In a new study, "Housing in America: The Next Decade," Urban Land Institute senior resident fellow John McIlwain says the housing market will not return to what it was prior to the downturn but rather that a "new normal" will take its place.
He expects another 10 percent decrease in residential prices this year, a jump in the number of borrowers abandoning "underwater" mortgages, and a change in consumer perceptions of homeownership.
"The emotional impact on the children and parents and disillusion about the 'joys' of homeownership will be intense; new attitudes to homeownership and the American dream will emerge," McIlwain writes.
He expects home price appreciation to hover around 1 percent or 2 percent per year after the market recovers and the national homeownership rate to drop from 67 percent currently to 62 percent by 2020.
In the coming decade, McIlwain expects the following:
- Older baby boomers to move to urban, mixed-use, mixed-age centers near family instead of retiring to Sun Belt communities;
- Immigrants to snub the suburbs in favor of more close-knit communities;
- Younger boomers to face the challenges of lost home equity and a smaller pool of move-up buyers;
- Generation Y to rent for long periods by choice or because they are paying off student loans or have stagnant incomes.
Source: Inman News (02/01/10)
Daily Real Estate News | February 3, 2010 |
An estimated 4.5 million home owners owe 75 percent more than their homes are worth. That number is likely to peak at 5.1 million in June, affecting 10 percent of home owners and making them increasingly likely to just walk away.
''We're now at the point of maximum vulnerability,'' says Sam Khater, a senior economist with First American CoreLogic, the firm that conducted the recent research. ''People's emotional attachment to their property is melting into the air.''
Consultants at Oliver Wyman calculated that 17 percent of owners defaulting in 2008 –about 588,000– chose to default even though they could pay.
First American estimates that it would cost about $745 billion – about the same as the original 2008 bank bailout – to restore all underwater borrowers to the break-even point.
Doing so would be seen as highly unfair by many taxpayers, says Michael S. Barr, assistant Treasury secretary for financial institutions, but doing nothing would be another blow to a fragile economy.
Source: The New York Times, David Streitfeld (02/022010)
Daily Real Estate News | January 25, 2010 |
Existing-home sales fell as expected in December after first-time buyers rushed to complete deals during the months leading up to the original November deadline for the tax credit. However, prices rose from December 2008 and annual sales improved in 2009, according to the National Association of REALTORS®.
Existing-home sales—including single-family, townhomes, condominiums and co-ops—fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million units in December from 6.54 million in November, but remain 15 percent above the 4.74 million-unit level in December 2008.
There were approximately 5,156,000 existing-home sales in 2009, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008. It was the first annual sales gain since 2005.
Tax Credit Creates Swing in Market
Lawrence Yun, NAR chief economist, says there were no surprises in the data.
“It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,” he said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010."
However, Yun says, the job market remains a concern and could dampen the housing recovery. "Job creation is key to a continued recovery in the second half of the year,” he says.
An NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.
The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008.
“The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun says. It was the first year-over-year gain in median price since August 2007.
Falling Inventories
NAR President Vicki Cox Golder said market conditions are challenging in some areas.
“There’s a shortage of lower-priced homes for sale in much of the country, resulting in multiple bids in some areas,” she says. “Raw unsold inventory has been trending down. As the market heats up again this spring, buyers may need to be prepared to move quickly on a particular home."
Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply at the current sales pace. That is an increase from a 6.5-month supply in November.
Raw unsold inventory is 11.1 percent below a year ago, is at the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008.
Distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.
For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008. Distressed homes accounted for 36 percent of total sales last year.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.93 percent in December from 4.88 percent in November; the rate was 5.29 percent in December 2008.
Single-Family Home, Condo Sales Dip
Single-family home sales fell 16.8 percent to a seasonally adjusted annual rate of 4.79 million in December from a pace of 5.76 million in November. Sales are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5 percent to 4,566,000.
The median existing single-family home price was $177,500 in December, which is 1.4 percent above a year ago. For all last year, the median price for a single-family home was $173,200, down 11.9 percent from 2008.
Meanwhile, existing condominium and co-op sales fell 15.4 percent to a seasonally adjusted annual rate of 660,000 in December from 780,000 in November. Sales are 34.7 percent higher than the 490,000-unit pace a year ago. For all of 2009, condo sales rose 4.8 percent to 590,000 units.
The median existing condo price was $183,700 in December, up 1 percent from December 2008. For all of last year, the median condo price was $176,100, which is 16.1 percent below 2008.
Regional Breakdown
Here are existing-home sales figures by region:
- Northeast: sales dropped 19.5 percent to an annual level of 910,000 in December but are 21.3 percent above a year ago. Median price: $241,700, up 3.2 percent from December 2008.
- Midwest: sales fell 25.8 percent in December to a level of 1.15 million but are 8.5 percent higher than December 2008. Median price: $143,200, which is 1.8 percent above a year ago.
- South: sales dropped 16.3 percent to an annual pace of 2.01 million in December but are 15.5 percent above December 2008. Median price: $152,000, down 1 percent from a year ago.
- West: sales declined 4.8 percent to an annual rate of 1.38 million in December but are 15 percent higher than a year ago. Median price: $236,000, up 2.7 percent from December 2008.
— NAR
The homebuyer tax credit is not as simple or straightforward as you might think. Here are some nuances that will affect homebuyers who plan to use it.
- To qualify for the move-up tax credit, a home owner must have occupied the same principal residence for five of the last eight years consecutively.
- Buyers can elect to claim the credit on either their 2009 or their 2010 tax return, whichever is best for them.
- Buyers who claim the credit in 2009 can’t file electronically because the Internal Revenue Service hasn’t put the required forms on line. The wait for a refund is three or four months.
- The home can be a mobile home or travel trailer that is fixed to land owned or leased by the home owner. A mobile home or travel trailer that is actually mobile doesn’t qualify.
- The home can’t be purchased from a close relative, including a parent, spouse, child, grandparent or grandchild.
- A buyer who earns no taxable income or doesn’t owe any federal income tax can qualify for the tax credit and file a tax return just to claim it.
Source: Bankrate.com, Marcie Geffner (01/21/2010)
The Federal Housing Administration served subpoenas Tuesday on 15 mortgage companies with high default rates for FHA-backed loans.
The agency has previously taken action against several lenders with questionable records, including Lend America and Taylor, Bean & Whitaker Mortgage Co.
Department of Housing and Urban Development's Inspector General, Kenneth Donohue said he plans to determine why these 15 lenders had so many loans that defaulted shortly after they closed.
Troubled lenders include: First Tennessee Bank N.A, of Memphis, Tenn.; Alethese LLC, of Lakeway, Texas; Security Atlantic Mortgage Co., of Edison, N.J.; Pine State Mortgage Corp., of Atlanta; Birmingham Bancorp Mortgage Corp., of West Bloomfield, Mich.; Alacrity Financial Services LLC, of Southlake, Texas; Assurity Financial Services LLC, of Englewood, Colo.; D and R Mortgage Corp., of Farmington, Mich.; Webster Bank, of Cheshire, Conn.; Mac-Clair Mortgage Corp., of Flint, Mich.; Americare Investment Group Inc., of Arlington, Texas; 1st Advantage Mortgage, of Lombard, Ill.; American Sterling Bank, of Independence, Mo.; Sterling National Mortgage Co., Inc., of Great Neck, N.Y.; and Dell Franklin Financial LLC, of Columbia, Md.
John Courson, CEO of the Mortgage Bankers Association, applauded the crackdown. "We're concerned about the viability of the program and we want to make sure that the bad apples and the bad players, frankly, are eliminated," he said.
Source: The Associated Press, Alan Zibel (01/12/2010)
As HousingWire first reported, the US Treasury Department will launch the Home Affordable Foreclosure Alternatives Program (HAFA) in 2010.
HAFA will complement the Home Affordable Modification Program (HAMP) by providing financial incentives to servicers, borrowers and investors to go forward with short sales or a deed-in-lieu, according to a Treasury announcement late Monday (available to download here).
In a short sale, the bank sells the property for a price short of the balance owed on the property’s loan.
Under HAMP, the Treasury allocates capped incentives to servicers for the modification of loans on the verge of foreclosure. Borrowers must be HAMP-eligible to qualify for HAFA and must be considered for the new program within 30 days of failing to qualify for or complete a HAMP trial.
Borrowers must be able to provide the buyer of the home with a clear title. Any subordinate liens must be paid off in full. The borrower can also negotiate with the holder to release the liens before the closing date.
HAFA allows the borrower to receive pre-approved short sale terms before the property is listed and frees them from future liability for the debt. Also, servicers utilizing the program are prohibited from requiring a reduction in the real estate commission agreed to in the listing agreement.
The borrower also receives a $1,500 incentive for relocation after the transaction. The servicer receives a $1,000 incentive to cover administration and processing costs, and investors will be paid a maximum of $1,000 for allowing up to $3,000 in short-sale proceeds to be paid out to subordinate lien holders. In total, each transaction under HAFA will cost the Treasury up to $3,500 of incentive payments.
HAFA will officially launch on April 5, 2010, but servicers can implement the program prior to that date. However, in order to participate in the program, the servicer must have signed a HAMP servicer participation agreement by Dec. 31, 2009.
HousingWire first reported on HAFA’s forthcoming launch in October, when the chief of the Homeowner Preservation Office at the Treasury, Laurie Maggiano, released information on HAFA when she spoke at the Mortgage Bankers Association’s annual convention in San Diego.
Two weeks later, Herb Allison testified before the Congressional Oversight Panel (COP), which reviews actions taken by the Treasury, and indicated guidelines were being developed.
Write to Jon Prior.
We all saw the highly debated government “Cash for Clunkers” program come and go in what seemed like the blink of an eye. While the $8,000 tax credit has been being promoted for some time now, time is starting to run out to take advantage of this opportunity to get a huge tax break on buying a home in Boise.
To qualify, you must be purchasing the home as your primary residence, and you must not have owned a home within the previous three years. So, while it’s not specifically limited to first-time buyers, it’s also not available to those who are simply upgrading from their current home to a newer purchase.
The $8,000 tax credit applies to buyers who purchase a home between January 1st and November 30th. When you factor in the time it takes to find the right property, negotiate an accepted offer, and schedule closing (typically 30 days out), time is really running short.
If you’ve been renting for awhile and have been entertaining the idea of becoming a Boise home owner, you should absolutely act now. Fall is typically a slower season for real estate, which could make the market even more generous to buyers.
Better yet, there are special programs for those who qualify, offered through IHA, that could enable you to take out a second loan – basically an advance on your tax credit – to make your down payment. This Tax Credit 2nd Loan program makes buying a home a real possibility for many first time buyers who otherwise don’t have the cash required for a down payment.
Don’t let this opportunity pass you by. I’d be happy to show you several fantastic homes in Boise real estate, and as the leading Boise foreclosure expert, I’ll show you how to get a great deal on an already great deal!
According to the latest reports by RealtyTrac, a record 360,149 homeowners received a foreclosure notice in July – a whopping 7% increase over figures from June. Despite recent good news about an increase in existing home sales and stabilizing home prices, the foreclosure crisis itself doesn’t seem to be easing up.
The government – both Federal and State – continue their efforts to create alternative solutions for homeowners in distress. Just two weeks ago, the Obama Administration released statistics about the number of homeowners who have been offered assistance under a number of the programs available to help prevent foreclosure, in an effort to put pressure on banks and mortgage lenders for not doing enough to help homeowners in trouble. Overall, only 15% of eligible homeowners have received assistance.
The bottom line is, as the number of foreclosure filings continues to replace some or, in some cases, nearly all of, the number of new and existing homes sold each month, the housing market will continue to struggle, and prices, while the decline may lessen, won’t rebound.
In Idaho real estate, there were 2,491 new foreclosure filings in the month of July, and only 83 foreclosure properties sold. 1,074 of those were in Ada County alone. The number of Idaho foreclosures on the market is increasing substantially. The average sales price for an Idaho foreclosure was only $184,527.
The number of sales in Ada County decreased in July as well. In June, there were 448 properties sold compared to only 282 in July. Another interesting fact – the average sales price was down a bit, too: from $198,625 in June to $192,619 in July, although the average sales price per square foot remained the same at $102.
You can even beat the incredible $102 per square foot average sales price by taking advantage of the many foreclosure properties in the current Idaho real estate market. Idaho home prices are very, very reasonable right now, so call your local Boise foreclosure expert to make an appointment to view one of the many fine homes on the market today.
WASHINGTON – Existing-home sales in the second quarter showed healthy gains from the first quarter in the vast majority of states, and price declines have increased affordability in most metro areas, according to the latest survey by the National Association of REALTORS®.
Total state existing-home sales, including single-family and condo properties, rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million units in the second quarter from 4.58 million units in the first quarter, but remain 2.9 percent below the 4.90 million-unit pace in the second quarter of 2008.
Thirty-nine states experienced sales increases from the first quarter, and nine states were higher than a year ago; the District of Columbia showed both quarterly and annual rises.
Gain Appears to Be Sustainable
“With low interest rates, lower home prices, and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” said Lawrence Yun, NAR chief economist. “There have been sustained sales gains in Arizona, Nevada, and Florida, as well as diverse areas such as Maryland, the District of Columbia, and Nebraska. More recently, we’ve seen strong double-digit gains in Idaho, Utah, New Mexico, Washington, Hawaii, New York, New Jersey, Maine, Vermont, Wisconsin, Indiana, South Dakota, and Montana.”
Yun also explained housing’s impact on the overall economy. “Given the need for related goods and services, each home sale pumps an additional $63,000 into the economy – that’s how the housing engine traditionally pulls us out of recession. In addition, sales are drawing down inventory and that will help stabilize home values, which in turn will lessen foreclosure pressure and boost credit availability for other sectors of the economy.”
Distressed Sales
During the second quarter, 129 out of 155 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the second quarter of 2008, while 26 areas had price gains.
Distressed sales – foreclosures and short sales – accounted for 36 percent of transactions in the second quarter, which continued to weigh down median home prices because they typically are sold at a 15 to 20 percent discount; first-time buyers accounted for one-third of transactions. The national median existing single-family price was $174,100, which is 15.6 percent below the second quarter of 2008.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage declined to a record low 5.03 percent in the second quarter from 5.06 percent in the first quarter; the rate was 6.09 percent in the second quarter of 2008.
NAR President Charles McMillan said there are unique opportunities in the current market. “Housing affordability is hovering near record highs and there’s a wide selection of homes, but first-time buyers need to move quickly to take advantage of the $8,000 tax credit because they have to finalize the transaction by November 30,” he said. “Various state, local, and nonprofit programs target first-time buyers, and a REALTOR® can help you identify the programs and financing options that are currently available in your area.”
The largest sales gain between the first and second quarters were in:
- Idaho, up 67.5 percent
- Hawaii, up 24.2 percent
- New York, up 22.3 percent
- Wisconsin, up 21.7 percent
- Nebraska, up 20.3 percent
Twelve other states experienced double-digit sales increases from the first quarter. Year over year, California, Minnesota, and Michigan are showing double-digit gains from the second quarter of 2008 but are off from the first quarter of this year.
The largest single-family home price increase in the second quarter was in the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $113,200 rose 30.6 percent from a year ago. Next was the Cumberland area of Maryland and West Virginia at $123,500, up 21.7 percent from the second quarter of 2008, followed by Elmira, N.Y., where the median price increased 11.3 percent to $85,000.
Price Gains and Declines
“The sharpest price declines continue to be concentrated in metros with high levels of foreclosures, including areas in California, Florida, Arizona, and Nevada, where distressed homes comprise many of the transactions,” Yun said.
Median second-quarter metro area single-family home prices ranged from a very affordable $55,700 in the Saginaw-Saginaw Township North area of Michigan to $569,500 in Honolulu. The second most expensive area in the second quarter was the San Jose-Sunnyvale-Santa Clara area of California, at $500,000, followed by San Francisco-Oakland-Fremont at $472,900.
Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $71,500, and Lansing-East Lansing, Mich., at $81,200.
“Recently sold homes are concentrated in lower price ranges. The median price may not be representative of overall values in a given area because many middle-priced homes are not on the market,” Yun clarified.
Condo Market
In the condo sector, metro-area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $176,900 in the second quarter, down 19.8 percent from the second quarter of 2008. Four metros showed annual increases in the median condo price and 53 areas had declines.
The metros with condo price increases were:
- Virginia Beach, Va.
- Wichita, Kan.
- Dallas
- Colorado Springs, Colo.
Metro-area median existing-condo prices in the second quarter ranged from $66,400 in Las Vegas-Paradise, Nev., to $405,700 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $318,400, followed by Boston-Cambridge-Quincy at $277,400.
Other affordable condo markets include the Sacramento-Arden-Arcade-Roseville area of California at $101,200 in the second quarter, and Tucson, Ariz., at $102,500.
Northeast
Regionally, existing-home sales in the Northeast jumped 15.0 percent in the second quarter to a pace of 797,000 units but are 8.4 percent below a year ago.
The median existing single-family home price in the Northeast declined 9.7 percent to $246,000 in the second quarter from the same quarter in 2008. After Elmira, N.Y., the best gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $115,400 rose 6.7 percent from the second quarter of 2008, followed by Syracuse, N.Y., at $124,600, up 0.8 percent.
Midwest
In the Midwest, existing-home sales rose 3.2 percent in the second quarter to a pace of 1.06 million but are 5.3 percent below a year ago.
The median existing single-family home price in the Midwest was down 8.6 percent to $146,800 in the second quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Bismarck, N.D., where the median price of $157,800 was 3.5 percent higher than a year ago, followed by Springfield, Ill., at $116,200, also up 3.5 percent, and Topeka, Kan., at $113,300, up 2.7 percent.
South
In the South, existing-home sales increased 3.9 percent in the second quarter to an annual rate of 1.76 million but are 7.2 percent lower than the second quarter of 2008.
The median existing single-family home price in the South was $158,600 in the second quarter, down 10.3 percent from a year earlier. After the Cumberland region of Maryland and West Virginia, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with an 11.0 percent gain to $138,600, followed by, Jackson, Miss., at $140,100, up 8.2 percent, and Shreveport-Bossier City, La., at $146,800, up 3.0 percent.
West
Existing-home sales in the West declined 2.3 percent in the second quarter to an annual rate of 1.13 million but are 11.8 percent above a year ago.
The median existing single-family home price in the West was $212,600 in the second quarter, which is 26.6 percent below the second quarter of 2008. The best metro price performances in the West were in Kennewick-Richland-Pasco area of Washington, where the median price of $163,900 rose 0.3 percent from a year earlier, and Yakima, Wash., at $162,800, also up 0.3 percent. No other areas covered in the region reported increases.
Source: NAR
The new incentives offered as part of the Making Home Affordable Program entice lenders to accept proceeds from a short sale as full satisfaction of a loan, and offer $1,500 to homeowners to help with relocation costs. Idaho short sales are already a more affordable option for lenders in comparison to an Idaho foreclosure, but this program is designed to enable even more homeowners to avoid Idaho foreclosure status.
This program also includes a streamlined process designed to make the Idaho short sales process easier. So why do you need a short sale expert? Idaho short sales, no matter how streamlined, are complex. There are more Idaho short sales on the market than ever, and lenders don’t even have adequately trained staff to handle the short sale process.
Negotiations are complicated further if another lender holds a lien on the property. The Foreclosure Alternatives Program is offering an additional $1,000 to help satisfy the liens held on a short sale property by another lender. In order to qualify for this program, homeowners must qualify for participation in the Making Home Affordable Program, and they can consider a short sale if they do not qualify for a loan modification or have had a failed loan modification.
An agent with experience with Idaho short sales can make the process much easier for both the borrower and the lender, offering expertise for making the process go much more smoothly. Experience in Idaho short sales means an agent has a good idea of what many Idaho lenders will be willing to accept and what won’t fly, saving a borrower what could potentially be months of harrowing negotiations.
This program is also going to attempt to create uniform short sale documents and processes, which should help to simplify the process further for agents. An agent with prior experience in short sales, however, has likely already been through the process a number of times, making the new uniform process even more understandable for a borrower.
Image Copyright markensen on Flickr Creative Commons.
Link: http://www.flickr.com/photos/photomarkensen/2455465401/
Daily Real Estate News | July 20, 2009 |
Don’t forget to remind potential buyers of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away.
For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for Business Week.
He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.
He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.
Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.
Source: BusinessWeek.com, Marc Roth (11/17/2009)
The Obama Administration has implemented an incentive that will make short sales more attractive to lenders, meaning that the number of homes available for short sale may increase as banks become more willing to enable homeowners to get out from under a mortgage through a short sale.
The U.S. Treasury will provide up to $1,000 to lenders who agree to accept proceeds from a short sale as full repayment, even though the proceeds will be less than the amount owed on the mortgage. This incentive is designed to help homeowners avoid foreclosure, as part of the Making Home Affordable program implemented in February of this year.
A short sale is a situation in which the lender closes out a mortgage for whatever sales price is able to be obtained on a home. In the past, banks could be difficult to deal with in short sale situations, but this new incentive could make lenders more pliable in the negotiation process.
If you’re looking at short sales in the Boise real estate market, it’s best to work with an expert in the short sale and foreclosure industry. I’ve been helping people find affordable homes in Boise for many years, and I know all the ins and outs of dealing with banks and ensuring a good deal.
The Boise real estate market has many opportunities for short sales, and these new incentives will enable homeowners and banks to benefit. This means you could have a chance to buy a property at fair market value, rather than an inflated price from a homeowner who’s desperately trying to get a mortgage payoff, despite the value of the home having decreased.
Due to current economic conditions, the number of short sale properties on the market is rising. The increasing number of short sales on the market presents challenges for REALTORS®. Below you'll find more information on: short sales and their challenges, the government's efforts to address these challenges, and tools to help you navigate the short sale process.
Coming soon: In July 2009, the Obama Administration will release short sales guidelines and standard forms through the Making Home Affordable Short Sales Program.
Latest news: Fannie Mae Confirms Short Sales Commissions Policy and Establishes Appeals Process.
What is a short sale?
A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.
Why is the number of short sales rising?
Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.
A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.
What challenges have short sales presented for REALTORS®?
The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:
1. Limited experience
Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders' lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
2. Absence of a uniform process and application
Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions.
3. Multiple lenders
When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.
As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.
What is being done to address or eliminate these challenges?
On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program. Among other things, the new program:
· Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
· Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
· Requires the short sale agreement to specify reasonable and customary real estate commissions and costs to be deducted from the sales prices. (The servicer must agree not to negotiate a lower commission after receiving an offer.)
· Will provide standardized documents, including short-sale agreements and offer acceptance letters.
The Foreclosure Alternatives Program is anticipated to launch in late July.
For more information on all the short-sales provisions included in the program, see NAR's Short Sales Incentive Summary and the government's Foreclosure Alternative Program fact sheet (PDF 44K).
We’ve all heard the recent rumblings about the housing market beginning to stabilize. Foreclosures in May were up 18% from last year, and believe it or not, some are saying foreclosures are contributing to the stabilization.
Specifically, foreclosures are contributing to lower housing prices, and we’re now seeing an increased demand in home sales. Home resales increased by 2.4% in May – median sales prices, on the other hand, decreased 17% in May. The market provides an outstanding opportunity to purchase a new home at a lower price, and with the Fed working to keep rates low, it’s an opportunity not to be missed.
There are an unprecedented number of homes in foreclosure, and the Idaho real estate market is definitely realizing this. Some are noting a “foreclosure rush,” referring to investors and others in the market for a new home jumping on the chance to buy a great home at a discount. As a result, we’re seeing inventories drop, but median Idaho home prices are still being pushed downward.
The number of Idaho foreclosures, in particular, is still quite high, so even though inventories are starting to slump slightly, there are a number of incredible deals to be had. The bad news is more foreclosures can be driving the median home value down, but that’s good news for anyone looking to make a move. Idaho housing prices will eventually stabilize, so it’s wise to buy a home at a discount when you can, particularly if you plan to remain in the home for ten or more years.
As long as foreclosures continue to rise, we can expect to see housing demand increase as well. But as the number of people jumping in on the foreclosure rush increases, we could see decreasing inventories and may start to see median Idaho real estate prices rise as well. So many variables make a prediction difficult, but one thing is clear: making an Idaho real estate investment is a wise move!
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Link: http://www.sxc.hu/profile/tomreason
Reports from the first quarter of 2009 indicated that the Boise-Nampa area had twice the foreclosure rate of the national average. An estimated 1 in 85 homes in the Treasure Valley were the subject of a foreclosure filing during the first quarter of this year. With the latest economic reports indicating more positive change, and the stimulus efforts initiated by the Obama administration, it will be interesting to see how Idaho’s housing market has been affected in second quarter reports.
Since the second quarter just ended at the end of June, we’ll be waiting a few weeks for the most accurate reports of the status of Idaho real estate. Approximately 3,000 foreclosures were filed in the Treasure Valley area between the months of January and March of 2009.
In comparison to the rest of the nation, the Boise area is 27th on the list of the nation’s highest foreclosure rates. The number one spot was held by Las Vegas, Nevada, in the first quarter, with a foreclosure rate seven times the national average. In fact, every city on the list above Boise is from one of four states: Florida, California, Arizona, and Nevada.
Whether the foreclosures can be blamed solely on the economy or on simple overzealous optimism on the part of buyers, the foreclosure rates present an opportunity for Idaho real estate investors and anyone looking to purchase a home in the Boise area. The Boise real estate market is filled with great deals on fantastic homes. In the current market conditions, you’ll find beautiful homes in foreclosure. There are gems to be found as opposed to the stereotypical foreclosed home in disrepair.
If you’re looking to take advantage of the current housing conditions to find your Boise dream home, contact me today. I’m an expert in Boise foreclosures and short sales and would be thrilled to help you find the home of your dreams – at an incredible price!
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