February Home Sales Up from January, Down from 2008

Market Statistics/Performance, News 1 Comment »

MAAR released the February Home Sales Report today showing an increase in sales from January but a decline from February 2008. Other data from February:

  • Pending sales up 8.2% from January
  • Inventory down slightly from January, down 15.3% from February 2008 and down 23.6% from the peak in July 2007
  • Foreclosures up from January but down 14.5% from February 2008

Lower interest rates and the first-time buyer tax credit are likely behind the jump in pending sales and we hope to see that trend continue as we get into the typically busier spring an summer months. It also supports the anecdotal feedback we’ve heard from REALTORS® that they’re seeing more interest from buyers in recent weeks.

The continued decline in inventory is good news as well, though we’re still a bit removed from the more balanced inventory of 8,000 units that we’d like to see.

Posted by Scott Sherrin at 3:55 pm

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FHFA Director Responds to Questions Raised by REALTORS® at NAR Conference

Market Statistics/Performance, Mortgage Lending, News No Comments »

On December 4, 2008, the Director of the Federal Housing Finance Agency, Jim Lockhart, wrote to NAR President Charles McMillan to follow up on the questions raised by REALTORS® at the Orlando meetings that he was unable to answer at the time. Director Lockhart is the conservator for Fannie Mae and Freddie Mac and the federal regulator of the two government sponsored enterprises (GSEs). In Orlando, Director Lockhart spoke at a standing-room-only session to 600 REALTORS® and then fielded questions for nearly an hour. He also attended the meeting of the Conventional Finance and Lending Committee to discuss GSE issues in a smaller setting.

Here are highlights of the Director’s responses to REALTOR® recommendations that the GSEs:

  • Increase the 4-unit investor loan limit. Director Lockhart advised that one of the GSEs is considering raising the 4-loan limit on investor loans (both GSEs permit waivers). [Note: When one GSE makes a policy change, the other very often follows suit.]
  • Adopt a process to appeal servicer decisions. Mr. Lockhart notes that the GSEs are working to streamline their loss mitigation procedures. On short sales, they are working on a number of initiatives. He did not indicate that the GSEs are developing an appeals process.
  • Establish better foreclosure policies (including concern about banks refusing to work with borrowers until they are at least 90 days delinquent). Mr. Lockhart reviewed the streamlined loan modification program announced shortly after the Orlando meetings by FHFA, Treasury, HUD, and HOPE Now to reduce preventable foreclosures. He did not explain the logic of limiting the new program to borrowers at least 90 days delinquent, but he did refer to other initiatives targeted at borrowers at earlier stages of delinquencies or even those not yet delinquent.
  • Reform owner-occupied condo rules. Mr. Lockhart made two points: (1) in an established project, the 51% owner occupancy requirement does not apply to any loan secured by an owner-occupant principal residence or second home, and (2) at least one of the GSEs is considering clarifying the 51% requirement to exclude bank-owned units from being counted as investor units.
  • Apply the same underwriting standards to jumbo conforming loans (loans above $417,000 that may be purchased by the GSEs) (the member questioned the assumption that jumbo conforming loans are more risky. Mr. Lockhart believes that jumbo conforming loans are riskier because defaults involving larger loans result in higher losses. He also notes that most jumbos have been ARMS which are relatively riskier and may be hard to refinance.

Download the full letter.

Posted by Scott Sherrin at 6:02 pm

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Will Proposed Interest-Rate Buydown Make an Impact?

Market Statistics/Performance, Mortgage Lending, News 1 Comment »

As the overall economy continues to falter, the federal government is now looking at a plan to push down mortgage interest rates to below 5% - far lower than any rate seen ever. This proposal was detailed in yesterday’s Wall Street Journal, and is beyond the plan announced last week to buy up to $600 billion in debt issued or backed by Fannie Mae or Freddie Mac. The Journal reports:

Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.

Borrowers would have to qualify for a mortgage guaranteed by Fannie, Freddie or the Federal Housing Administration. Those guarantees apply to loans where borrowers can document their income and afford their monthly payments, steering the government away from backing loans considered risky.

The National Association of REALTORS® (NAR) has expressed support for such action, and it is part of a Four-Point Plan NAR unveiled a few months ago to stimulate the housing market.

But the plan has critics, who question how effective such action will be considering that home prices continue to fall and that unemployment rates are expected to climb into 2009.

What do you think? Is this the right approach for the government to take, or will the results have little impact on the housing market?

Making Offers Isn’t Just for Buyers Anymore

Market Statistics/Performance, Trends 1 Comment »

It used to be that buyers of real estate made offers to sellers of real estate. But in today’s much more competitive market for sellers, it seems that they’re the ones making the offers now.

Virginia REALTOR® and blogger Scott Rogers has worked with several sellers recently who have made offers to buyers who had expressed serious interest in the seller’s home. In a recent post he shares some tips to sellers considering such a move.

I suppose that shouldn’t seem so strange given the freebies some sellers have offered potential buyers, from a free car to themselves (the old buy-a-house-get-a-wife deal).

Any REALTORS® in Memphis worked with a seller who wanted to approach a seriously interested buyer with an offer? Any local sellers thinking about making the first move?

Posted by Scott Sherrin at 1:58 pm

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New Housing Law Offers Relief, Benefits to Home Buyers

Community, Governmental Affairs, Market Statistics/Performance, Mortgage Lending, News 3 Comments »

This morning, President Bush signed into law the Housing and Economic Recovery Act of 2008, legislation aimed at shoring up the housing market in the United States and offering current homeowners with troubled mortgages and potential homeowners with significant assistance.

Of most interest to people who do not own a home but have been thinking about it is a $7,500 tax credit to qualified first-time home buyers who purchase a home between April 9, 2008, and June 30, 2009. That’s a tax credit, meaning those who qualify will receive a dollar-for-dollar reduction in what they owe the year the credit is taken against their income taxes. The credit does have to be repaid, but it is done over 15 years and payments don’t start until tax returns files two years after the credit is taken.

In the Memphis-area market first-time buyers make up a larger share of all buyers than the national average, which means a larger number of people locally stand to benefit from the credit. Add to that the affordability of Memphis-area real estate and it adds up to an outstanding opportunity for first-time buyers.

Here’s the fine print:

  • The credit amount can be 10 percent of the cost of the home purchased, not to exceed $7,500.
  • Any single-family property (including condos) that will be used as a primary residence is eligible.
  • The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 for joint filers). The amount of credit available gradually phases out as adjusted gross income reaches $95,000 for a single filer and $170,000 for joint filers.
  • The credit is repayable over 15 years (without interest) in equal installments of 6.67% of the credit or when the owners sell the home, assuming there is sufficient capital gain from the sale. Repayment does not begin until two years after the credit is claimed.

More detailed information on the tax credit, including FAQs and answers, is available at this site created by the National Association of Home Builders.

Read the rest of this entry »

Posted by Scott Sherrin at 12:49 pm

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Keeping the ‘Crisis’ in Perspective

Ethics/Professionalism, Governmental Affairs, Market Statistics/Performance, News No Comments »

A little over a week ago, Dennis Kneale commented on CNBC about whether the housing “crisis” is really a crisis at all, or just a smaller problem blown out of proportion. From Kneale’s perspective it all comes down to the numbers, which reveal homeowners most affected by the supposed “crisis” is a much smaller percentage than what you might believe.

Direct link to the video is:

http://www.cnbc.com/id/15840232?video=780461999

Posted by Scott Sherrin at 8:13 am

An Overview of Short Sales in Plain English

Education, Market Statistics/Performance, Mortgage Lending 2 Comments »

The Virginia Association of REALTORS® has posted on its VAR Buzz blog an excellent article on short sales that offers someone new to this type of transaction a good overview of the topic. While no article can replace experience, especially when it comes to short sales (where each transaction is likely to be nothing like the next one), this article provides a great foundation or review for any practitioner.

And if you’re looking for more instruction on short sales, register for the August 8 class at MAAR.

Posted by Scott Sherrin at 7:42 am

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What Higher Gas Prices Mean for the Suburbs

Community, Market Statistics/Performance, News, Trends No Comments »

Do higher gas prices have anything to do with a decline in real estate sales prices? According to this report from CEOs for Cities, they do have an impact, especially on homes in outlying suburbs and in metro areas with weak central cities.

In the report, Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs, Joseph Cortright lays out how the run up in gas prices in the past few years corresponded with the popping of the housing bubble.

Between 1990 and 2004 the price of gas was essentially unchanged in inflation-adjusted terms, making a longer commute from your new home in the suburbs a non-issue, at least from a financial standpoint. Today’s gas prices averaging more than $3.50 a gallon is pinching all consumers, but likely weighs more heavily on those metropolitan areas and suburbs where people have to drive the farthest.

As such, the report found that while there is overall weakness in housing prices, price declines are generally more severe in cities and neighborhoods that require lengthy commutes and provide few transportation alternatives to driving your own vehicle.

Looking at housing values in five cities in both close-in and distant neighborhoods, the researchers found that in each case, housing prices fared worse in the more distant neighborhood. In Portland, the price of an average house in the 97202 ZIP code (3 miles from the central business district downtown) increased 7.7% from the fourth quarter 2006 to the fourth quarter 2007. During the same period, the average house in suburban Vancouver, Ore. (13.6 miles from the central business district) saw a price decline of 8.4%.

In concluding his report, Cortright offers five policy implications for leaders in all communities:

  • The relative decline in prices in sprawling suburbs is likely to persist because of the continued high price of gas, and governments should plan accordingly.
  • The market for higher density and redevelopment in close-in neighborhoods is likely to grow stronger, and local land use plans should accommodate this shift.
  • Government can help families save money by making it easy and convenient to live in mixed-use, close-in neighborhoods served by transit.
  • Reducing vehicle miles traveled not only saves families money, households that drive less have more to spend on other things, stimulating the local economy. Additionally, reducing oil consumption not only cuts greenhouse gas emissions but lowers the trade deficit.
  • Many distant exurban developments may no longer be economical, and propping up building and homeownership in these areas encourages unsustainable settlement that makes families even more vulnerable to future gas price increases.

Considering that gas prices aren’t likely to fall soon, if ever, this report’s findings have some striking implications, not only for Memphis-area real estate, but the future economic success of our city.

Posted by Scott Sherrin at 1:31 pm

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MAAR Brings Housing Market Concerns to Rep. Blackburn

Community, Governmental Affairs, Market Statistics/Performance 1 Comment »

On April 24th, U.S. Congresswoman Marsha Blackburn asked to meet with several members of MAAR to discuss the current housing market in Tennessee and how she could help in Congress.  MAAR President John Snyder, Governmental Affairs Director Aubrie Kobernus, several members of MAAR’s Governmental Affairs committee, and I were able to spend an hour talking frankly with the Congresswoman. We told her what we felt were the most important issues that needed to be addressed to help get our market improving at a faster rate.

We shared with her the importance of pending legislation to allow for lower down payments for FHA loans and risk-based pricing. Another discussion involved the type of information related to real estate markets that’s given to the media out of Washington. The concern we expressed is that they’re using information that basically covers ONLY those markets that are experiencing drastic price reductions. We asked that the representatives of the states that are not seeing the same type of problems be very loud and clear that this information doesn’t cover every market. As we all know quite well, real estate is a local issue that differs no matter where you are.

Other topics of discussion included:

  • Tax credits for the purchase of a home
  • The merits of a government bailout of the lenders that have bought these bad loans
  • Possible legal action against lenders who fraudulently made these loans

It was a great discussion in an hour’s time and we’re hopeful Ms. Blackburn will take some of our ideas back to Washington. We’ll have a chance to reiterate these points in our visits with other Tennessee representatives during the NAR Midyear Legislative Meetings in Washington May 12-17.

Pending Sales Up in March; MLS Statistics Report Gets an Upgrade

Market Statistics/Performance, News 3 Comments »

Pending sales recorded by the MAAR Multiple Listing Service as of March 15 were up more than 4 percent from pending sales recorded as of February 15. This is the second straight month we’ve seen an increase in pending sales and that statistical data is in line with anecdotal reports from many MAAR members who have reported increased activity for the first few months of 2008. This information is part of the February market report released today by MAAR.

With the February report we have begun including sales, pricing, and days on market information broken out for 17 geographic areas: Fayette and Tipton counties and 15 areas within Shelby County. This expanded reporting should provide MAAR members and the general public with a more detailed view of what’s happening within the Memphis-area real estate market.

Area Detail Report

Look for more enhancements to the MLS statistics report in the coming months as we add more historical data to show longer-term trends.

Posted by Scott Sherrin at 3:40 pm

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