In the past few weeks the real estate market showed multiple signs of a rebound of some sort. In 20 metropolitan areas prices rose 0.2% in August but were still down 3.8% year over year. This may all change soon. In September, pending sales were down 4.6%. Could this be another beginning of a triple dip? With Freddie Mac requesting for another $6 billion of your tax money and holding about 60,000 REOs from the market, which will take approx. 15 years to sell off, I don’t think our country’s rebound in a lot of areas will happen anytime soon and hope that the triple dip is not too severe.
Some help is on the way. The Federal Housing Financing Agency is trying to help change the market. They are making a few changes to the Home Affordable Refinancing Program to attract more borrowers and stimulate the mortgage industry and helping more homeowners. The National Association of REALTORS are also concerned with the state of our real estate market and has a 5 point plan that could get us out of this triple dip situation and stabilize the market. With any change, it will take a while for the changes to make a difference. Let’s hope that it won’t be too long.
There has been more then 610,000 foreclosures last month and represents a 1% increase then the previous quarter. On average it took 336 days to complete the foreclosure process nation wide. New York took 986 days to complete the process while Texas only took 86 days. Wow, Texas seems to be doing something different.
President Obama is expected to help struggling homeowners with their mortgage payments. The Wall Street Journal reports, “The administration’s plan is expected to eliminate “appraisals and extensive underwriting requirements for most borrowers” who are up-to-date on their mortgage and want to refinance at a lower rate”. This should help those who have been keeping up with their payments and were looking for assistance in avoiding foreclosure.
While most the country is having foreclosure problems, there are areas that are still doing well. These areas are the most expensive areas in the United States. The economy today doesn’t seem to hurt these types of properties. In fact, it seems to have increased the sales activity in this price range.
If our government continues to ignore our budget problems that we have today, we will be in the same credit classification as Greece. Once we loose our credibility, things will be more expensive. Something has to be done.
Although our budget is operating at a 60 % deficit, home sales have increased and is on track to out perform last year. This increase is fueled by homes being more affordable, historically low interest rates, and lower unemployment, according to Lawrence Yun, NAR Chief Economist. April did show signs of our economy improving but the housing industry is still fragile.
Even though we have an increase in sales, the values of the homes have dropped 3% in the first quarter of 2011, which makes this decline the largest since 2008.
With all this going on, it’s still a great time to make that investment in the “Great American Dream”.
The California Housing Finance Agency (CalHFA) is administering $2 billion in federal funds for borrowers who are at risk of losing their homes. Borrowers who took out loans after January 1, 2009 are eligible for 4 different programs as long as the property is a primary resident, meet income requirements, and face a documented financial hardship.
The four programs are the following:
- The Unemployment Mortgage Assistance Program (UMA) which will help homeowners with their mortgage payments.
- The Mortgage Reinstatement Assistance Program (MRAP) which provides funds for homeowners who have fallen behind in their payments
- The Transition Assistance Program which provides relocation assistance
- The Principal Reduction Program (PRP) which provides funds to reduce the outstanding principal balance.
GMAC, Guild Mortgage, CalHFA, and California Dept. of Veterans Affairs are the organization that offers all 4 programs.
There are about 78,000 homes that are either vacant and for sale, or under construction. This is an improvement and with a normal level of buying, the homes would sell in 2 1/2 months. The study shows that there is a housing shortage brewing. If this happens, then it would change the market to a seller’s market and buyers will have a hard time purchasing again. The market today is still considered a buyer’s market and there are more bargain hunters out looking for deals. More investors are also very active making all cash purchases. There are 6 cities that are considered to be cheaper then renting the same house. All this may be history if unemployment rises, which it is decreasing today, interest rates continue to rise and become non deductible.
Wow!! It’s almost the end of January and boy did it fly by. Since the beginning of the year, the rates have been going up. In November of 2010, the 30 year fixed loans were at a 40 year low of 4.17% the 15 year rate was 3.57%. Now it’s at 4.8% and the 15 year rate is 4.09%. I don’t think we will ever see the November rates ever again. There will probably be less borrowing, in 2011, due to the economic conditions.
So what do you think prices of homes will do? Well, most of the country will continue to see declines or stablize in prices except for 10 cities. Unfortunately, Florida and parts of the Western parts of the US will see the largest drops in home values.
Ever wonder why it takes so long to finish a short sale transaction? It could take 3 to 4 times longer then a regular sale and there is no guarantee that the sale will be completed. This process is really between the buyer and seller, however there is another party, a lender of record, that has to cooperate with the purchase. They have their own proceedures to approve the purchase and could take a long time.
Where do you go after your home is foreclosed upon by the bank? Your credit is a mess and you may not make as much money as before, so where do you go?
The Center for Economic and Policy Research has a report, “The Gains from Right to Rent in 2010”, and has suggested to allow homeowners the right to rent their home, after foreclosure. By doing so, it may address the nation’s foreclosure problem.
HR 5028, under Right to Rent legislation, would allow the foreclosed homeowner to stay in the home as a renter for a substantial period of time. This would help the homeowners from being homeless and it will help the communities that are experiencing high numbers of foreclosures.
Have you had an experience working with a short sale? If you did, you’ll agree that there is no guarantee that the home will be sold to you, no matter how long it takes to get an approval and how frustrating it is to not know if you are going to be able to buy the home. Well, the HAFA program is designed to help with the frustrations homeowners, sellers, buyers, and agents experience when going through the short sale process. This program should help speed up the process and help people but there is no guarantee. Only time will tell.
How do you think the real estate market is doing? Is it better or is it worse then when the market went bust? I think the market place here in San Francisco and the Peninsula are doing better. We did go through a major price change in many areas but prices are stabilizing. We are much more fortunate then some other areas in the country.
The National Association of REALTORS have information about the real estate market, in general, and why it’s going to get better. How is your area? Doing better? I hope it is!