±1.4%) below the 2008 figure of 905,500."

What does this tell us? The story is the same; housing starts and permits are rising. And the building of new homes (down 4%) is not going to accelerate upward in the forseable future. We will continue to see inventory rise, prices will fall, and with interest rates still very low, we'll see a buying opportunity not seen in 25 years. Be patient. Actually the prices are looking pretty good today! What caused the overbuilding/buying? The Fair Housing Act likely.

Housing Completions from the Census Bureau.

"Privately-owned housing completions in December were at a seasonally adjusted annual rate of 768,000. This is 11.2 percent (±13.6%)* below the revised November estimate of 865,000 and is 25.3 percent (±8.6%) below the December 2008 rate of 1,028,000. Single-family housing completions in December were at a rate of 503,000; this is 11.1 percent (±10.2%) below the revised November rate of 566,000. The December rate for units in buildings with five units or more was 245,000. An estimated 796,000 housing units were completed in 2009. This is 28.9 percent (±3.0%) below the 2008 figure of 1,119,700."

New Home Sales November 2009

The Census Bureau says:

"Sales of new one-family houses in November 2009 were at a seasonally adjusted annual rate of 355,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.3 percent (±11.0%) below the revised October rate of 400,000 and is 9.0 percent (±15.3%)* below the November 2008 estimate of 390,000. The median sales price of new houses sold in November 2009 was $217,400; the average sales price was $280,300. The seasonally adjusted estimate of new houses for sale at the end of November was 235,000. This represents a supply of 7.9 months at the current sales rate."

What the heck does all this mean? Well, the report on new home sales were expected to rise some as builders reap the benefits of the $8,000 tax credit for first time home buyers. But guess what? The Commerce Department said sales fell 11% percent to a seasonally adjusted annual rate of 400,000 from a downwardly revised 390,000 in November 2008. Look for more inventory when all the tax credit and incentive plans lapse. More inventory = lower prices.

Existing Home Sales

From the National Association of Realtors, "Existing-home sales rose again in November as first-time buyers rushed to close sales before the original November 30 deadline for the recently extended and expanded tax credit."

Sometimes when we look at two different sources of data we don't come up with the same answer. It's understandable as the information gathered may be from different time periods not to mention different agendas and other reasons.

More good news for BUYERS!

Foreclosure Rates

”GLUT OF HOMES” are sweet words to buyers. Not so for sellers.

Delinquencies rose and continue to rise for all loan types but were largest for subprime adjustable-rate loans that reset at higher interest rates, the industry trade group said in its quarterly National Delinquency Survey. Now the next hurdle, that being alt-a loans. The impact will be big, HUGE actually. These resets are going to occur in the 18 months from mid 2009 - to the end of 2010 and will impact everything in the economy! It could be avoided if mortgage interest rates stay low and they are as the feds are keeping them low. Why? These resettable mortgages could enjoy a very low rate for a permanent mortgage. Meaning, if a person wants to stay in a home they bought with a variable rate or interim rate, the permanent rate could be low enough the buyer stays in the home rather than forfeit. The problem of being underwater still exists.

Ramblings and Observations

Why not buy now? Several good ones. First the jobless rate continues to increase - hard to imagine that's been the case for many months now. And two, the price of homes are continuing to fall, although there are pockets of improvement. 3. The sale is going to be on for a while. 4. You might be moving where you find work. 5. You might be wise to conserve cash reserves.

This hasn't changed at all ... more affordable real estate is coming this way no doubt ... at least more affordable than recent transactions. More softening is seen and more on the side of buyers ... that might be an understatement. Is it time to sell overpriced property? Prices continue to fall in areas of greatest speculation and appreciation particularly in California, Nevada (Vegas and Reno), Arizona, Florida, and some of New England. Inventory continues spiraling up ... no ... leaping up in some places ... in overbuilt areas, delinquencies are up in every state over this period last year. Louisiana and Mississippi are particularly hit hard. Texas is fourth on the list behind Alabama. And there's speculation about a "real estate bubble" these days. SPECULATION? There is indeed regionalized over-bought conditions in real estate as evidenced by deliquencies, reposessions and inventory. More and more data is coming in regarding inventory. Remember inventory is represented by the homes that are for sale at any given time. Until changes are seen, we will keep this position.

We continually see large builders reducing their inventory, mostly of unbuilt lots. All builders are still shrinking albeit builder stock prices have risen some and it depends on the builder as Beazer reported improved revenue. Remember as inventory rises, builders generally either slow production or lower prices or both and both are being experienced today! So, is it a buyers market ... you should make the judgement. Rates are very low (<5%+- in many areas).

Mixed signals? Not at all ... this is a complicated circumstance. But it is puzzling that interest rates are still very low, going lower in some instances, home prices are not rising now (falling actually) and INVENTORY is up. Puzzling may be the wrong way to characterize it as the Feds are keeping interest rates low. Foreclosures as we said are at all time highs. You can see the bending ... it has been after all a transition period from seller to a buyer market. Actually ... it is a buyers market indeed. Yes ... indeed it is but if you can wait, it might be even better with inventories rising and foreclosures in huge numbers! Builders say they're on the road to recovery.

Remember about the worm? The worm continues turning meaning it is a buyers market, there's more. It might get better! So for sellers ... and if the market does collapse further and with the alt-a resets emminent ... selling is still a real option. If you're underwater already, it might get worse before it gets better. For buyers ... if the market collapses ... waiting for the bottom ... where ever that may be ... is the ticket if you're clever enought to recognize it. Collapse? Home builders associations say not, but what else would you expect? But others, bankers, lenders of all sorts, say special financing in the past will likely catch up to the unwary. ARMS, interest only loans and the like face a day of reckoning and we've seen subprime borrowers go under or default, with the alt-a resets, more houses will be on the market. Lots more! Look folks, the feds are pumping money into the housing market like crazy ... does that tell you something? And with the likelyhood of the FEDS making it easy for many recent home buyers to get out of a real pickle, it would appear ... well ... things could stabilize some, it will happen, but when is the question. The opposite side of this is the fact the CDOs will continue to suffer because of resets of rates by lenders. Actually we know this is not the real problem ... but borrowers that bought more than they could afford are likely the real culprit. That's really sad because many poor folks need good housing and were "helped along" by unscrupulous lenders in some cases and their agents, not to mention the Fair Housing Act. The Fair Housing Act was a good idea that was implemented poorly or worse. Poor people should have the opportunity that everyone has if and only if the repayment of a loan is likely. In other words, regardless of your financial status, rich or poor or somewhere inbetween, a loan is expected to be repaid. Wonder why we have more regulations coming down the pipe?

There's plenty of real estate for sale in America and more is likely to come. Yes prices are still in the downward direction. Many still are suggesting a "deflating" of prices rather than a bust ... nevertheless builders, suppliers, bankers (lenders) ... others will continued to be affected negatively as we've seen.

You must do your very best to determine if the property you are interested in is worth the selling price. Never buy on instinct, whim or because you're afraid of missing out on a good deal, your family wants you to "settle down", etc. Value is where your mind should be in purchasing a home. Home is the keyword here as most looking for a home are not interested in an "investment" primarily, although for many of us our home will be our biggest investment. There's plenty out there, just do your homework to find your dream!

Real estate for sale in America is an understatement. Now even cheaper with very low interest rates, remaining so for many many months. The innovative methods of financing have all but dried up and foreclosures are the talk of the day but boy are the houses of dreams available everywhere!

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