In 2009, rates jumped about .250% leading into Memorial Day and then they jumped an additional .500% the week of Memorial Day. Last year rates jumped from 3.5ish in May to 4.00% in June and then 4.50% in July. OK so we have skated through most of May and rates have held in so I am happy! Today, rates are exactly where they were on Friday. An FHA 30 Year fixed rate with no points is at 3.750% (5.690APR) and a conventional loan with 20% down and no points is currently at 4.125% (4.198APR) assuming your buyer has a 740 credit score.

We touched a little on Capital Gains last week and I wanted to go a little more into depth on this. I will start with some basic stuff and work my way into the more complicated information a little later. If a person purchases a property and then sells it for a profit this could constitute a capital gain. If they lived in that house for two of the past 5 years and the gain was less than $250,000.00 for a single person or $500,000.00 for a couple then they would be exempt from taxes. Pretty simple stuff. The end!! Not so fast! About 80% of our clients will fit into that mold. While 20% will make over the exemption, or sell before the two years. So let's look at those clients a little more carefully and how can they get out of their house before two years and minimize the gains.

• So if a client buys for $400K and sells for 500K is the gain $100K? The answer to that is no.
• We need to ask what their expenses were going in? Closing costs, escrow title, loan fees...
• What was the cost of the improvements they did? Kitchen, bath, roof, landscape...
• What are the selling costs to sell the property?

Depending on improvements, those fees may or may not add up to 100K, but all of the money they spent will be deducted from their profits and they would only pay taxes on the remaining profit. We always have our clients consult with their tax person when they are looking to sell. It is imperative that they know what the real cost is to sell a property before they sell it.
Please let me know if you have any questions or if you have any clients that have any questions on loans or anything to do with Real Estate.
Thank you for your time and remember to always align yourself with the best in the business! That will make your business the best!

Sincerely,

Mike Meena

Augusta Financial

Regulators Seek to Ease Housing Credit:

Both the new regulator for Fannie Mae and Freddie Mac, as well as the secretary of Housing and Urban Development, announced they would shift strategies by making credit more available to homeowners. 

Federal Housing Finance Agency (FHFA) Director Mel Watt, who recently took over the job of regulator for the mortgage giants, said in his first public comments that he would not lower the maximum loan limits for Fannie Mae and Freddie Mac, which currently stand at $417,000 in most markets. Watt's predecessor, Edward DeMarco, had contemplated the move as a way to shrink Fannie and Freddie's footprint in the mortgage market.

Watt, a former North Carolina congressman, also said he would try to alleviate some of the uncertainty banks face in dealing with Fannie and Freddie.

"I know that repurchase risk remains a top concern for the mortgage industry. Lenders believe that too much uncertainty still exists in this area for them to ease their credit overlays. Ultimately, this undermines the goal of improving access to mortgage credit for creditworthy borrowers," he said.

In another move to open up credit to first-time homebuyers specifically, HUD Secretary Shaun Donovan announced a new four-year pilot program at the Federal Housing Administration (FHA) starting this fall. The FHA is the government mortgage insurer for low down payment loans.

Under the program, first-time homebuyers who commit to credit counseling will qualify for reduced FHA insurance premiums on their loans. For the average FHA loan balance of $180,000—these reductions, according to Donovan, can add up to roughly $10,000 in savings over the life of the loan. 

Buying Beats Renting After Just Two Years in Half of Metro Areas:

Prospective homeowners face a pleasing condition: In half of U.S. metropolitan areas, buying now beats renting after a mere two years.

"Rents keep rising, and mortgage rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it," said Stan Humphries, chief economist for Zillow.com, the housing and mortgage firm behind a rent-versus-own study,

Two years is a surprisingly short time to make a home purchase pay off. For many years, the rule of thumb was that you must own a home for four or five years to break even . It takes that long for the home's rising value to offset the various costs, including title insurance and realtor's commission, incurred in the purchase and sale. Renting makes more sense for anyone who does not expect to stay in the home beyond the break-even period.

But prospective buyers benefit from the lower prices. And low mortgage rates allow them to keep their monthly costs down. At the same time, high demand has pushed rents up very fast in many communities. The higher the rent, the sooner owning pays off. Finally, low-interest earnings on safe savings such as bank accounts reduce the gains renters can enjoy on cash that is saved instead of being put into a down payment on a home.

"Among the 35 largest metro areas analyzed by Zillow in the first quarter, those with the shortest breakeven horizon were Riverside (less than 1 year), Orlando (1 year), Tampa (1.1 years) and Miami-Fort Lauderdale (1.2 years)," Zillow said, referring to locations in California and Florida. "Large metros with the longest breakeven horizon included Washington, D.C. (4.2 years), Boston (4 years), Phoenix (3.3 years), San Diego (3.2 years), Minneapolis and Baltimore (both 3.1 years)."

Zillow cautions that break-even periods can vary considerably within any given city. 

Both Pending and Existing Home Sales Beat Forecasts:

U.S. home buyers signed more contracts to buy existing homes in March, as weather in much of the country warmed and as more listings came onto the market. An index of so-called "pending" home sales from the National Association of Realtors rose 3.4 percent from February, the first gain in nine months.

"After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers," Lawrence Yun, chief economist for the Realtors. "Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy."

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

In a separate report last week, The National Association of Realtors said on Tuesday Existing Home Sales came in at an annualized rate of 4.59 million units, the market forecasts were only expecting a reading of 4.55 million units.

So, we have two reports that show the housing market slowly moving forward despite higher home prices and tighter credit which is a good sign for the Spring season. 

U.S. Housing Starts Climb in March:

The Commerce Department reported that groundbreaking increased 2.8 percent to a seasonally adjusted annual rate of 946,000.

Plus, February's data was actually better than first released. As February's starts were revised to show a 1.9 percent rise rather than the previously reported 0.2 percent fall.

Gaines in home building has been difficult as a brutally cold winter weighed on home building in December and January.  Activity has also been hampered by shortages of building lots and skilled labor as well as rising prices for materials.

Groundbreaking for single-family homes, the largest segment of the market, surged 6.0 percent to a 635,000-unit pace last month. Starts for the volatile multi-family homes segment fell 3.1 percent to a 311,000-unit rate. 

Survey: Consumer Confidence in Housing Hot This Spring

DAILY REAL ESTATE NEWS | TUESDAY, APRIL 08, 2014

Consumer attitudes are reflecting greater optimism in the housing market heading into real estate's traditionally strong spring selling season, according to Fannie Mae's March 2014 National Housing Survey.

In the poll of 1,000 people, 38 percent say it's a good time to sell a home, up from 26 percent a year ago. The poll also shows that 69 percent of those surveyed say it's a good time to buy, and 52 percent say it's easier today to get financing for a home.

Americans also feel more confident about their personal finances: An all-time survey high of 40 percent say their personal financial situation has improved during the past year.

"The housing recovery continues to proceed in fits and starts," says Doug Duncan, Fannie Mae’s chief economist. "Rising mortgage rates and a lack of supply have dampened housing market momentum. However, we see several positive signs going into this year's spring home-buying season, compared with last year. For example, consumers are less pessimistic about their personal finances and more optimistic about the current selling environment and their ability to get a mortgage. Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track. Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers."

However, consumers' home-price expectations softened a bit in the latest survey. The average 12-month home-price-change expectation fell from last month, reaching 2.7 percent, the survey shows. Also, slightly fewer respondents — 48 percent — said they thought home prices would rise in the next 12 months.

Source: Fannie Mae

Internet Traffic Points to Strong Spring:

Visits to real estate sites from desktop computers surged 15 percent in March compared to the month before, indicating the spring homebuying season has gotten off to a hot start.

Consumers recorded about 362 million visits to real estate sites from desktop computers last month, a good chunk more than February’s 316 million visitors, according to Experian Marketing Services.

Zillow maintained its sizable Web market lead in the real estate category in March — capturing 16.46 percent of visits to real estate sites from desktop computers for the month, according to Experian, which measures total hits and not unique site visitors.

Zillow’s two chief competitors — Trulia, with 8.91 percent market share, and realtor.com, with 7.49 percent market share — closed in slightly on Zillow’s lead over the course of the month. Compared to their February positions, Trulia and realtor.com closed their gaps with Zillow by 0.32 percentage points and 0.3 percentage points, respectively, for the month.

By capturing 0.86 percent of March’s real estate traffic from desktop computers, Re/Max jumped to No. 18, joining Century 21 Real Estate — which ranked No. 16 with 0.99 percent Web market share in March — as the only other real estate franchisor website in the top 20.