Where real-estate market may be headed, and how to plan for it

Evidence of a bottomThere are some signs that the relentless foreclosures and price erosion are easing. We may be hitting bottom.
1. Escrow index. Last week, pending home sales, as measured by the National Association of Realtors pending home sales index, were up unexpectedly to 89, the highest since October of last year. A leading indicator of sales, it shows buyers may be coming off the sidelines.
2. Sellers market in lower price ranges? While overall U.S. months-of-inventory remains over 11, the figure appears to be dropping at the lower price ranges. In the Sacramento market, for instance, a previously overheated market, homes under $500,000 are seeing months of inventory between three to four vs. 12 or 13 for higher price ranges... [read more] Yahoo! Finance, Jennifer Openshaw 8/18/08

President Bush signs into law the Housing and Economic Recovery Act of 2008

Thanks to the advocacy of REALTORS across the nation, homebuyers will soon have access to more affordable financing, and first-time homebuyers (those who have not owned a home for three years) will receive a tax-credit to help them enter the market. This is exciting news for REALTORS, home buyers and sellers alike. Here are more details of the Housing and Economic Recovery Act of 2008:

National Association of REALTORS®
Summary of Key Provisions of H.R. 3221 - The Housing Stimulus Bill (as of 7/30/08)

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H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:

• GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  
• FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  
• Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
  
• FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
  
• Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
  
• VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
  
• Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
  
• GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
  
• Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
  
• National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
  
• CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
  
• LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
• Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

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Why Home Buyers Should Understand the Importance of Interest Rate Drops

Home buyers too frequently treat interest rates as a secondary concern. Many buyers will stress over $300 or $400 in negotiations over purchase price. But when told that interest rates dropped half a point, home buyers will often respond with a shrug...[more] [Broker Agent News, Ki Gray April 2008]

5 Tips for Buying a Home in a Down Market

The subprime mortgage bust has scared a lot of people away from the housing market. The nightly news is filled with images and stories of everyday Americans who are losing their homes because they made greedy and uninformed decisions, they were taken advantage of by predatory brokers, or a combination of these situations. However, the news isn’t all bad. This decline in the market has dropped prices and made housing affordable to many fiscally responsible renters who never considered home ownership to be an option.

If you find yourself house-hunting, make sure that you follow these five simple steps to take advantage of this downturn in the market; if you don’t, you could be the next sad story on your local news...more [Bankaholic.com April 10, 2008]

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A Different Approach to Revitalizing the Housing Market

While U.S. Federal Reserve rate cuts and the economic stimulus package are helpful, they aren't enough to bring the economy back from the brink of recession. Some mortgage lenders' decision to temporarily suspend the foreclosure process through "Project Lifeline" is encouraging, but more drastic steps need to be taken to help a housing market that is obviously in trouble.

Few would disagree that the explosive growth in the housing market (prices and inventory) over the past several years was stimulated by lenders providing easy financing. As is typical with most major purchases, as financing becomes more affordable, an increase in demand will follow.

While it is easy to blame "subprime" lenders, More... [Lyle Martin- Broker Agent News 2008]

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What Your Real Estate Agent Knows That You Don't

When you make the decision to sell your home, you are under no obligation to hire a real estate agent or broker to help you with the sale. Nonetheless, most people prefer to hire a real estate agent in order to better protect themselves. And, it also puts them in a better position to successfully sell the home in a short amount of time. more... [Broker Agent News by Eric Bramlett 11-30-2007]

Save Your Home from Foreclosure

YOU’RE NOT ALONE IF YOU’RE HAVING TROUBLE PAYING YOUR MORTGAGE
The housing boom led to a record homeownership rate of nearly 70 percent, but some homeowners now face problems making their mortgage payments and can’t refinance their loans. Over the last few years, lenders invented new types of mortgages to help families buy their first homes and refinance their existing mortgages. Many of these mortgages helped families without cash for a down payment, or with less-than-perfect credit, qualify for loans known as "subprime" loans. read more...

List Low, Sell High

In today’s hot sellers market, setting a list price that's lower than market value can be an effective strategy as long as you combine it with an aggressive marketing campaign. In this article from The Boston Globe, the author states that if sellers expose an under priced listing to a broad-enough segment of the market before accepting offers, the market will establish the price through a process of competitive bidding. This strategy is most effective in markets that lack enough homes for sale to meet the demand. Further the author cites that to be a successful seller, you need to manage your expectations. Using gimmicks to attract buyers, may increase the number of showings your listing receives. But, it's unlikely to result in a sale if your listing is priced too high. [Dian Hymer, The Boston Globe, August 27, 2007]

Risky Loans Get Harder To Come By

Some nontraditional mortgage loans have vanished from
lenders' menus, while others have gotten more expensive during an eventful week for
those in the mortgage industry.
But a looming credit crunch for riskier mortgage debt has not yet spilled over to
traditional, creditworthy borrowers, who can still obtain conventional financing at
market rates, mortgage lenders say.
"What we're seeing is because of the mess in the subprime market world right now. It
is definitely blowing over to the [parts of the] prime market," said Ginny Ferguson,
co-owner and broker of Heritage Valley Mortgage in Pleasanton, Calif.
It's the riskiest part of the nonsubprime market that is feeling the squeeze as the
secondary mortgage market has curbed its appetite for these loans.
Mortgage offerings changed daily this week as some companies took Alt-A loans off
the table...[Amy Hoak, MarketWatch, Aug 3, 2007]

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Selling your home for the best price in an up or down market

A good, full service Realtor will be able to help you sell your home for the best possible price, terms and conditions. In this article from Jacksonville.com, the author states that for obvious reasons, the asking price is the most important factor in determining how fast your home sells. Professionals know that the longer a house stays on the market, the lower the selling price will be in comparison to the original asking price. It is important to look at all the feedback with your Realtor to determine the next steps to take. The author further adds that if your home has languished on the market for several months, it may be a good time to take another look at your competition and determine a more aggressive strategy. [Phyllis Staines, Jacksonville, June 08, 2007]

The right price is right way to capture buyer

Selling a home "as-is" in the current market is not all that easy. In this article from The Washington Times, the author states that there is a very big difference between an as-is sale and a house that has a lot of defects. He further recommends that sellers do not call their property as-is when they list it. Rather, they should raise that with buyers or perspective buyers at contract time once there's an offer being negotiated. Buyers should be interested in all the best properties available on the market. Without doing more research, you shouldn't rule out any property for any reason. Before you decide for certain how to market your home, be sure to consult with a Realtor regarding your state's disclosure regulations. [Sara Sicks, The Washington Times, June 01, 2007]

Will market warm up this spring?

The spring market always is the hottest period of the year for home sales. The pertinent question is that whether this spring will be better than last spring was. As per the article from The Washington Times, the author states that the increase in traffic that agents were reporting caused some to hope that the spring market would pick up in a big way. Cumulative data for the District actually shows sales there up by 2 percent over the first four months of the year, but that is the only jurisdiction where sales have risen this year. April's lackluster sales meant that home prices are falling or stagnant in most of the region. [Chris Sicks, The Washington Times, May 18, 2007]

Professional Staging Edits Clutter and Smells

Sellers with small children or pets might consider hiring an accredited professional stager (ASP) who can provide simple guidelines to help them redirect potential buyers' focus to the home's highlights as a welcoming, livable space. As per the author from The Washington Times, professional staging edits clutter, smell. A good stager knows the demographics and can calculate when a property should be staged to sell to buyers with one or more children. Homeowners with a large family, including many pets, may not recognize the disorder and accumulation of items in their homes. A stager can help them with a fresh perspective on how to rearrange, organize and get rid of unnecessary items. [Cary Lee Dailey, The Washington Times, March 30, 2007]