U.S. to lower the size of mortgage it will guarantee
The current conforming loan limit, which determines the maximum size of a mortgage that the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac can buy or guarantee – is set to expire Friday, Sept. 30. We were here before, and the loan limit was raised to help the struggling housing market a couple of years ago. The increased loan limit had the biggest impact on the higher end markets here in the SF Bay Area where in some areas home prices are still well above the $625,500 price tag.
Before the loan limit was raised before, financing for higher end homes could be tough. Especially for buyer who may have the ability to pay the monthly mortgage, but don’t have the access to enough liquidity in their cash flow to allow for down payments. On the flip side the lower rates did seem to help the lower and middle end of the markets. Homes with a lower price point were more appealing becuase money was eaiser to find. It will be interesting to see how the re-adjustment really affects the market. The one big differenc this time that I see, is you can actually find jumbo loans. Time will tell.
Making sense of the story
Beginning Oct. 1, the conforming loan limit will decline to $625,500, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.
Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.
Under the new GSE loan limits, Monterey County would see the greatest drop in the loan limit at $246,750, followed by San Diego ($151,250), Sonoma ($141,550), Solano ($140,500), and Napa ($137,500) counties.
Under the new FHA loan limits, Monterey County would see the greatest drop in the loan limit at $246,750, followed by Merced ($201,450), Riverside ($164,650), San Bernardino ($164,650), Solano ($157,300), and San Diego ($151,250) counties.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) estimates that more than 30,000 California home buyers statewide will be impacted by the change to the conforming loan limits.
In anticipation of the conforming loan limit decline, some banks already have stopped accepting conventional and government applications for loan amounts that exceed the new permanent loan amounts.
Read the full story http://lat.ms/oJbxe1
2012 Residential Real Estate Forecast – from Leslie Appleton-Young, Chief Economist
California home sales and median price are predicted to improve only slightly in 2012, as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 California Housing Market Forecast” released today.
Leslie Appelton Young, CAR Chief Economist, housing forecast
2012 FORECAST FACT SHEET From CAR
| 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011f | 2012f | |
| Existing Single-family Home Resales (000s) | 625 | 477.5 | 346.9 | 441.8 | 546.9 | 491.5 | 491.1 | 496.2 |
| % Change | 0.03% | -23.60% | -27.30% | 27.30% | 23.80% | -10.10% | -0.10% | 1 |
| Median Price ($000s) | $522.70 | $556.40 | $560.30 | $348.50 | $275.00 | $303.10 | $291.00 | $296.00 |
| % Change | 16.00% | 6.50% | 0.70% | -37.80% | -21.10% | 10.20% | -4.00% | 1.7 |
| 30-Yr FRM | 5.90% | 6.40% | 6.30% | 6.00% | 5.10% | 4.70% | 4.50% | 4.7 |
| 1-Yr ARM | 4.50% | 5.50% | 5.60% | 5.20% | 4.70% | 3.50% | 3.00% | 3.1 |
f=forecast
Many underwater homeowners hampered by high interest rates
A total of 10.9 million homes with a mortgage were in a negative equity position at the end of the
second quarter, constituting 22.5 percent of all residential properties with a mortgage, according
to CoreLogic.
“High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery,” CoreLogic Chief Economist Mark Fleming said in a statement. “The hardest-hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices.”
Clearly it makes sense for banks to work with homeowners in good standing that have higher rates. We will see if common sense prevails….
Read the full story
http://lat.ms/mQ02zI
Mistakes housing investors make
With traditional investments delivering low returns, some are considering buying rental housing. However, potential investors should do their homework and avoid the following common mistakes.
Making sense of the story
Investing in real estate right now can be profitable, if everything goes as planned. Rents are increasing in many areas, and more properties may be coming on the market.
Last month, the Obama administration asked for proposals on how to convert at least some of Fannie Mae’s and Freddie Mac’s inventories of foreclosed homes into affordable rentals.
Traditionally, investors rented out properties for 1 percent of the purchase price per month. However, according to one property management firm, today, some investors are receiving as much as 2 percent of the purchase price.
While it may be true that in some areas home prices are relatively low, that doesn’t mean the property can be rented out. Homes in deserted subdivisions aren’t any more appealing to renters than they are to buyers. The same is true for less-attractive properties or those in less-desirable school districts.
Prior to purchasing a property, investors should also factor in closing costs of 3 percent to 6 percent, the costs to fix up the place and maintain it, and the holding costs.
Investors become landlords, and as such, need to keep in mind that, just like homeowners, tenants may not always be able to pay rent. Evicting tenants can take several weeks.
It’s also important to remember that owning a rental is not the same as owning a home. An owner may put up with flaws in a home that a renter wouldn’t tolerate. Additionally, many states and communities have strict laws for landlords, even for those who own only one property.
Read the full story
http://online.wsj.com/article/SB10001424053111904103404576558484074477822.html?mod=
WSJ_RealEstate_LeftTopNews
Getting a fair appraisal in a tough market
Since the real estate market took a downturn, some people have complained they couldn’t buy, sell, or refinance a home because an appraiser used bank-owned (REO) or short-sold homes as comparables in the valuation process, which dragged down the value of their home. While using REO and short-sold properties can lower the value of a home, some homeowners are upset that their county assessor will not use these properties as comps for their property taxes.
Making sense of the story
In California, some assessors will consider distressed sales when looking at comps, but it varies widely by county, neighborhood, and house. In general, assessors will always look at non-distressed sales first and if there are enough, disregard REO and short sales. However, if there are not enough standard sales, or the home is in an area dominated by distressed sales, the assessor likely will take these properties into account.
Under Proposition 13, property is assessed upon a change in ownership at its fair market value. That is usually the same as the sale price. However, with distressed property, the sale price may not equal fair market value.
Between changes of ownership, assessors can raise values only by an inflation rate, not to exceed 2 percent per year, plus the value of major improvements or additions.
Under Prop. 8, owners who think the market value of their property has fallen below its assessed value can ask for a temporary reduction to the fair market value.
Homeowners who think their homes are worth less than the assessed value can usually ask their assessor for an informal review. If they are still not satisfied, they can file a formal appeal with their county’s assessment appeals board by Sept. 15 or Nov. 30, depending on the county.
Read the full story
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/01/BU1H1KUA2V.DTL
Location Makes a Difference
When evaluating the Real Estate market, if you only look at the big picture you might not get all the information. The Bay Area has a very diverse marketplace and location can make a big difference.
For example if you look at the chart below of Alameda County, it shows the history of properties for sale, pending and sold over the last year.
For Alameda County the number of single family properties for sale from the same time last year is up 2.6%. The number of sold properties is down 8.3% and the number of pending homes is up 19.1%.
For Oakland in the 94610 area code the number of single family properties for sale is up 28.6% from last year and the number of sold properties is down 16.7%. The number of pending homes is up 50% from the same time last year.
For Piedmont in the 94610 area code the number of single family properties for sale is down 40% from the same time last year. The number of sold properties is down -75% and the number of pending properties is up 300%.
If you only looked at the data for Alameda County, you would not have a very accurate picture of the market if you were looking in the Oakland’s 94610 area code or in Piedmont’s 94610 area code. One set of data does not say it all and when thinking about buying or selling, you have to consider the micro-markets that are all over the Bay Area.
Having accurate information can help you make informed decisions.
Alameda County For Sale, Pending and Sold Data for 1 year
Oakland 94610 For Sale, Pending and Sold Information For 1 Year
Piedmont 94610 For Sale, Pending and Sold Information For 1 Year
When income is freelance is a loan even an option?
After the financial market downturn in 2008, getting approved for a mortgage loan became even more difficult. Combine that with the schizophrenic economy, which left many people turning to freelance work, and the challenges involved in qualifying for a home mortgage increase exponentially. However, with a little extra work, home buyers using freelance work as proof of income still can qualify for a new loan.
Making sense of the story
Borrowers who earn most of their income on 1099s should be prepared for extra preparation, paperwork, and discussion of their financial standing when applying for a mortgage.
It’s important that independent contractors show that their income is stable and increasing. For some, that may mean declaring all their income on their tax returns, and not, say, carrying anything over to the next year, even if it means paying more taxes.
Consistency in income is key, so those applying for a mortgage this fall or winter should be prepared to provide proof for year-to-date income.
To increase the chances of getting a mortgage approval, borrowers should pay off other debts, including balances on credit cards.
Pinpointing the source of the down payment also is helpful. If the down payment will be a gift from a relative, borrowers are advised to submit an account statement showing the funds are available and awaiting the home purchase. Same goes for borrowing from a
401(k).
Freelancers also should be prepared for a more in-depth analysis of their ability to repay the debt. Submitting tax returns from the last three years and explaining any significant differences in income is advised.
Read the full story
http://www.nytimes.com/2011/08/28/realestate/loans-for-freelancersmortgages.html?ref=realestate
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.
Read the full story
http://online.wsj.com/article/SB10001424053111904070604576514573303531678.html?mod=
WSJ_RealEstate_LeftTopNews
Foreclosures fall for tenth straight month
Foreclosure filings were down 4 percent in July compared with June and were 35 percent lower than July 2010, marking the tenth straight month of year-over-year declines, according to RealtyTrac. Foreclosures are still prevalent in the market, and are probably going to be a significant part of the marketplace. Part of the reason is many of the banking institutions are actually doing short sales. This helps to stem the number of foreclosures entering the market place. In addition it looks like Fannie is going to set up a program for foreclosures to be rentals. (See the full article here) This is a pretty interesting twist in the foreclosure realm. Home owners who can’t afford to pay the mortgage can rent it instead. This also will help to mitigate the problem with disgruntled homeowners trashing the property on their way out the door.
The overall economic recovery will definitely continue to have an impact on the rate of foreclosure and the real estate market in general. As always where you live will make a big difference in terms of the rate of foreclosure and recovery. Call me a Polly Anna, but hopefully we can have a reasonable and rational approach to economic news. It ain’t great, but the sky isn’t falling either. I for one, am personally tired of the sensationalizing of the news. In 2005 everything was the best ever and if you don’t jump in your an idiot, and now it is the worst it has ever been and if you do jump in your an idiot. Sensational news yes, a reasonable approach to life, not so much.
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S.F., Oakland in top 10 most walkable U.S. cities
Among the nation’s 50 largest cities, San Francisco was the second most walkable, after New
York, and Oakland ranked 10th, said Seattle’s Walk Score, which assigns numerical ratings that
quantify how close an address is to amenities like grocery stores, restaurants, schools, and
parks.
Some of you reading may be surprised to hear that Oakland is in the top 10. There is a prevalent misconception about Oakland and what many readers may not know is there are a lot of really cool, walk able great neighborhoods in Oakland. Sometimes perception is not always reality.
Read the full story
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/20/BUUK1KCC67.DTL&tsp=1
