Real estate developers are starting to get a glimpse of the challenges they’ll face in developing the athletes’ village if Chicago is chosen to host the 2016 Summer Olympics.
Among them is building up to 2,500 residential units that will hit the market all at once, obtaining financing and meeting the needs of the Olympics and those of the private market, which is the final destination for the project. Cassandra Francis, who is spearheading the project for the Chicago 2016 bid committee, offered some details during a luncheon Wednesday sponsored by the Chicago School of Real Estate at Roosevelt University.
The village is the highest-priced item to be built for the games. It’s a nearly $1-billion project on the site of the former Michael Reese Hospital on the city’s South Side. Although Chicago is buying the site for $86 million, the city and the Olympics organizing community are counting on private developers to construct and finance the housing project. That has become an increasingly dicey proposition since London and Vancouver, British Columbia, sites of the next two Olympics, have needed government help to keep privately developed villages on track.
Financing could be hard to line up because banks are no longer lending as generously as they did before, raising questions about whether private developers can handle the project alone.
“That’s one of the concerns the (International Olympic Committee) has,” Ms. Francis said. “We do believe we can get traditional financing.” She said the bid committee also is looking into federal financing for portions of the project that involve affordable housing, housing for seniors and student housing. ..more
Saturday
Federal Housing Rescue Plan Launches ...
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Source: CNN, Tami Luhby (04/16/2009)
10 Happiest States in the U.S. ...
MainStreet.com’s Happiness Index examined household income, debt, employment, and foreclosures to choose the states that are surviving the current economic crisis with the most panache.The analysis discovered that despite disastrous conditions in parts of Michigan and Ohio, overall, the Midwest is navigating the financial meltdown with the highest average salaries, lowest unemployment, and fewest foreclosures. In fact, Nebraska, in the center of the corn belt, scores highest on MainStreet’s Happiness Index.Here are the rest of the top-10 happiest states:
Nebraska
Iowa
Kansas
Hawaii
Louisiana
Oklahoma
Wyoming
South Dakota
West Virginia
Wisconsin
Source: MainStreet.com, Stephen Dalton (04/06/2009)
Nebraska
Iowa
Kansas
Hawaii
Louisiana
Oklahoma
Wyoming
South Dakota
West Virginia
Wisconsin
Source: MainStreet.com, Stephen Dalton (04/06/2009)
10 Riskiest U.S. Housing Markets...
Even with hints of a housing recovery in some places, risky markets, dominated by nonprime mortgages, still prevail in a number of areas. Forbes magazine and Moody’s Economy.com surveyed the 200 largest metropolitan areas, adding up the number of loans to low-rated borrowers and dividing that sum by the total number of mortgages to calculate the percentage of each area’s market that is below prime. Here are the 10 metro areas with the highest percentages of nonprime mortgages, which makes them susceptible to defaults as unemployment rates continue to rise.
Mission, Texas
Detroit
Miami
Brownsville, Texas
Merced, Calif.
Lakeland, Fla.
Bakersfield, Calif.
Fort Lauderdale, Fla.
San Bernardino, Calif.
Visalia, Calif.
Source: Forbes, Maha Atal (03/31/2009)
Mission, Texas
Detroit
Miami
Brownsville, Texas
Merced, Calif.
Lakeland, Fla.
Bakersfield, Calif.
Fort Lauderdale, Fla.
San Bernardino, Calif.
Visalia, Calif.
Source: Forbes, Maha Atal (03/31/2009)
Big Improvement to First-Time Buyer Tax Credit ...
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment.” Mr. Donovan says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
courtesy NAR
courtesy NAR
Monday
Thirty-Year Mortgage Hits a Low of 4.85% ...
The average rate on 30-year fixed-rate home mortgages hit a record low this week, after the Federal Reserve announced it would purchase Treasury securities over the next six months, Freddie Mac's chief economist said on Thursday.
The 30-year mortgage averaged 4.85% in the week ended March 26, the lowest point since Freddie Mac's weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.
Fifteen-year fixed-rate mortgages and five-year adjustable-rate mortgages also hit record lows. The 15-year fixed-rate mortgage averaged 4.58% and hasn't been lower since 1991, when the survey began tracking the mortgage. The 15-year mortgage averaged 4.61% last week and 5.34% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.96%, the lowest since the survey began tracking the ARM in 2005. The ARM averaged 4.98% last week and 5.67% a year ago.more...
The 30-year mortgage averaged 4.85% in the week ended March 26, the lowest point since Freddie Mac's weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.
Fifteen-year fixed-rate mortgages and five-year adjustable-rate mortgages also hit record lows. The 15-year fixed-rate mortgage averaged 4.58% and hasn't been lower since 1991, when the survey began tracking the mortgage. The 15-year mortgage averaged 4.61% last week and 5.34% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.96%, the lowest since the survey began tracking the ARM in 2005. The ARM averaged 4.98% last week and 5.67% a year ago.more...
Saturday
FAQ’s Regarding the 2009 Federal First-TimeHomebuyers Tax Credit...
The American Recovery and Reinvestment Act of 2009 was signed on February 17, 2009. The Act includes a few revisions for the First-Time Homebuyers Tax Credit.
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Q What is the amount of the new tax
credit?
A $8,000
Q Who is eligible for the $8,000 tax
credit?
A First time homebuyers who closed (or will close)
on homes between January 1, 2009 and November
30, 2009.
Q What are the details of the new tax
credit?
A Thenewtaxcredit isan $8,000 refundabletax credit
(orupto10%of thepurchaseprice). Thismeans that if your
total tax liability in the given year is less than $8,000 the IRS
will send a refund for the balance.
Q Do I have to pay back the credit?
A If you occupy your home for three years you will
not have to pay back the credit.
Q Who qualifies for the credit?
A •First-time homebuyers (Taxpayers who owned
a main home at any time during the three years prior
to the date of purchase are not eligible).
• Purchasers of a “main home.” i.e. principal
residence. The home must be a home located in the
United States and is generally considered to be the
home where you spend 50% or more of your time. It
can be a condo, single family detached, co-op,
townhouse or something similar. Vacation homes and
rental properties are not eligible. For new
construction, the “purchase date” is the date you
occupy the home.
Q What if I purchased a home between
April 8, 2008 and January 1, 2009?
A Purchasers who bought between 4/8/08 and
1/1/2009 are subject to the terms of the $7,500
repayable credit.
Q What are the income limits?
A The credit is reduced or eliminated for higherincome
taxpayers. Joint filers with a MAGI of $170,000
and above and single filers with a MAGI of $95,000 and
above are ineligible for the credit. Singles making
between $75,000 and $95,000 and joint filerswith aMAGI
of between $150,000 and $170,000 are in the “phase-out”
range, meaning you will only receive a fraction for the
$8,000 tax credit.
Q When/How can I claim the credit?
A It can be claimed on your 2008 tax return (to be
filed by April 15, 2009), an amended 2008 Tax Return,
or your 2009 Tax Return.
Q Who do I contact if I have more
questions about this credit?
A Contact your tax preparer, or
call the IRS toll-free at (800) 829-1040 for more
information on the tax credit. This information is
accurate based on the information available as of
February 19, 2009. As with any tax law change, check
with a tax advisor if there are any question regarding
using this provision.
courtesy, CAR
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Q What is the amount of the new tax
credit?
A $8,000
Q Who is eligible for the $8,000 tax
credit?
A First time homebuyers who closed (or will close)
on homes between January 1, 2009 and November
30, 2009.
Q What are the details of the new tax
credit?
A Thenewtaxcredit isan $8,000 refundabletax credit
(orupto10%of thepurchaseprice). Thismeans that if your
total tax liability in the given year is less than $8,000 the IRS
will send a refund for the balance.
Q Do I have to pay back the credit?
A If you occupy your home for three years you will
not have to pay back the credit.
Q Who qualifies for the credit?
A •First-time homebuyers (Taxpayers who owned
a main home at any time during the three years prior
to the date of purchase are not eligible).
• Purchasers of a “main home.” i.e. principal
residence. The home must be a home located in the
United States and is generally considered to be the
home where you spend 50% or more of your time. It
can be a condo, single family detached, co-op,
townhouse or something similar. Vacation homes and
rental properties are not eligible. For new
construction, the “purchase date” is the date you
occupy the home.
Q What if I purchased a home between
April 8, 2008 and January 1, 2009?
A Purchasers who bought between 4/8/08 and
1/1/2009 are subject to the terms of the $7,500
repayable credit.
Q What are the income limits?
A The credit is reduced or eliminated for higherincome
taxpayers. Joint filers with a MAGI of $170,000
and above and single filers with a MAGI of $95,000 and
above are ineligible for the credit. Singles making
between $75,000 and $95,000 and joint filerswith aMAGI
of between $150,000 and $170,000 are in the “phase-out”
range, meaning you will only receive a fraction for the
$8,000 tax credit.
Q When/How can I claim the credit?
A It can be claimed on your 2008 tax return (to be
filed by April 15, 2009), an amended 2008 Tax Return,
or your 2009 Tax Return.
Q Who do I contact if I have more
questions about this credit?
A Contact your tax preparer, or
call the IRS toll-free at (800) 829-1040 for more
information on the tax credit. This information is
accurate based on the information available as of
February 19, 2009. As with any tax law change, check
with a tax advisor if there are any question regarding
using this provision.
courtesy, CAR
Low Mortgage Rates Will Cost You ...
Mortgage rates are low, but getting a home loan is going to cost you.
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market as lenders try to reduce their risk and anticipate rates.
"It's an interesting time, in that mortgage rates are historically low," says Amy Bohutinsky, vice president of communications for Zillow.com, a real-estate Web site. "But at the same time, while rates are low, lending standards are still really tight. What that means is that people who qualify for these really good rates … fall under a strict set of guidelines."
Even borrowers with decent credit aren't immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers also are often paying more points, or prepaid interest, that bring the mortgage rate down.
Pricing Changes
If you look at where mortgage pricing was a year and a half ago, and where it is now, "there have been a slew of changes, mostly negative from a borrower's perspective," says Rick Allen, vice president of MortgageMarvel.com, a mortgage Web site.
The most recent changes started to show up in lenders' rate sheets this year. New risk-based pricing from Freddie Mac and Fannie Mae adds fees to mortgages based on a borrower's credit score. In order to avoid the extra fees, borrowers need to have a FICO score of 740 or higher, says Dan Green, loan officer with Mobium Mortgage in Cincinnati and author of TheMortgageReports.com.
The new rules take effect in April at Fannie and Freddie, but many lenders have already incorporated them.
The new fees, called loan-level price adjustments, have been an unwelcome surprise for some homeowners interested in taking advantage of low rates. "It has created a different pricing scenario from one consumer to the next," Mr. Allen says. "What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher."
Charges have also gone up for those who extract equity from their home through a cash-out refinance. Condo financing could also cost more.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took just 0.4 point to get it.
There's an inverse relationship between points and rates; the more points you pay, the lower the rate becomes. A point is 1% of the mortgage amount, charged as prepaid interest.more...
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market as lenders try to reduce their risk and anticipate rates.
"It's an interesting time, in that mortgage rates are historically low," says Amy Bohutinsky, vice president of communications for Zillow.com, a real-estate Web site. "But at the same time, while rates are low, lending standards are still really tight. What that means is that people who qualify for these really good rates … fall under a strict set of guidelines."
Even borrowers with decent credit aren't immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers also are often paying more points, or prepaid interest, that bring the mortgage rate down.
Pricing Changes
If you look at where mortgage pricing was a year and a half ago, and where it is now, "there have been a slew of changes, mostly negative from a borrower's perspective," says Rick Allen, vice president of MortgageMarvel.com, a mortgage Web site.
The most recent changes started to show up in lenders' rate sheets this year. New risk-based pricing from Freddie Mac and Fannie Mae adds fees to mortgages based on a borrower's credit score. In order to avoid the extra fees, borrowers need to have a FICO score of 740 or higher, says Dan Green, loan officer with Mobium Mortgage in Cincinnati and author of TheMortgageReports.com.
The new rules take effect in April at Fannie and Freddie, but many lenders have already incorporated them.
The new fees, called loan-level price adjustments, have been an unwelcome surprise for some homeowners interested in taking advantage of low rates. "It has created a different pricing scenario from one consumer to the next," Mr. Allen says. "What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher."
Charges have also gone up for those who extract equity from their home through a cash-out refinance. Condo financing could also cost more.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took just 0.4 point to get it.
There's an inverse relationship between points and rates; the more points you pay, the lower the rate becomes. A point is 1% of the mortgage amount, charged as prepaid interest.more...
Wednesday
Prices to fall here less than other cities: forecast..
Prices of single-family homes in the Chicago-area will hit bottom in early 2010 after a three-year, 17.1% drop, according to a new forecast. That may not sound like good news, but it is considering how much more prices are projected to plunge in other big metropolitan areas. And prices here had already declined by 13.3% through the third quarter of 2008, meaning they don’t have much further to fall, according to the forecast by Moody’s Economy.com.
Still, it could be a while before prices here and nationwide rebound as the economy struggles to get back on its feet after the worst recession in a generation.
“We’re not really going to see a recovery before 2011 or 2012,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com.
The West Chester, Pa.-based research firm developed its price forecast by using projections for key economic indicators, like unemployment and foreclosures, to estimate the future direction of the S&P/Case-Shiller index, a widely cited home-price survey based on repeat sales of the same properties. The study looked at 369 U.S. metro areas, focusing only on single-family homes. more...
Still, it could be a while before prices here and nationwide rebound as the economy struggles to get back on its feet after the worst recession in a generation.
“We’re not really going to see a recovery before 2011 or 2012,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com.
The West Chester, Pa.-based research firm developed its price forecast by using projections for key economic indicators, like unemployment and foreclosures, to estimate the future direction of the S&P/Case-Shiller index, a widely cited home-price survey based on repeat sales of the same properties. The study looked at 369 U.S. metro areas, focusing only on single-family homes. more...
Sunday
Report: Some Home Prices to Bottom Out in 2009 ...
House prices in much of the U.S. will bottom out in this year's fourth quarter, Moody's Economy.com says in a new report.
In some of the hardest hit markets, however, prices won't reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.
"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.
It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration "that will help place a floor under the housing downturn." Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.
On average, house prices nationwide will hit bottom in this year's fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.
But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.more...
In some of the hardest hit markets, however, prices won't reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.
"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.
It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration "that will help place a floor under the housing downturn." Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.
On average, house prices nationwide will hit bottom in this year's fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.
But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.more...
Thursday
Chicago home prices down less than U.S. in Nov
Chicago home prices fell in November but not as much as prices nationwide, which a widely watched index shows dropped by the sharpest annual rate on record.
But the silver lining might be that more families can finally buy a home for the first time in years. Falling home prices coupled with lower interest rates have shaved hundreds of dollars off monthly mortgage payments, and that is luring buyers back into the market, new data this week showed.
The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday tumbled by a record 18.2 percent from November 2007, the largest decline since its inception in 2000.
Chicago prices fell 12.5 percent compared with November 2007 and 2.8 percent compared with October 2008, the S&P/Case-Shiller data show.
Both the 20- and 10-city indices have recorded year-over-year declines for 23 straight months. Prices are at levels not seen since February 2004.
But the numbers may not be as ugly at second glance, according to Patrick Newport, an economist with IHS Global Insight.
"If you adjust for inflation, they're not record declines," Newport said. "Home prices are still dropping at about a 20-percent clip, but it's not as bad as it's been in last six months."
But the recession and sweeping job losses don't bode well for a near-term turnaround in housing prices. Newport estimates prices will drop another 10 percent to 15 percent this year.
In fact, Americans' mood about the economy darkened further in January, sending a widely watched barometer of consumer sentiment to a new low, the Conference Board said Tuesday.
The National Association of Realtors said Monday that the median home price fell a record 15 percent last month to $175,400, down from $207,000 a year ago. That led to a surprising jump in sales from November's level.
With current interest rates and a 10 percent down payment, anyone who buys a median-priced home now would save $254 a month compared with the median price and interest rate of a year ago. more...
But the silver lining might be that more families can finally buy a home for the first time in years. Falling home prices coupled with lower interest rates have shaved hundreds of dollars off monthly mortgage payments, and that is luring buyers back into the market, new data this week showed.
The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday tumbled by a record 18.2 percent from November 2007, the largest decline since its inception in 2000.
Chicago prices fell 12.5 percent compared with November 2007 and 2.8 percent compared with October 2008, the S&P/Case-Shiller data show.
Both the 20- and 10-city indices have recorded year-over-year declines for 23 straight months. Prices are at levels not seen since February 2004.
But the numbers may not be as ugly at second glance, according to Patrick Newport, an economist with IHS Global Insight.
"If you adjust for inflation, they're not record declines," Newport said. "Home prices are still dropping at about a 20-percent clip, but it's not as bad as it's been in last six months."
But the recession and sweeping job losses don't bode well for a near-term turnaround in housing prices. Newport estimates prices will drop another 10 percent to 15 percent this year.
In fact, Americans' mood about the economy darkened further in January, sending a widely watched barometer of consumer sentiment to a new low, the Conference Board said Tuesday.
The National Association of Realtors said Monday that the median home price fell a record 15 percent last month to $175,400, down from $207,000 a year ago. That led to a surprising jump in sales from November's level.
With current interest rates and a 10 percent down payment, anyone who buys a median-priced home now would save $254 a month compared with the median price and interest rate of a year ago. more...
Sunday
10 Cities Boasting Mini Sales Booms ...
Some cities that were hardest hit by the real downturn are experiencing mini sales booms.Las Vegas real estate properties are down 28 percent in price, but sales of homes are up 15 percent.Motivated buyers accounted for 64 percent of Las Vegas sales in October, says Radar Logic, a derivatives firm. That’s the highest rate in the country."There's a pretty active housing market, it's simply at a lower-priced inventory," says Michael Feder, chief executive of Radar Logic. "And there are now bidding wars taking place over homes in foreclosure."Phoenix and San Diego are reporting similar experiences. "We're clearing out the bad news," says Kiva Patten, a director at Merrill Lynch specializing in housing derivatives."By the end of 2010 – that's where we're calling the bottom in the forward market. You're going to get a small price appreciation in 2011," says Patten. "It's not like the turn is 10 percent per year, it'll be something like 3 percent or 4 percent."Here are the cities where experts say it makes the most sense to buy now.
Las Vegas
Sacramento, Calif.
San Diego, Calif.
Los Angeles
Detroit
Phoenix
San Francisco
Washington, D.C.
San Jose
AtlantaSource: Forbes, Matt Woolsey (01/12/09)
Las Vegas
Sacramento, Calif.
San Diego, Calif.
Los Angeles
Detroit
Phoenix
San Francisco
Washington, D.C.
San Jose
AtlantaSource: Forbes, Matt Woolsey (01/12/09)
Saturday
Short Sale v. Foreclosure
Both short sales and bank-owned homes you are negotiating with lenders rather than sellers. In a short sale, the seller might be desperate to accept any offer to avoid foreclosure, but that doesn't matter if the primary and junior lien holders don't agree to it. With bank-owned properties, you will be dealing with the "real-estate owned" or REO department of the lender who took ownership of the house at the auction. In both cases, you should be prepared to be patient, since lenders are overwhelmed with distress sales these days and may take weeks to respond to your offer. According to a survey of real-estate agents conducted in November by Campbell Communications the average wait time to get an answer from a lender on a short sale is 8.1 weeks, up from 4.5 weeks in a survey conducted earlier in 2008.
While it isn't unusual to see both short sales and bank-owned properties listed at prices far below those offered by traditional sellers, don't expect them to sell for much more than 20% below asking price, says Fort Lauderdale, Fla., broker Scott Coloney, who has assembled a "foreclosure response team" of financial and legal partners to facilitate distress sales. In fact, properties in good condition and in desirable locations may even spark bidding wars...more
While it isn't unusual to see both short sales and bank-owned properties listed at prices far below those offered by traditional sellers, don't expect them to sell for much more than 20% below asking price, says Fort Lauderdale, Fla., broker Scott Coloney, who has assembled a "foreclosure response team" of financial and legal partners to facilitate distress sales. In fact, properties in good condition and in desirable locations may even spark bidding wars...more
Monday
With Rates This Low...
The Treasury Department is considering a plan to push down 30-year fixed-rate rates for home purchases to as low as 4.5%, in the hopes that it will stimulate sales, stop the freefall of prices, and allow homeowners to afford bigger loans.
But the proposed plan only helps those who buy homes, not those who want to refinance. Furthermore, you must have a steady job and good credit to qualify -- and you must not owe more on the house than it's worth.
Assuming the plan comes to fruition and you're in the market for a new home, should you take the bait?
Let's look at the pros and cons:
Pros: Unless a seller or builder bought down your rate, it's likely that you've never had the chance to buy a home with a 4.5% fixed-rate mortgage (see 30 Year FRM 1971-2008 graph at (mortgage-x.com). It's so tempting a rate that it may entice fence-sitters who have been waiting for home prices to hit bottom to jump anyway, since it (and other stimulus measures like it) are likely to evaporate once the economy starts to improve.
If the government succeeds in cutting rates to these levels, it will boost buying power considerably. If you bought a resale home at the current median price of $183,300 and took out a loan for 80% of the purchase price, you'd pay $879 a month at a 6% rate, but only $743 a month at 4.5%. Assuming that you don't try to buy more house than you can afford, presumably you will have more money to buy other goods, like a car or washing machine. Boosting the bottom line of retailers will help save jobs, which must happen before the economy can get back on track.
Cons: If, tempted by low rates, you take on a bigger loan than you can afford, at a time when jobs are being erased, you're not just putting your financial future at risk -- you're reaffirming the whole free-spending, McMansion-loving culture that created this mess in the first place.
Employers have cut 1.2 million jobs this year, sending the unemployment rate to a 14-year high of 6.5%, and economists expect that the rate will be higher when the Labor Department announces November's numbers on Friday.
The bottom line: If you can get a lower fixed-rate loan than you have now, either for a new purchase or a refinance, you'd be foolish not to take it. But there's no reason that you have to use the money for a bigger house, or a bigger loan. Downsize your expectations, your home and your debt, and you'll be better prepared if you yourself are downsized...more
But the proposed plan only helps those who buy homes, not those who want to refinance. Furthermore, you must have a steady job and good credit to qualify -- and you must not owe more on the house than it's worth.
Assuming the plan comes to fruition and you're in the market for a new home, should you take the bait?
Let's look at the pros and cons:
Pros: Unless a seller or builder bought down your rate, it's likely that you've never had the chance to buy a home with a 4.5% fixed-rate mortgage (see 30 Year FRM 1971-2008 graph at (mortgage-x.com). It's so tempting a rate that it may entice fence-sitters who have been waiting for home prices to hit bottom to jump anyway, since it (and other stimulus measures like it) are likely to evaporate once the economy starts to improve.
If the government succeeds in cutting rates to these levels, it will boost buying power considerably. If you bought a resale home at the current median price of $183,300 and took out a loan for 80% of the purchase price, you'd pay $879 a month at a 6% rate, but only $743 a month at 4.5%. Assuming that you don't try to buy more house than you can afford, presumably you will have more money to buy other goods, like a car or washing machine. Boosting the bottom line of retailers will help save jobs, which must happen before the economy can get back on track.
Cons: If, tempted by low rates, you take on a bigger loan than you can afford, at a time when jobs are being erased, you're not just putting your financial future at risk -- you're reaffirming the whole free-spending, McMansion-loving culture that created this mess in the first place.
Employers have cut 1.2 million jobs this year, sending the unemployment rate to a 14-year high of 6.5%, and economists expect that the rate will be higher when the Labor Department announces November's numbers on Friday.
The bottom line: If you can get a lower fixed-rate loan than you have now, either for a new purchase or a refinance, you'd be foolish not to take it. But there's no reason that you have to use the money for a bigger house, or a bigger loan. Downsize your expectations, your home and your debt, and you'll be better prepared if you yourself are downsized...more
Saturday
Investors Not Happy With 4-Loan Limit...
Some real estate investors are up in arms over a new Fannie Mae-Freddie Mac policy that limits to four the number of real estate loans that can be held by a single person.
The rule, which took effect Dec. 1, prohibits an investor from obtaining even a fifth mortgage no matter how much money he puts down or how much income documentation he provides. It offers no exceptions for assets or history of success as a real estate investor.
“The four-house rule is going to keep us in a recession longer,” said Tom Hutchens, an Atlanta-area investor. “It’s going to keep qualified buyers out of the market.”
Some investors are trying to work around the rule by partnering with other investors to either buy in cash or use their eligibility to borrow.
Source: The Atlanta Journal-Constitution, D.L. Bennett (12/05/08)
The rule, which took effect Dec. 1, prohibits an investor from obtaining even a fifth mortgage no matter how much money he puts down or how much income documentation he provides. It offers no exceptions for assets or history of success as a real estate investor.
“The four-house rule is going to keep us in a recession longer,” said Tom Hutchens, an Atlanta-area investor. “It’s going to keep qualified buyers out of the market.”
Some investors are trying to work around the rule by partnering with other investors to either buy in cash or use their eligibility to borrow.
Source: The Atlanta Journal-Constitution, D.L. Bennett (12/05/08)
Mortgage Rates Take a Big Dip
For the week ended Dec. 3, Freddie Mac reported the lowest interest on 30-year fixed home loans since late January.
The rate came in at an average of 5.53 percent, down from 5.97 percent the previous week and 5.96 percent a year ago; while 15-year fixed mortgages settled at 5.33 percent compared to 5.74 percent last week and 5.65 percent in the year-earlier period.
Borrowing costs for short-term loans also were lower, with one-year adjustable-rate mortgages dipping to 5.02 percent from 5.18 percent a week ago and 5.46 percent a year ago.
Five-year hybrid ARMs, meanwhile, fell to 5.77 percent from 5.86 percent last week and 5.75 percent during the same period of last year.
Source: Realty Times (12/05/08)
The rate came in at an average of 5.53 percent, down from 5.97 percent the previous week and 5.96 percent a year ago; while 15-year fixed mortgages settled at 5.33 percent compared to 5.74 percent last week and 5.65 percent in the year-earlier period.
Borrowing costs for short-term loans also were lower, with one-year adjustable-rate mortgages dipping to 5.02 percent from 5.18 percent a week ago and 5.46 percent a year ago.
Five-year hybrid ARMs, meanwhile, fell to 5.77 percent from 5.86 percent last week and 5.75 percent during the same period of last year.
Source: Realty Times (12/05/08)
Wednesday
Existing-Home Sales Down as Buyers Hesitate
Existing-home sales declined on the heels of a strong gain in September as uncertainty and economic concerns increased in October, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales—including single-family, townhomes, condominiums and co-ops—fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September. Sales and are 1.6 percent below the 5.06 million-unit level in October 2007
Single-family home sales declined 3.3 percent to a seasonally adjusted annual rate of 4.43 million in October from a level of 4.58 million in September, but are unchanged from a 4.43 million-unit pace in October 2007.
Condominium and co-op sales eased by 1.8 percent to a seasonally adjusted annual rate of 550,000 units in October from 560,000 in September, and are 12.0 percent below the 625,000-unit pace a year ago.
Lawrence Yun, NAR chief economist, said consumer hesitation is understandable.
“Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” he said. “We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”
Regional Data
Midwest. Existing-home sales in the Midwest fell 6.0 percent in October to a pace of 1.10 million and remain 9.1 percent below October 2007. The median price in the Midwest was $149,400, down 6.7 percent from a year ago.
—NAR
Existing-home sales—including single-family, townhomes, condominiums and co-ops—fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September. Sales and are 1.6 percent below the 5.06 million-unit level in October 2007
Single-family home sales declined 3.3 percent to a seasonally adjusted annual rate of 4.43 million in October from a level of 4.58 million in September, but are unchanged from a 4.43 million-unit pace in October 2007.
Condominium and co-op sales eased by 1.8 percent to a seasonally adjusted annual rate of 550,000 units in October from 560,000 in September, and are 12.0 percent below the 625,000-unit pace a year ago.
Lawrence Yun, NAR chief economist, said consumer hesitation is understandable.
“Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” he said. “We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”
Regional Data
Midwest. Existing-home sales in the Midwest fell 6.0 percent in October to a pace of 1.10 million and remain 9.1 percent below October 2007. The median price in the Midwest was $149,400, down 6.7 percent from a year ago.
—NAR
Sunday
Slow Mortgage Start ...
The federal government's latest effort to help financially distressed homeowners is getting off to a slow start.
Lenders filed just 42 applications to refinance troubled mortgages under the federal Hope for Homeowners program in the two weeks after the program's Oct. 1 launch, according to the Federal Housing Administration. Some estimates have suggested that it could eventually help as many as 400,000 homeowners.
The program allows mortgage companies to refinance delinquent borrowers into affordable, government-backed loans, provided the mortgage company writes down a portion of the loan balance. To qualify for a new loan, homeowners must agree to share future appreciation with the federal government. In addition, the new loan amount -- including a 3% upfront mortgage insurance premium -- can't exceed 90% of the current appraised value, which is likely to mean a significant reduction in the loan balance....more
Lenders filed just 42 applications to refinance troubled mortgages under the federal Hope for Homeowners program in the two weeks after the program's Oct. 1 launch, according to the Federal Housing Administration. Some estimates have suggested that it could eventually help as many as 400,000 homeowners.
The program allows mortgage companies to refinance delinquent borrowers into affordable, government-backed loans, provided the mortgage company writes down a portion of the loan balance. To qualify for a new loan, homeowners must agree to share future appreciation with the federal government. In addition, the new loan amount -- including a 3% upfront mortgage insurance premium -- can't exceed 90% of the current appraised value, which is likely to mean a significant reduction in the loan balance....more
Local real estate outlook...
The Chicago real estate market has moved up in an annual popularity contest, but it still gets a lukewarm reception from investors.
Chicago ranks 10th for commercial and multifamily residential investment in the 2009 "Emerging Trends in Real Estate" survey released last month by the Urban Land Institute and PricewaterhouseCoopers LLP. That's up from 12th in the 2008 survey.
Critics cite a glut in office space and coInvestors are concerned about Chicago's overbuilt condo market, which is having a negative spillover effect on apartments as more condo investors, unable to sell their units, rent them out instead. About 28% said they would buy into the local apartment market.ndominiums as big negatives for the market, while fans like the transportation and infrastructure and the buzz surrounding the city's 2016 Olympics bid.
Respondents gave Chicago a rating of 5.1 on a 9-point scale, down from 5.5 in the 2008 survey and the lowest score since 1994. With the economy heading into a recession and the credit markets locked up, investors gave most big markets lower ratings than they did in the last survey.
Chicago's "not doing great, but it's doing much better than other Midwestern markets," says Jonathan Miller, principal author of the "Emerging Trends" report....more
Crains Chicago Business
Chicago ranks 10th for commercial and multifamily residential investment in the 2009 "Emerging Trends in Real Estate" survey released last month by the Urban Land Institute and PricewaterhouseCoopers LLP. That's up from 12th in the 2008 survey.
Critics cite a glut in office space and coInvestors are concerned about Chicago's overbuilt condo market, which is having a negative spillover effect on apartments as more condo investors, unable to sell their units, rent them out instead. About 28% said they would buy into the local apartment market.ndominiums as big negatives for the market, while fans like the transportation and infrastructure and the buzz surrounding the city's 2016 Olympics bid.
Respondents gave Chicago a rating of 5.1 on a 9-point scale, down from 5.5 in the 2008 survey and the lowest score since 1994. With the economy heading into a recession and the credit markets locked up, investors gave most big markets lower ratings than they did in the last survey.
Chicago's "not doing great, but it's doing much better than other Midwestern markets," says Jonathan Miller, principal author of the "Emerging Trends" report....more
Crains Chicago Business
Saturday
2009 Economic Outlook
The U.S. economy has entered a recession and will contract for the next three quarters, and the recovery, from the second half of 2009, will be tepid. The unemployment rate will peak at 6.7 percent by midyear next year before steadily heading down. However, existing home sales will be rising despite challenging economic times.
The most important factor driving home sales is affordability. With home prices falling in many parts of the country and mortgage rates still near historic lows, affordability conditions have markedly improved. Even with rising unemployment, nearly 93 percent of households will have jobs. This 93 percent of working households (rather than 95 percent during good economic times) respond to incentives. Added measures, from the first-time homebuyer tax credit to a larger number of mortgage loans qualifying to be purchased by Fannie and Freddie and through the FHA program, will further bring homebuyers to the marketplace.
Back in the previous recession, the economy shed nearly 2 million net jobs from 2001 to 2003. All the while, existing home sales rose from 5.2 million to 6.2 million just as jobs were being cut. New home sales likewise rose from 900,000 to 1.1 million. Mortgage rates were falling and housing affordability was rising during these years. The 2 million job cuts were painful, but the economy still had 130 million job hOn the economic front, recession in itself is not a positive for the housing market because there are fewer job holders. But if a recession is accompanied by rising housing affordability, then home sales can trend higher - as is now. A prolonged deep recession, however - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to home buying.
An early indication that buyers are responding to incentives was the solid jump in the pending home sales in August to the highest level in over a year. The biggest increases were in areas with rising affordability from sharp reductions in home prices in California, Nevada, and Florida. The expansion will broaden to other markets where home prices have markedly fallen, including Rhode Island, Virginia, and Minnesota. Existing home sales, therefore, will likely breakout from the narrow trading range of 4.8 to 5 million of the past 12 months to 5.2 million by the year end and to 5.4 million in 2009. Even with the improvement, the next year's sales level will still be well below the 7.1 million peak sales achieved with rampant speculative buying in 2005.
The Bottom Line
Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move to a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and subprime mortgage defaults have caused financial markets to freeze and have pushed the economy into a recession. However, recent rising home sales and some sustained momentum will bring the economy back into the fold. Rising home sales will also thin out the housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have passed bottom. Simply, the economy will not recover without a housing market recovery.
Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. With it, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.
Lawrence Yun, Chief Economist
The most important factor driving home sales is affordability. With home prices falling in many parts of the country and mortgage rates still near historic lows, affordability conditions have markedly improved. Even with rising unemployment, nearly 93 percent of households will have jobs. This 93 percent of working households (rather than 95 percent during good economic times) respond to incentives. Added measures, from the first-time homebuyer tax credit to a larger number of mortgage loans qualifying to be purchased by Fannie and Freddie and through the FHA program, will further bring homebuyers to the marketplace.
Back in the previous recession, the economy shed nearly 2 million net jobs from 2001 to 2003. All the while, existing home sales rose from 5.2 million to 6.2 million just as jobs were being cut. New home sales likewise rose from 900,000 to 1.1 million. Mortgage rates were falling and housing affordability was rising during these years. The 2 million job cuts were painful, but the economy still had 130 million job hOn the economic front, recession in itself is not a positive for the housing market because there are fewer job holders. But if a recession is accompanied by rising housing affordability, then home sales can trend higher - as is now. A prolonged deep recession, however - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to home buying.
An early indication that buyers are responding to incentives was the solid jump in the pending home sales in August to the highest level in over a year. The biggest increases were in areas with rising affordability from sharp reductions in home prices in California, Nevada, and Florida. The expansion will broaden to other markets where home prices have markedly fallen, including Rhode Island, Virginia, and Minnesota. Existing home sales, therefore, will likely breakout from the narrow trading range of 4.8 to 5 million of the past 12 months to 5.2 million by the year end and to 5.4 million in 2009. Even with the improvement, the next year's sales level will still be well below the 7.1 million peak sales achieved with rampant speculative buying in 2005.
The Bottom Line
Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move to a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and subprime mortgage defaults have caused financial markets to freeze and have pushed the economy into a recession. However, recent rising home sales and some sustained momentum will bring the economy back into the fold. Rising home sales will also thin out the housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have passed bottom. Simply, the economy will not recover without a housing market recovery.
Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. With it, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.
Lawrence Yun, Chief Economist
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