Good news for you first time home buyers!
Senators agreed Wednesday to extend a popular tax credit for first-time home buyers and to offer a smaller credit to some repeat buyers. The tax credit provides up to $8,000 to first-time home buyers but is set to expire at the end of November. Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid (D-Nev.). The tax credits would be available to buyers who sign purchase agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers. Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash. Senators in both major parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as today, but lawmakers were still haggling over several unrelated amendments Wednesday evening. Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own. Republicans were demanding the opportunity to offer amendments to restrict federal aid to the community activist group ACORN and to require that people receiving unemployment benefits be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires.The Senate's majority Democrats have blocked the proposed amendments. If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have said they support extending the tax credit for home buyers. Lawmakers didn't release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion. About 1.4 million home buyers have qualified for the existing credit through August. The National Assn. of Realtors estimates that 350,000 of them would not otherwise have bought their homes. The government said Wednesday that new-home sales fell 3.6% last month. Some builders blamed the drop, the first since March, on uncertainty about the tax credit. It takes 45 days to 60 days to close the deal on a house, making it unlikely that a sale made today would be consummated by the end of November.
Friday, October 30, 2009
Wednesday, October 28, 2009
California Association of Realtors releases September sales and price report
Home sales increased 2.1 percent in September in California compared with the same period a year ago, while the median price of an existing home declined 7.3 percent, C.A.R. reported yesterday. The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3 percent decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1 percent compared with August’s $292,960 median price.
“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”
“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”
Wednesday, October 21, 2009
A Call to Action
C.A.R. and NAR are asking that members contact their congressional representatives and urge them to extend the federal tax credit for first-time home buyers, set to expire next month on Nov. 30.
A recent survey conducted by C.A.R. to gauge the role the federal tax credit played in the purchase decision of first-time buyers revealed that nearly 40 percent of first-time home buyers reported they would not have purchased a home without the tax credit. Nearly 70 percent of recent first-time home buyers surveyed said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.
A recent survey conducted by C.A.R. to gauge the role the federal tax credit played in the purchase decision of first-time buyers revealed that nearly 40 percent of first-time home buyers reported they would not have purchased a home without the tax credit. Nearly 70 percent of recent first-time home buyers surveyed said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.
Wednesday, October 14, 2009
In case you had any questions: How Escrow Works
If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.
How it works
When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.
When it's used
When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.
Its purpose
The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.
How you benefit
Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.
Escrow payments
Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.
When escrow may be waived
In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.
If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.
How it works
When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.
When it's used
When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.
Its purpose
The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.
How you benefit
Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.
Escrow payments
Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.
When escrow may be waived
In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.
Tuesday, October 6, 2009
Orange County Housing Report: The Inventory Drops Below 8,000
Great article.
This is what many of us are going through right now.
Incredibly, the continuous drop in the Orange County inventory has left many buyers scratching their collective heads, "Why aren't there more homes and why is there so much competition to buy?" Orange County housing is off to a normal, cyclical Autumn market start with drops in the inventory and demand. Yet, the active listing inventory has dropped, unabated since March of this year, an uncharacteristic trend that has everybody questioning what exactly is going on. First, homeowners are steering away from placing theirhomes on the market unless they absolutely have to. They understand now more than ever that they are competing with distressed sellers and that prices have come down off of their over inflated highs. Second, there is definite truth to the fact that there is a shadow inventory of homes that have not been foreclosed upon and if allowed to work their way through thenormal foreclosure process, more homes would be placed on the market. Yet, any increase would be rapidly sopped up by the current pent up demand from buyers who have been unsuccessful in purchasing after writing several offers. Third, with values coming down 35% or more from their peak, buyers, investors, speculators and first time homeowners are jumping into the market to purchase homes priced below $750,000. And, finally, with the help of the Federal Reserve, interest rates have reached historical lows that we may not see again in our lifetime. Put all of this together and we have experienced a gigantic drop in the active inventory.
So,where is demand going from here? Based upon prior years, we can expect a slow erosion in demand as the Autumn market eventually is followed by the many distractions of the Holiday market, from Halloween to the first couple of weeks of the New Year. The number of distress properties on the market dropped by 65 homes in the past two weeks, now totaling 2,319. 29.6% of the active inventory isdistressed compared to 43.3% last year. The distressed inventory has dropped 44% from its peak, reached in August of 2008. There are currently 320 foreclosures in all of Orange County, a drop of 14 in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.66 months. Foreclosures are the hottest segment of the current marketplace and are, on average, selling for 3% above their asking prices. There are currently 1,999 short sales on the active market, a drop of 51 over the past two weeks. The expected market time for short sales is currently at 1.61 months. Short sales are also a hot segmentwithin the marketplace; however, buyers should not expect instantaneous results and quick closings. The short sale process includes obtaining lender approval after the buyer and seller agrees upon a price. This is anecessary step because the seller owes more than the home is worth and must request that the lender take less than the full loan amount as repayment. The process is improving, but can still take months to obtain formal lender approval.
This is what many of us are going through right now.
Incredibly, the continuous drop in the Orange County inventory has left many buyers scratching their collective heads, "Why aren't there more homes and why is there so much competition to buy?" Orange County housing is off to a normal, cyclical Autumn market start with drops in the inventory and demand. Yet, the active listing inventory has dropped, unabated since March of this year, an uncharacteristic trend that has everybody questioning what exactly is going on. First, homeowners are steering away from placing theirhomes on the market unless they absolutely have to. They understand now more than ever that they are competing with distressed sellers and that prices have come down off of their over inflated highs. Second, there is definite truth to the fact that there is a shadow inventory of homes that have not been foreclosed upon and if allowed to work their way through thenormal foreclosure process, more homes would be placed on the market. Yet, any increase would be rapidly sopped up by the current pent up demand from buyers who have been unsuccessful in purchasing after writing several offers. Third, with values coming down 35% or more from their peak, buyers, investors, speculators and first time homeowners are jumping into the market to purchase homes priced below $750,000. And, finally, with the help of the Federal Reserve, interest rates have reached historical lows that we may not see again in our lifetime. Put all of this together and we have experienced a gigantic drop in the active inventory.
So,where is demand going from here? Based upon prior years, we can expect a slow erosion in demand as the Autumn market eventually is followed by the many distractions of the Holiday market, from Halloween to the first couple of weeks of the New Year. The number of distress properties on the market dropped by 65 homes in the past two weeks, now totaling 2,319. 29.6% of the active inventory isdistressed compared to 43.3% last year. The distressed inventory has dropped 44% from its peak, reached in August of 2008. There are currently 320 foreclosures in all of Orange County, a drop of 14 in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.66 months. Foreclosures are the hottest segment of the current marketplace and are, on average, selling for 3% above their asking prices. There are currently 1,999 short sales on the active market, a drop of 51 over the past two weeks. The expected market time for short sales is currently at 1.61 months. Short sales are also a hot segmentwithin the marketplace; however, buyers should not expect instantaneous results and quick closings. The short sale process includes obtaining lender approval after the buyer and seller agrees upon a price. This is anecessary step because the seller owes more than the home is worth and must request that the lender take less than the full loan amount as repayment. The process is improving, but can still take months to obtain formal lender approval.
Thursday, October 1, 2009
Orange County Housing Report: Top 10 OC Housing Trends
Read this artical from Altera Real Estate Group. Really interesting. Check it out!
Even though the kids have gone back to school, the Orange County housingmarket has not really changed much over the course of the past severalweeks. It is a good time to take a look at the broader market and pinpointthe latest trends. Here's a breakdown of the top 10 current Orange Countyhousing market trends (in no particular order):1. Below $750,000 is technically a seller's market with an expected markettime of approximately two months or less. The activity below $500,000 isincredibly hot. However, this is not a conventional seller's market asvalues are not appreciating. The sheer numbers of distressed properties,mainly short sales, is keeping a lid on any appreciation. Buyers canexpect multiple offers, a tremendous amount of competition, and the need towrite offers to purchase on more than one property (often times several).2. The listing inventory has been dropping all year and is now just abovethe 8,000 mark at 8,064. We started the year at 11,842 active homes on themarket. One year ago there were 5,110 additional homes on the market andtwo years ago there was more than double today's numbers. In the lowerprice ranges there is not a lot of new inventory coming on the market.3. Cash is king and so are buyers with larger down payments. With so muchcompetition in the lower ranges, buyers with very little down are having ahard time purchasing. They are losing out to buyers that can afford largerdown payments. Many first time home buyers who are relying on the low downpayments allowed by FHA financing simply cannot compete with more qualifiedbuyers and investors. That's right. Investors are back and taking away theability for a lot of buyers to purchase.4. Foreclosures are EXTREMELY hot. There are currently only 334 activelistings that are foreclosures in all of Orange County, representing 4.1% ofthe total inventory. The expected market time for foreclosures is 0.66months, or between two and three weeks. 5. The average sale to list price ratio for foreclosures over the pastthree months is 103%. That means that, on average, foreclosures are sellingfor 3% above the list price. The sale to list price ratio for short salesand equity sellers is 98%. And, if there weren't so many appraisal issues,those numbers would be even higher. Buyers in the lower ranges should notexpect to offer that much less than the asking price.6. Prices are not dropping in the lower ranges, but they are in the upperranges above $1 million. The higher the price range, the higher theexpected market time with less and less demand. 30% of the active inventorycan be found above $1 million, yet the higher end represents only 7% ofdemand. 7. The rumors of a foreclosure moratorium have been rampant all year long.There is truth to the moratorium, but it does not look like there will be asubstantial increase in the number of foreclosures to hit the market untilthe first quarter of 2010. Also, there is a tremendous amount of pent updemand where just about every agent has pockets filled with buyers who areactively looking, but, surprisingly, there just is not a lot of freshinventory. Any increase in foreclosures will most likely be offset by pentup demand.8. With pressure from the federal government, lenders are moving more andmore towards short sales. We can expect within the coming weeks for theObama administration to announce something along these lines. Currentlymost short sales, where home owners owe more than their homes are worth,take a very long time to obtain lender approval, delaying the ultimate closeof escrow. Lenders are creating procedures to speed up the process. Shortsales are a better route than foreclosures because they are in much bettercondition and save the lenders a lot on repairing and carrying costs. Thereare currently 2,050 short sales on the market with an expected market timeof 1.58 months, much different than just one year ago when there were 4,422short sales with an expected market time of 6.2 months.9. There are currently more distressed sales within the upper ranges. Lastyear only 6.5% of all distressed properties were above $750,000. Today,11.4% of all distressed properties are above that mark. The upper rangesare not immune to distressed sales. More and more prime borrowers arehaving trouble paying their mortgages. A contributing factor to this trendis the increase in unemployment and the falling of property values wheremore and more borrowers are upside down in their homes.10. The total pending sale count , not just a snapshot of the past month(what I refer to as demand), has steadily increased by 56% over the lastyear. It is taking longer to close pending sales primarily because thereare a large number of short sales that are waiting on lender approval; thus,the count has really blossomed. There are now 6,851 total pending saleversus 4,393 one year ago.Here's a breakdown of how the numbers look this week: the active listinginventory dropped by 298 homes in the past two weeks to 8,064, its lowestlevel since January of 2006. Demand, the number of new pending deals overthe prior month, increased by 61 in the past two weeks to 3,464. Lastyear's demand was at 2,974, 490 fewer than today, and two years ago, it wasat 1,180, 2,284 fewer than today. The expected market time is currently at2.33 months, a slight change from the 2.46 month mark two weeks ago. Thenumber of distress properties on the market dropped by 132 homes in the pasttwo weeks, now totaling 2,384. 29% of the active inventory is distressedcompared to 43% last year. There are currently 2,050 short sales on theactive market, a drop of 134 over the past two weeks. The expected markettime for short sales is currently at 1.58 months.
Even though the kids have gone back to school, the Orange County housingmarket has not really changed much over the course of the past severalweeks. It is a good time to take a look at the broader market and pinpointthe latest trends. Here's a breakdown of the top 10 current Orange Countyhousing market trends (in no particular order):1. Below $750,000 is technically a seller's market with an expected markettime of approximately two months or less. The activity below $500,000 isincredibly hot. However, this is not a conventional seller's market asvalues are not appreciating. The sheer numbers of distressed properties,mainly short sales, is keeping a lid on any appreciation. Buyers canexpect multiple offers, a tremendous amount of competition, and the need towrite offers to purchase on more than one property (often times several).2. The listing inventory has been dropping all year and is now just abovethe 8,000 mark at 8,064. We started the year at 11,842 active homes on themarket. One year ago there were 5,110 additional homes on the market andtwo years ago there was more than double today's numbers. In the lowerprice ranges there is not a lot of new inventory coming on the market.3. Cash is king and so are buyers with larger down payments. With so muchcompetition in the lower ranges, buyers with very little down are having ahard time purchasing. They are losing out to buyers that can afford largerdown payments. Many first time home buyers who are relying on the low downpayments allowed by FHA financing simply cannot compete with more qualifiedbuyers and investors. That's right. Investors are back and taking away theability for a lot of buyers to purchase.4. Foreclosures are EXTREMELY hot. There are currently only 334 activelistings that are foreclosures in all of Orange County, representing 4.1% ofthe total inventory. The expected market time for foreclosures is 0.66months, or between two and three weeks. 5. The average sale to list price ratio for foreclosures over the pastthree months is 103%. That means that, on average, foreclosures are sellingfor 3% above the list price. The sale to list price ratio for short salesand equity sellers is 98%. And, if there weren't so many appraisal issues,those numbers would be even higher. Buyers in the lower ranges should notexpect to offer that much less than the asking price.6. Prices are not dropping in the lower ranges, but they are in the upperranges above $1 million. The higher the price range, the higher theexpected market time with less and less demand. 30% of the active inventorycan be found above $1 million, yet the higher end represents only 7% ofdemand. 7. The rumors of a foreclosure moratorium have been rampant all year long.There is truth to the moratorium, but it does not look like there will be asubstantial increase in the number of foreclosures to hit the market untilthe first quarter of 2010. Also, there is a tremendous amount of pent updemand where just about every agent has pockets filled with buyers who areactively looking, but, surprisingly, there just is not a lot of freshinventory. Any increase in foreclosures will most likely be offset by pentup demand.8. With pressure from the federal government, lenders are moving more andmore towards short sales. We can expect within the coming weeks for theObama administration to announce something along these lines. Currentlymost short sales, where home owners owe more than their homes are worth,take a very long time to obtain lender approval, delaying the ultimate closeof escrow. Lenders are creating procedures to speed up the process. Shortsales are a better route than foreclosures because they are in much bettercondition and save the lenders a lot on repairing and carrying costs. Thereare currently 2,050 short sales on the market with an expected market timeof 1.58 months, much different than just one year ago when there were 4,422short sales with an expected market time of 6.2 months.9. There are currently more distressed sales within the upper ranges. Lastyear only 6.5% of all distressed properties were above $750,000. Today,11.4% of all distressed properties are above that mark. The upper rangesare not immune to distressed sales. More and more prime borrowers arehaving trouble paying their mortgages. A contributing factor to this trendis the increase in unemployment and the falling of property values wheremore and more borrowers are upside down in their homes.10. The total pending sale count , not just a snapshot of the past month(what I refer to as demand), has steadily increased by 56% over the lastyear. It is taking longer to close pending sales primarily because thereare a large number of short sales that are waiting on lender approval; thus,the count has really blossomed. There are now 6,851 total pending saleversus 4,393 one year ago.Here's a breakdown of how the numbers look this week: the active listinginventory dropped by 298 homes in the past two weeks to 8,064, its lowestlevel since January of 2006. Demand, the number of new pending deals overthe prior month, increased by 61 in the past two weeks to 3,464. Lastyear's demand was at 2,974, 490 fewer than today, and two years ago, it wasat 1,180, 2,284 fewer than today. The expected market time is currently at2.33 months, a slight change from the 2.46 month mark two weeks ago. Thenumber of distress properties on the market dropped by 132 homes in the pasttwo weeks, now totaling 2,384. 29% of the active inventory is distressedcompared to 43% last year. There are currently 2,050 short sales on theactive market, a drop of 134 over the past two weeks. The expected markettime for short sales is currently at 1.58 months.
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