The New Homebuyer Tax Credit Won't Die --Should It?

The government has given buyers using the credit another three months to close sales, and the initiative is being imitated on a smaller scale by states and private companies. But some think the market would be better off if we laid it to rest for good.

Karen and Greg Osmon had outgrown the three-bedroom Winston-Salem, N.C., home they lived in with their two children, so they put it up for sale. Unfortunately, they did so in December of 2008, at the height of the financial crisis. With the economy in a downward spiral, they couldn't find a buyer, and when the property didn't move for over a year, they were forced to pull it off the market.
The Osmons decided to try selling again in early May of this year, but they'd missed a chance to capitalize on an incentive that had boosted home sales in the months prior: the first-time homebuyer tax credit, an $8,000 federal rebate whose April 30 deadline boosted sales of new homes in that month by 48% over the previous year, according to the Census Bureau.

For full story:
http://www.forbes.com/2010/07/01/home-buyer-tax-credit-lifestyle-real-estate-housing.html

National Home Price Index Rises:

The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing, using data provided by Fannie Mae and Freddie Mac. The House Price Index is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.

According to FHFA, their national Housing Price Index for purchases rose 0.9% and is the third consecutive month of home price increases and shows that the housing market does have some real fundamental "bright spots".

How to lower your property taxes:

Despite home prices in major urban centers decreasing 31 percent between 2005 and 2009, property taxes across the U.S. increased by nearly 20 percent. There is good news, however; homeowners can fight back.

Making sense of the story

• Homeowners should keep in mind that property taxes do not always correspond with home values, because local governments typically don’t measure values every year and some have limits on annual property-tax increases.
  
  
• As a result, current property taxes might reflect the home’s value when the market was healthier. According to the Congressional Budget Office, property-tax adjustments lag behind changes in home prices by an average of three years.
  
  
• Although homeowners cannot change their property-tax rate, which is set by the local government, homeowners can get their assessment lowered if they appeal to their local assessor.
  
  
• One key to a successful appeal is fact checking the assessor’s work. About half of all successful appeals come from homeowners pointing out an error in the assessor’s description of the home, according to one property tax expert.
  
  
• During the appeal process, which is similar to a less-formal court hearing, homeowners may present their case to several local officials or representatives. The simplest way to convince officials that a property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to the property being discussed. This should include square footage, amenities, and neighborhood characteristics. Sale documents and photos of the property in question, as well as the comparable properties also should be brought in.
  
  
• Homeowners who have made improvements or substantial changes to the property should be cautious about appealing an assessment though, as it could have negative effects and actually increase the property’s value and, in turn, the property taxes.

FHA announces loan eligibility criteria for loans in pipeline

With the Sept. 30, 2011, expiration of the current high-cost loan limits fast approaching, the Department of Housing and Urban Development (HUD), which regulates and oversees the FHA home loan program, has issued Mortgagee Letter 11-29 (ML). This ML clearly lays out how and when lenders are to implement the new loan limits that take effect on Oct. 1, 2011. According to the ML, as long as FHA home buyers have case numbers and credit approval (as defined in the ML attached below) on or before Sept. 30, they are eligible for the higher loan limits, even if the loan closes on or after Oct. 1.
While C.A.R. will continue to try to extend the current loan limits, absent Congressional action, we welcome this announcement as providing a clear and smooth transition to the lower loan limits, which is in stark contrast to the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac. FHFA has allowed lenders to implement the new loan limits on their loans whenever and however they see fit. Home buyers have been forced to shop for a lender who still will offer the higher loan limits since many lenders, including Bank of America and Wells Fargo, already have lowered their Fannie and Freddie loan limits

California home sales decline in July, but remain higher than a year ago

Closed escrow sales of existing, single-family detached homes in California dropped 4.1 percent to a seasonally adjusted 458,440 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. July home sales were up 4.5 percent from the 438,850 units sold in July 2010. The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.


“Although July sales improved over last year, they were somewhat weaker than expected, given current prices and mortgage rates,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Economic uncertainty and recent developments in financial markets have caused hesitation among buyers, the effects of which we may see in the coming months. We must see sustained job and income gains along with an increase in consumer confidence before we can expect to see consistent improvement in the housing market.”

The statewide median price of an existing, single-family detached home sold in California dipped 0.3 percent in July to $294,230 from a revised $295,210 in June. July’s median price was down 7.6 percent from the $318,550 recorded in July 2010.

“Despite the uncertain outlook, interest rates are at near-record lows, and home prices are favorable,” said C.A.R. President Beth L. Peerce. “Well-qualified, motivated buyers who expect to own their home for more than a few years should carefully study their options now.”

Housing survey finds job loss a top concern for American workers

Concerns about job loss and increasing consumer pessimism reveal that 64 percent of Americans surveyed during the second quarter say the economy is on the wrong track, according to Fannie Mae's latest quarterly National Housing Survey.
The monthly survey found that 70 percent of respondents now believe the economy is on the wrong track, and just 23 percent say the economy is heading in the right direction.

More than a quarter (26 percent) of American workers reported being concerned about losing their job in the next year. While 44 percent of concerned American workers reported having a home mortgage (compared with 42 percent of all Americans), just 33 percent of them perceive their savings to be sufficient (versus 49 percent of those workers not concerned about losing their job).

Forty-four percent of these workers say their household expenses have increased significantly over the past year, compared with 35 percent of workers not concerned about losing their job.

Nearly three-fourths (73 percent) of single-family renters say it would be difficult to get a home mortgage, with 33 percent citing their credit history as the biggest obstacle to getting a home mortgage (versus 20 percent of multifamily renters), according to the survey.

Short sales: Are they worth the trouble?

Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.
Making sense of the story

• Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
  
  
• Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
  
  
• Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.
  
  
• In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
  
  
• Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or forego an inspection altogether.
• Even with the challenges associated with short sales, buyers should not avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line