But a little-known Federal Housing Administration (FHA) loan program that’s been around since 1978 can help take the sting out of “as-is.” Only 219 borrowers took advantage of the FHA’s 203k program in 2009. Not that many lending and real estate professionals are aware of the program, say observers.

Last year, Tom Meyer found a classic Oakland, Calif., home built in 1925 near Mills College he liked a lot. As a short sale it was priced right and about half the original asking price. Trouble was, the place needed some fix-up work—foundation improvements, dry rot work, a new roof over the garage and other improvements.

With the help of the FHA’s 203k renovation financing loan program, Meyer folded about $100,000 worth of repairs and improvements into his $422,000 mortgage. He had bought the home for $320,000. “I would not be able to pay a contractor $100,000 and buy a house at the same time,” said Meyer, who works in corporate media at Shaklee’s Pleasanton headquarters. “It had been essentially allowed to start falling apart over the last 20 years.”

He had rented in San Francisco for 25 years before moving into his new digs last September with his girlfriend, Cathy Keating. “We like old houses, and a great benefit of this program is that it helped us keep a beautiful but deteriorating house from deteriorating further. With the work we did, we expect it to still be standing and beautiful 80 years from now,” he said.

Renovation financing through the 203k program allows the costs of needed repairs and improvements to be included in the FHA federally-insured loan amount instead of having the buyer come up with cash or a separate loan to do the work.

“This is a perfect loan for an as-is situation,” said Kristine Marr, a loan officer with Prospect Mortgage in Lafayette, Calif. “It’s not a new loan program, although I think it’s going to have a lot more use today because we have so many foreclosures and bank-owned properties. You go into lots of homes and see people have yanked out stoves and ovens and fixtures and sinks.”

The work has to be done within six months after escrow closes. Borrowers have the option of putting up to six months of mortgage payments on the end of the loan if they don’t want to live in the house while the work is being done.

“Renovation financing is a program that allows you to not only finance the purchase of a home but finance any repairs and/or improvements. It provides buyers with a responsible way to purchase a fixer-upper property,” said Luis C. Munoz, who helped Meyer with the loan and is a renovation loan specialist with the Oakland branch of Mason-McDuffie Mortgage Corp. Munoz also gives presentations about the program at monthly home ownership workshops sponsored by the Unity Council, an Oakland-based nonprofit.

At a time when equity loans are hard to get, the program can also be used as a refinancing vehicle for borrowers who want to do repairs and improvements, provided the value of the home is greater than the value of the loan. “At the same time as you refinance, you pop in the extra dollars you need for whatever you want to do,” Marr said.

FHA home loans require certain health and safety standards be met and that needed repairs identified during the inspection process be completed before escrow closes. However, minor repairs and improvements costing between $5,000 and $15,000 can be done after escrow closes for borrowers who opt for a streamlined repair program.

A 203k loan can help buyers finance both minor and major repairs and improvements. It can also help buyers compete with investors when bidding for short sales and foreclosures, said Sheri Powers, director of the Homeownership Center at Unity Council.

The loans can also be used to pay for improvements such as new appliances, second-story additions, remodeled kitchens and bathrooms, and skylights, just to name a few examples. “Property repairs cost money and they want to make sure people using their loan program are going to be in the home in long run and not just the short run,” Powers said.

The loans have become more popular since home prices started falling and FHA lending limits were raised a couple years ago but are still a tiny sliver of overall FHA loan volume. Last year, 203k loans accounted for 219 mortgages in the Bay Area, compared to 35 in 2008, one in 2007 and none in 2005 and 2006, according to Department of Housing and Urban Development statistics. “It’s making a comeback,” said Powers.

Marr said that 203k financing is not for everyone. A buyer will have to work with contractors and may have to wait several months before moving in, she said. And there is no guarantee they won’t be outbid by an investor for the property. “A lot of listing agents are preferring the investors, because the investors tend to be all cash or 50% cash. That’s always hard to compete with,” she said.

(c) 2010, Contra Costa Times (Walnut Creek, Calif.).

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more real estate related headlines on RISMedia.com, be sure to see:
More Government Help Coming to Homeowners in California, Arizona, Nevada, Florida and Michigan
9 Leadership Mistakes to Avoid as We Rebuild Real Estate

On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors.

For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.

In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5% and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines.

That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500. The second credit expires April 30, is unlikely to be renewed, and remains the engine moving buyers.

“Not a single one has expressed concern about interest rates,” said Cheryl Miller of Long & Foster Real Estate in Blue Bell, Pa., acknowledging that “there is, I suppose, a false sense of security regarding rates remaining low.”

As the date for the Fed pullout approaches, analysts now generally agree that an immediate rate spike is no longer the likely result. “We think there will be a significant increase in private demand for mortgage-backed securities to take the place of the Fed,” said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed’s departure, he said, with rates possibly increasing a quarter of a percentage point, “but a significant one.”

Bankrate.com columnist Holden Lewis said rates are so low now—averaging 4.87% for a 30-year fixed this week—that an increase “is inevitable. But maybe they’ll rise gradually instead of jumping” April 1.

The Fed says it will stop buying “by” March 31 instead of “at” the end of the month, meaning that it likely has reduced its purchases and rates haven’t risen, Lewis said.

Moody’s Economy.com chief economist Mark Zandi said rates will “drift” higher in summer and fall, with the half a percentage point the Fed’s action cut working its way back in—mainly because investors believe the government would return if they got too high. For that reason, Philadelphia mortgage broker Fred Glick said, rates won’t change. “If the old buyers don’t come back, the Fed will intercede again to ensure rates during a continued slowly recovering economy will not go so high as to stymie a positive direction,” Glick said. Buyers of these securities “now see that the lenders have instituted rigorous standards to ensure that the Fannie Mae and Freddie Mac paper they are buying are very good loans,” he said.

On the other hand, said Holland, Pa.-based economist Joel L. Naroff, low rates are not sustainable, and “the only way to get the market to stand on its own is to get people to become realistic again about prices and rates.” Rates will likely rise, but “the level will still be historically low,” Naroff said.

When rates do rise, likely by year’s end, it won’t be because of the Fed’s action, but “natural macroeconomic forces” like a recovering economy and the high budget deficit, said Lawrence Yun, National Association of Realtors chief economist.

The possibility of renewed Fed intervention will likely prevent rate increases resulting from private investors demanding large risk spreads, said economist Brian Bethune of IHS Global Insight in Lexington, Mass. As a result, Bethune and IHS economist Patrick Newport believe, the rate will be at only 5.25% by the fourth quarter.

Many Fed officials have emphasized that “high unemployment and tame inflation warrant a continued promise to hold rates very low for a long time,” said Peter Buchsbaum, of Arlington Capital Mortgage in Horsham, Pa.

Some analysts expect the expansion to ease, “and I am sure the Fed does not want to extinguish the fragile recovery,” Buchsbaum said.

Treasury bond yields “did not move much after the Fed completed its $300 billion in purchases in November,” said Jerome Scarpello, of Leo Mortgage in Spring House, Pa., “meaning they were able to exit and not disrupt that market.” Rates will rise, he said, but not as high as the one percentage point others predict. “With unemployment high and foreclosures an issue, a significant rate increase can push home prices down,” Scarpello said, “and hamper the slight recovery we now have.”

(c) 2010, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

“Today’s single-family numbers are fairly encouraging, in that the level of building activity held firm even as large portions of the country experienced abnormal weather conditions,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.

“This latest data indicates that the single-family sector is gradually finding more stable ground, particularly in light of the poor weather conditions that hampered new building activity in two out of four regions last month and the continued difficulties that builders faced in accessing financing for new projects,” said NAHB Chief Economist David Crowe. “With the deadline for purchasers to take advantage of home buyer tax credits fast approaching at the end of April, improvement in single-family building activity was expected and may have continued into early March. Moreover, the very thin inventory of new homes now on the market, the pent-up demand from three-plus years of low household formations and good affordability conditions will provide the platform for a 25% gain in new-home construction in 2010 over 2009.”

While the combined pace of single- and multifamily housing starts fell 5.9% to 575,000 units in February, that decline was mostly due to a 30.3% dip in multifamily starts to a 76,000-unit pace following a double-digit increase on that side in the previous month. Meanwhile, single-family starts held virtually even, with a 0.6% decline to a 499,000-unit pace.

On a regional basis, combined starts activity declined 9.6% in the Northeast and 15.5% in the South, where unusually poor weather conditions were a factor in February. Meanwhile, starts activity posted gains of 14.3% in the Midwest and 7.9% in the West.

Permit issuance, which can be an indicator of future building activity, declined 1.6% overall to a seasonally adjusted annual rate of 612,000 units in February. This reflected a statistically insignificant 0.2% decline to 503,000 units on the single-family side and a 7.6% decline to 109,000 units on the multifamily side.

Regionally, permit issuance was mixed in February, with the Northeast posting no change, the Midwest posting an 11.7% gain, the South registering a 5.8% decline and the West recording a 2.1% decline.

For more information, visit www.nahb.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, be sure to see:
Foreclosures Take Heavy Toll on Hearts and Minds
Even in Tough Times, 77 Percent of Americans View Homeownership as a Part of Their Own Personal American Dream

The paper, “Immigrants and Housing Markets in Mid-Size Metropolitan Areas” by Gary Painter, Ph.D., director of research at the Lusk Center and co-author Zhou Yu, Ph.D., an assistant professor at the University of Utah, looked at 60 cities with housing priced lower than in the major gateways of New York, Los Angeles and Chicago. These mid-size areas, including Nashville, Detroit, Colorado Springs, Minneapolis, Sarasota and El Paso have shown an average 27% rise in new immigrant population at a time when the gateway cities are losing residents. The immigrants in these metropolitan areas come from all over the world, with the largest numbers from Mexico and China.

“The anticipated rapid growth of U.S. immigrant populations in the coming decades coupled with their movement into mid-size metro areas has the potential to transform communities,” explained Painter. “Our data suggest that immigrants are attracted to homes near active support networks of fellow immigrants and in places with lower rates of immigrant growth resulting in less competition for entry-level jobs,” he added.

Painter and Yu also found that immigrants continue to have a lower homeownership rate than native-born Americans with the same income and education levels. “Many of these immigrants may be waiting for other family members to join them before setting down more permanent roots,” explained Painter, who plans future research into the disparity in homeownership rates. He suggested that cities trying to lure immigrants with employment opportunities also start developing networks of real estate agents and lenders with the same ethnic backgrounds and a willingness to build strong ties to the new arrivals. “Nurturing links within the immigrant community is key to building a new rank of homeowners,” he said. Painter pointed out that areas with declining home values could see prices stabilize thanks to a wave of first-time home buyers who speak English as a second language.

For more information, visit www.usc.edu/lusk.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more headlines on RISMedia.com, don’t miss:
3 Tips to Tailor Your Web Strategy and Build Your Listing Inventory
A Frugal Lifestyle Shouldn’t Vanish when Economy Rebounds

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January 2010, fell 7.6% to 90.4 from an upwardly revised 97.8 in December, but remains 12.3% higher than January 2009 when it was 80.5.

Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.

As such, abnormal swings are expected in housing data. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”

The PHSI in the Northeast fell 8.7% to 71.3 in January but is 20.5% higher than January 2009. In the Midwest the index dropped 8.9% to 81.2 but is 11.8% above a year ago. Pending home sales in the South slipped 2.1% to an index of 98.1, but the index is 18.0% higher than January 2009. In the West the index dropped 13.2% to 102.9 but is 1.4% above a year ago.

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, don’t miss:
Home Buyers Rush to Take Advantage of Tax Credit Before It’s Gone
Homeowners Rent Out Rooms to Stave off Foreclosure

Buyers in the United States paid a final sale price of 2.8%, or $5,823, less than the last listing price during January, up from a median discount of 2.7% in December and 2.6% in November. December marked the first time in 11 months that buyers gained back negotiating power; for much of 2009, buyer discounts shrank as real estate markets across the country improved. One year ago, in January 2009, buyers negotiated a median 4.5%, or $10,178 off the last listing price of homes.

The biggest discounts continued to be found in Florida, although buyers in several New York City-area metros also found relatively large discounts during January. To see a list of where the largest discounts were found, click here.

However, sellers continued to do well in several markets, with most buyers in places like El Centro and Stockton, Calif., paying more than the last listing price of homes sold in January. To see the complete list, click here.

Fewer for-sale homes experienced price reductions in January 2010 than in December, with nearly one in five (19.8%) of homes for sale on Zillow experiencing at least one price cut as of the end of January.

For more real estate data, visit Zillow.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Don’t miss these headlines on RISMedia.com:
Create Your 2010 Success Blueprint
Volunteers Encourage Neighbors to Seek Trial Loan Modifications

The National Association of Realtors recently said that its pending home sales index, a forward-looking indicator based on contracts signed in January, fell to 90.4 from an upwardly revised 97.8 in December. That remains 12.3% higher than January 2009, when it was 80.5. The group blamed the weather for the month-over-month decline.

“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” Lawrence Yun, chief economist for the Realtors group, said in a statement. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February.”

The January results were the lowest since April. The biggest month-over-month drop came in the West, where the index declined 13.2%. The index fell 8.9% in the Midwest, 8.7% in the Northeast and 2.1% in the South.

(c) 2010, Los Angeles Times.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

The intent behind these changes is to make the lending process more transparent by providing settlement and loan information in a way that will allow borrowers to more easily shop loans and compare charges. To that end, the format of both the GFE and HUD-1 has been substantially altered. And while the goal is transparency for the borrower, most in our industry are still struggling to find clarity as to how to prepare these new forms.

Previously a one page document, the new GFE is now three pages in length.

The first page contains an important dates section as well as a summary of the borrower’s loan terms and the total settlement charges. The second page contains the breakdown of these charges into specific blocks depending on the particular settlement service and service provider. The last page explains that these blocks can fall into one of three different “tolerance buckets” meaning that at the time of closing, certain fees may fluctuate either by 10% in aggregate, without limitation, or not at all.

When preparing the new GFE, the loan originator must be sure to calculate the settlement charges correctly and properly disclose the charges in the appropriate GFE block. A miscalculation could be costly and result in the loan originator having to pay to cure a tolerance violation. For this reason, communication between the loan originator and settlement agent is more important than ever to ensure that the fees for all parties are accurate.

Once a new GFE has been issued, the settlement agent is required to use the new HUD-1. Page two of the HUD-1 mimics much of the format of the second page of the GFE. The third page shows whether the actual HUD-1 charges fall within the allowable tolerance limits as compared to the figures shown on the GFE. If a violation has occurred, the loan originator has 30 days from settlement to cure the violation. Page three of the HUD-1 also contains the loan summary similar to page one of the GFE. Again, the idea is that the two documents work in conjunction with each other in a way that makes comparison easy for the borrower.

For now, the best way to ensure that your company is complying with these new rules is to familiarize yourself with the new GFE and HUD-1 settlement statement forms. Both can be found on the website of the U.S. Department of Housing and Urban Development: www.hud.gov.

About the Author
Alyce Ritchie is a Partner and Practice Manager at Morris|Hardwick|Schneider.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Roughly 68% of those polled said the government should continue to support housing, and 65% believe the government should be doing more to keep families from losing their homes to foreclosure.

The poll included both home owners and renters and was conducted for the National Association of Home Builders (NAHB) by RT Strategies, a non-partisan public opinion polling firm based in Washington, D.C. RT Strategies interviewed a representative sample of 1,000 adults nationwide by telephone using live interviewers on January 29-31, 2010. The sample included 170 interviews with respondents from cell-phone-only households.

Among those polled, some key groups said the government should continue to play a vital role in maintaining a healthy housing market. For example, 78% of all potential home buyers, including 81% of renters intending to buy a home in the near future, said the government should continue to support housing.

Roughly 65% of home owners said the government also needs to do more to keep families from losing their homes. Support for more foreclosure protection was not confined merely to current home owners. Among renters, 84% said the government needs to do more to helped strapped borrowers. This issue is particularly important to women, with 71% supporting greater foreclosure protection, compared to 58% of men.

Keeping families in their homes is also particularly important to first-time home buyers, as 78% of young adults under age 30 support greater foreclosure protection. And 69% of adults who are 30 to 44, the prime age range for move-up buyers, said they support more foreclosure protection.

Overall, roughly two-in-three respondents said they own their home. Among renters, about two-in-three intend to buy a home in the near future. In addition, 15% of current home owners intend to buy a home in the near future.

The poll asked respondents for their views regarding the Worker, Homeownership and Business Assistance Act of 2009 that extended a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The legislation, which was signed into law by President Obama in November 2009, also authorized a tax credit of up to $6,500 for qualified repeat home buyers. Overall, 8% of those surveyed said they intend to take advantage of this credit, while another 24% who might have been interested in using the tax credit said they cannot afford to purchase a home at this time. Of the 33% of respondents who said they are planning to buy a home (both renters and current home owners), roughly 17% said they intend to use the tax credit.

Financial concerns continue to be the greatest barrier to growth in the housing market. Among renters nationwide who aspire to own their own home, 39% simply don’t have the money to buy a home at this time, and another 20% said the primary obstacle is that they feel they cannot qualify for a loan. Larger economic issues also play a role, as 18% of those surveyed said that job security is the greatest obstacle they face in trying to buy a home.

Weakness in the housing market itself may be blocking some home owners who would like to buy a new home, as 29% of current home owners said their greatest obstacle to purchasing another home is their inability to sell their current home. Beyond that, among current homeowners who aspire to buy a new home, 7% feel trapped by a mortgage that exceeds the value of their current home, 14% fear that the value of a new home might fall after they make the investment, and 13% say home prices are too high to allow them to buy a new home at this time.

Even amid a housing market downturn, 40% of respondents said their home is their most valuable investment, twice the number who cite any other single investment–401k accounts, savings accounts and CDs, stocks and bonds, or mutual funds–as their leading family investment.

For more information, visit www.nahb.org.

For more real estate related headlines on RISMedia.com, don’t miss:
Number of ‘For Sale’ Homes Increased 2.9 Percent in January 2010 According to ZipRealty Housing Report
FTC Proposes Rule That Would Bar Mortgage Relief Companies from Charging Up-Front Fees

“It’s not too late to take advantage of the home buyer tax credit,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “There are plenty of existing homes on the market, and even though the move-in ready newly constructed homes inventory has dwindled, builders may still be able finish a home in time.”

The IRS provides an additional two months beyond the deadline to close the deal. Buyers who sign a sales contract by the April 30 deadline are still eligible if they close the sale of the home by June 30, 2010.

More people than ever before are eligible for a home buyer tax credit, NAHB estimates that close to 70% of all potential buyers should qualify for some form of a credit.

First-time buyers don’t have to be buying their first home ever; they are defined by the IRS as those who have not owned a principal residence in the past three years. Repeat buyers may be eligible for a new $6,500 credit, as long as they have owned and lived in their current home at least five consecutive out of the past eight years.

The current credits also increase the income limits, enabling single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 to potentially qualify for a full credit.

NAHB’s website at www.federalhousingtaxcredit.com, which has received more than 6.5 million visitors since the site launched, provides basic information about the credits, detailed question and answer sections, and links to additional home-buying resources for consumers.

“If you’ve been considering buying a home for any reason, the home buyer tax credit, in addition to historically low interest rates and competitive home prices, make it an ideal time to buy,” said Jones.

For more information, visit www.nahb.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”

Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% below a year ago, and is at the lowest level since March 2006.

“Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory,” Yun said. “With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country.”

The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area.

A parallel NAR practitioner survey shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% in January.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying a home in the current environment has become more challenging. “First-time buyers and others who need a mortgage are increasingly losing out to all-cash investors for the best bargains in many areas, particularly for foreclosed homes where cash is king,” she said. “Inventory conditions vary by price range, and of course there are major differences depending on location. Realtors are the best buyer resource for strategies on winning bids in increasingly competitive markets,” Golder said. “The bidding for more desirable homes will only accelerate between now and the April 30 contract deadline to qualify for a tax credit of up to $8,000.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.03% in January from 4.93% in December; the rate was 5.05% in January 2009.

Single-family home sales fell 6.9% to a seasonally adjusted annual rate of 4.43 million in January from a level of 4.76 million in December, but are 8.6% above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4% from a year ago.

Existing condominium and co-op sales dropped 8.1% to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1% above the 449,000-unit level a year ago. The median existing condo price was $172,400 in January, which is 1.4 % higher than January 2009.

Northeast
Regionally, existing-home sales in the Northeast fell 10.9% to an annual pace of 820,000 in January but are 22.4% above a year ago. The median price in the Northeast was $245,300, a gain of 8.8% from January 2009.

Midwest
Existing-home sales in the Midwest declined 6.9% in January to a level of 1.08 million but are 8.0% higher than January 2009. The median price in the Midwest was $130,300, which is 1.0% below a year ago.

South
In the South, existing-home sales dropped 7.4% to an annual pace of 1.87 million in January but are 12.0% above a year ago. The median price in the South was $140,200, down 2.0% from January 2009.

West
Existing-home sales in the West declined 5.2% to an annual rate of 1.28 million in January but are 7.6% higher than January 2009. The median price in the West was $203,400, down 5.8% from a year ago.

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, be sure to see:

Foreclosures Take Heavy Toll on Hearts and Minds
Even in Tough Times, 77 Percent of Americans View Homeownership as a Part of Their Own Personal American Dream

The extension of the home buyers’ credit is expected to spur an increase in sales during the first quarter of 2010, normally the slowest quarter of the year, said Gary Walter, executive vice president of the Southwestern Michigan Association of Realtors Inc.

With competitive prices, low interest rates and a huge tax credit on their side, buyers are jumping off the fence. And if you’ve got a house to sell, there are things you can do to make sure they land on your side, Realtors say.

“If you’re looking around your house and you ask yourself: ‘Should I paint this room?’ you probably should,” said Ryan Arnt, associate president of Meredith and Kamp Realtors of Stevensville.

Another piece of advice from area Realtors—be reasonable about the price. And be flexible. “If you’re going to list your house, it’s going to disrupt your lifestyle pattern for awhile. You’ll need to be willing to show at a moment’s notice, be as agreeable and as flexible as possible, and put a little effort into it. The return will be worth it,” said Sharon Halliburton, broker associate with American Homes of Stevensville. She and other area Realtors say the worst is over. “I’m extremely optimistic. We’ve turned a corner,” Halliburton said.

National picture
After a surge last year from September through November, the original deadline for a $8,000 tax credit, existing home sales nationally fell in December 2009. But prices rose from December 2008 and sales overall improved in 2009, according to the National Association of Realtors.

For all of 2009, there were 5.1 million existing home sales, 4.9% higher than the 4.9 million transactions recorded in 2008, the first annual sales gain since 2005.

On the other hand, in Southwest Michigan, residential sales totaled just over $381.6 million in 2009, down 18% from nearly $465.9 million in 2008. It was the area’s third consecutive year of decline in the real estate market.

The number of single-family homes sold in 2009 was within 1% of the number sold in 2008, but the average selling price, $151,190, was down 18%. The median selling price of $93,550 was down 22% from 2008. Total closed sales, including single-family and multi-family houses, vacant land and commercial property, also dropped 18%, from $516.43 million in 2008 to just over $422.2 million in 2009.

In Southwest Michigan, Walter said prices have been influenced by the percentage of bank-owned homes on the market. He said that between May and November 2009, bank-owned houses accounted for about 35% of the total unit sales. In December that figure climbed to 45%.

Arnt said he’s not quick to steer potential buyers to bank-owned listings. “Most of the banks are willing to negotiate, and that brings down the price. But I typically tell my folks that if somebody couldn’t afford to pay their mortgage, what else haven’t they been able to keep up about the house? There’s more risk. You have to be willing to gamble,” he said.

But Art Atilla, a Realtor working primarily in St. Joseph and Benton Harbor, said there’s a reason the average number of days on the market in Benton Harbor in 2009 was 91, down 11% from 2008 and the quickest turn-around time in Southwest Michigan last year. “There’s a greater number of repossessed homes in Benton Harbor, and those are being sold off quickly because investors can pick them up for $15,000 to $30,000, depending on the location,” he said. “Is it better to have empty houses owned by banks, or have an investor buy it, clean it up and get it going? The best thing would be a for a family to buy it. But these houses need to be bought by somebody.”

Economists say the market is going through swings driven by the tax credit. The extension of the tax credit is expected to spur an increase in sales during the first quarter of 2010, normally the slowest quarter of the year. The extension gives buyers until April 30 to buy and until June 30 to close. The credit, up to $8,000, originally was for first-time buyers only, but has been extended to include homeowners who have lived in their home for five of the last 8 years. These people get up to $6,500. Extension of the tax credit adds more potential buyers to the market.

By early summer, the market should benefit from a more balanced inventory, leading to an overall rise in sales in 2010, economists say.

Jobs, jobs, jobs
But a lot could depend on the job market. Realtors say job creation is the key to a continued recovery in the housing market.

Once the home buyer tax credit ends at the end of April, and if mortgage rates rise after March, will the market be in trouble again? Since most of the fuel to the housing market in 2009 was provided by the government, does the market remain too fragile for the government help to end? Arnt predicts the government will let the tax credit expire, then launch some other incentive down the road. That might be a good thing, he said. “I think they announced too early that they were going to extend it, without letting the original one expire. There were people on the fence who didn’t get off because they heard the credit was going to be extended,” he said.

Arnt is optimistic about the housing market’s future. “Personally, I feel very confident. I think the worst is over. I think we definitely have bottomed out, and things are looking very positive. There’s buyer activity that wasn’t there 30-60 days ago.” Arnt said potential buyers are breathing a sigh of relief, having made it through the holidays with their jobs intact. “I think people are more comfortable and feel that the market has been through the worst and is on the way to recovery,” he said.

Realtors are hoping that a shrinking inventory will help improve the average sales price. The December 2009 inventory dropped 7% from December 2008. In Southwest Michigan, there are 2,803 houses listed, which equates to a 13.3-month supply. That is down from a 16.5-month supply in November 2009 and a 14.1-month supply in December 2009.

National figures for January showed an inventory of 3.29 million existing homes, 11.1% below a year ago and 28.2% below the record of 4.58 million in July 2008. Nationally, the median home price in December 2009 was $178,300, 1.5% higher than in December 2008. Economists said that was due to an increased number of mid- to upper-priced houses in the mix.

Prices stabilizing
Halliburton said, after reviewing the January figures, she’s optimistic. She said that in St. Joseph and Lakeshore, there were 26 homes sold in January, a 73% jump over 15 sold last January.

The average number of days on the market for homes sold in St. Joseph and Lakeshore in January was 99, compared to 147 days a year ago. The average sales price in the same area in January was $153,648, down just $132 from a year ago.

For the entire Southwest Michigan area, she said, the average price was up 27% over a year ago. “I’m excited. These are the best numbers I’ve seen in a long time,” Halliburton said. “I’ve been listing at least one house a week since the first of the year. My spring starts in February, marketing-wise.”

To sell your house, she said, it’s got to look better than everybody else’s on the block. “Work on curb appeal outside. Inside, de-clutter, clean, paint, all the things you’ve been meaning to clean anyway- take a third of the stuff out of every room.”

Atilla recommends “staging” a house before putting it on the market. “You get somebody with a good eye and you can cost-effectively make the home as good as it can be. Paint, rearrange furniture, add color accents, put towels in the bathroom. If you need a new roof or furnace, be honest about that in your price.”

Copyright (c) 2010, The Herald-Palladium, St. Joseph, Mich.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

The third-straight drop in sales on a month-to-month basis was unexpected. “The housing market remains very, very distressed,” wrote Dan Greenhaus, chief economist for Miller Tabak & Co.

“There may have been some weather-related issues playing havoc with the sales data but clearly, these results are extremely unnerving,” wrote Jennifer Lee, an economist for BMO Capital Markets. “There is nothing positive to glean from this report.”

U.S. stock markets fell after release of the report, which coincided with release of congressional testimony by Federal Reserve Chairman Ben Bernanke, who said the economy remains fragile and needs low interest rates for an extended period of time.

Data on sales for December 2009 were revised higher to a seasonally adjusted annual rate of 348,000, up from 342,000 previously reported.

Sales of new homes are down 6.1% compared with January 2009’s 329,000 units, which was the previous record low. The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory, up from 8.0 months in December and the highest monthly supply since May.

Government statisticians have low confidence in the monthly report, which is subject to large revisions, and large sampling and other statistical errors. In most months, the government isn’t sure whether sales rose or fell. The standard error in January for instance, was plus or minus 14%. The government says it can take up to five months to establish a statistically significant trend in sales. Over the last five months, sales have been on a 362,000 seasonally adjusted annual pace, down from 382,000 in the five-month interval through December.

Sales had risen fairly steadily in the first half of 2009 before plateauing last fall. Seasonally adjusted sales have now fallen three months in a row.

With mortgage rates still very low and prices down, most analysts had concluded that the recent decline in sales was due to the impending expiration of the first-time home buyers’ credit in November.

As it happened, Congress extended the tax credit through June and expanded it to include repeat buyers. But the tax credit didn’t help sales in January. Sales of new homes are recorded once a sales contract is signed, not at closing. Some homes are sold before ground is broken on construction.

Details
Home builders had been slashing their inventory of unsold homes for more than a year to a 38-year low before January’s 1,000 increase. The number of homes for sale that are under construction fell to a record low of 100,000.

Builders have cut back on production of new homes, but they still face headwinds from unsold existing-homes as foreclosures continue to mount up. If a home isn’t sold before it’s finished, it’s taking a record 14.2 months to sell it after completion—a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.

The median sales price of a new home sold in January was $203,500, down 2.4% compared with a year earlier. Cheaper homes were selling better than expensive ones: 47% of sales were for less than $200,000, up from 43% in December. Meanwhile, 38% of sales were for $200,000 to $400,000, down from 41% in December.

Sales were down in three of four regions: down 35% in the Northeast, down 12% in the West and down 10% in the South. January’s sales were up 2% in the Midwest, the government’s data showed.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, don’t miss:
5 Great Strategies to Keep Your Website in Tip-Top Shape – Part 2
U.S. Home Value Losses Stabilize in 2009; Homeowners Lose Nearly $500 Billion in Value

C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is one of the most fundamental measures of housing well-being for first-time buyers in the state.

The minimum household income needed to purchase an entry-level home at $257,940 in California in the fourth quarter of 2009 was $44,100, based on an adjustable interest rate of 4.5% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $1,470 for the fourth quarter of 2009.

At $44,100, the minimum qualifying income was 4% lower than a year earlier when households needed $45,900 to qualify for a loan on an entry-level home. Home prices remained below peak levels, resulting in an improvement in housing affordability compared with the previous year.

At 84%, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 48%, followed by the San Francisco Bay region and Santa Barbara area both at 50%.

For more information, visit www.car.org.

Don’t miss these headlines on RISMedia.com:
Top 9 Reverse Mortgage Myths – Separating Fact from Fiction
Murphy’s Law and the Real Estate Agent

Furthermore, the Coldwell Banker January 2010 survey respondents cited financial drivers as the No. 1 reason why home buyers or sellers are moving into a house with other generations of their family (39%). Twenty-nine percent said that health care issues are the primary reason, and 6% cited a strong family bond as the main factor.

“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” said Diann Patton, Coldwell Banker Real Estate Consumer Specialist. “With two or three generations living under one roof, families often experience more flexible schedules, quality time with one another and can better juggle childcare and eldercare.”

Communicating with family members and consulting with their real estate professional is key as well. “Talk to everyone involved and determine how comfortable the family members are about sharing bathrooms, office space or common areas, and let that guide your search,” Patton advises. “All of these topics are incredibly important in finding the right kind of home to fit the family–like one that has four bathrooms or one that has three.”

Helpful Hints:
-Sellers with “mother in-law suites” or additional spaces that could accommodate a family interested in a multi-generational living arrangement should highlight this aspect of the home. Whether it’s a garage apartment or refurbished basement, this separate space can help one home stand apart from the others on its block.

-Buyers must be clear about their exact needs. Some families may just want an extra bedroom or two for family members, while others require areas with a separate kitchen, entrance, handicap accessibility or even a larger garage for additional cars. Desired location may also be influenced by proximity to local hospitals, senior centers or other important activities to family members.

-Extended families purchasing a home together should consider signing a written contract outlining everything from finances to chores and childcare. Each family should assess their situation individually and find a plan that works best for them.

For more information, visit www.coldwellbanker.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more real estate related headlines on RISMedia.com, be sure to see:
4 Major U.S. Demographic Waves to Watch in New Decade
Some Housing Markets Hot Again, According to ZipRealty Q4 2009 ‘Home Hunter Report’

“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said National Association of Home Builders (NAHB) Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.

“As our latest home builder surveys have indicated, today’s excellent home buying conditions–including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values–are helping drive potential buyers back to the market,” said NAHB Chief Economist David Crowe. However, he said, “A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”

The overall gain in housing starts was reflected on both the single- and multi-family side this January. While single-family starts posted a 1.5% gain to a seasonally adjusted, annual rate of 484,000 units, multifamily starts posted a 9.2% gain to 107,000 units.

Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell 4.9% to a rate of 621,000 units in January. This was due entirely to a 23% decline to 114,000 units on the multifamily side, which offset a big gain in that sector the previous month. Single-family permits held virtually even, with a 0.4% gain to 507,000 units.

Combined single- and multifamily housing starts rose in three out of four regions this January. The South and West each registered a third consecutive month of improvement, with 1% and 8.9% gains, respectively, and the Northeast also posted a 10% gain. The Midwest saw a 3.2% decline in overall housing starts.

Conversely, permit issuance declined in three out of four regions this January. The West was the only region to post a gain, of 8.5%, while declines of 17.8%, 20.2% and 1.3% were registered in the Northeast, Midwest and South, respectively.

For more information, visit www.nahb.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more real estate related headlines on RISMedia.com, be sure to see:
The Expanded Home Buyer Tax Credit Could Chase Away the Winter Blues
5 Ways to Eliminate Negative Cash Flow in Your Real Estate Business

The HOI showed that 70.8% of all new and existing homes sold in the final quarter of 2009 were affordable to families earning the national median income of $64,000, slightly higher than the previous quarter and near the record-high 72.5% set during the first quarter of 2009. Affordability during the final quarter of the year was up from 62.4% during the fourth quarter of 2008.

“Favorable mortgage rates and sliding house prices that have now started to stabilize nationally have both contributed to a record year for housing affordability in 2009,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “With interest rates still hovering at low levels and the economy beginning to rebound, the federal housing tax credit will encourage even more first-time and repeat home buyers to enter the market and help further stabilize housing and the economy by creating new jobs, stimulating home sales and reducing foreclosures.”

Indianapolis again was the most affordable major housing market in the country during the fourth quarter, a position the metro area now has held for four and a half years. More than 95% of all homes sold were affordable to households earning the area’s median family income of $68,100.

Also near the top of the list of the most affordable major metro housing markets were Detroit-Livonia-Dearborn, Mich.; Dayton, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Akron, Ohio.

Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind., which historically has had a favorable income-to-house price ratio, outscoring all others. In Kokomo, 98% of homes sold during the fourth quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Monroe, Mich.; Flint, Mich.; Lima, Ohio; and Bay City, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the fourth quarter of 2009. The New York metro area has occupied this position for seven consecutive quarters. Slightly less than 20% of all homes sold during the final quarter of 2009 were affordable to those earning the New York area’s median income of $64,800.

The other major metro areas near the bottom of the affordability scale included San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Redwood City, Calif.

San Luis Obispo-Paso Robles, Calif. was the least affordable of the smaller metro housing markets in the country during the fourth quarter. Others near the bottom of the chart included Santa Cruz-Watsonville, Calif.; Ocean City, N.J.; Napa, Calif.; and Santa Barbara-Santa Maria-Goleta, Calif.

For more information, visit www.nahb.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

It’s on the market as a short sale, so the owner can’t act until the mortgage holder approves the discount price. But the Altamonte Springs, Fla. couple insists on buying their first home in time to take advantage of the federal government’s home buyer tax credit, which now expires April 30, 2010.

“The house is our dream house—it’s perfect for us,” Nacion-Ograyensek said. “We are trying to get in on the tax credit, but it’s done in April, and it’s already February. We’ve gotten to the point where we’re passively looking for other houses, but none are quite right.”

Under pressure from the real estate industry, Congress extended and expanded the tax credit last fall. It was to have ended November 30, 2009 and benefit only buyers who had not purchased a home in the past three years. Like the original, the latest version is worth as much as $8,000, but it gives both first-time buyers and qualified existing homeowners until April 30 to secure a contract on a home, and until June 30 to close the deal.

Though real estate agents and homebuilders hope the measure boosts sales, as the previous version was credited with doing, some fear that buyer’s intent on getting a short sale bargain will not make the new deadlines.

In the Orlando area, 67% of Realtors’ existing-home sales in December 2009 were distressed sales—and about half of those were short sales, known for taking at least three months to complete. Even buyers who nail down a contract with the seller by the April 30 deadline can’t be sure the purchase will close within the required two months. “That’s where you get into that riverboat-gambling mentality,” said Jim Ruddy, the longtime real estate agent representing Nacion-Ograyensek and her husband. “Is it worth gambling that $8,000?” At this point in the tax credit countdown, buyers interested in purchasing a short sale must decide whether they are really committed to that property—enough that they would still want to purchase it if they miss the June 30 tax credit deadline, Ruddy said.

Nacion-Ograyensek said she and her husband recently revisited the short sale house in Altamonte Springs and decided it was worth the gamble. The kitchen is ideal for cooking, and the backyard is large enough if they have children or adopt a dog. They have decided to stick with their plan; still, each day that passes makes them more anxious.

In hopes of capturing tax credit-motivated buyers who aren’t focused on distressed properties, Florida’s real estate agents have scheduled an unprecedented statewide open house of properties listed for sale. The event, organized by the Florida Association of Realtors, is set for April 10-11—just two weeks before the tax credit deadline.

Kathleen McIver-Gallagher, chairman of the Orlando Regional Realtor Association, said buyers intent on getting the tax credit should be concerned if they are trying to purchase a short sale through lenders known for slow responses to short sale offers.

As the April tax credit deadline nears, buyers will probably become more interested in homes other than distressed sales, McIver-Gallagher said. “There are plenty of regular homes out there,” she added.

Compounding the delays are new reporting rules that lenders must now follow. Nate Morris, vice president of Thomas Mortgage and Financial Services, said the new requirements involve good faith estimates and HUD closing documents. “It certainly could further complicate things,” said Morris, a board member of the Mortgage Bankers Association of Florida. “I don’t see this working out till the middle of the year. Everyone in the mortgage business talks about it on a daily basis.”

(c) 2010, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, don’t miss:
Economy Forces Changes in Thinking about Retirement Homes
Repeat Buyers Need to Act Fast to Capitalize on Expanded Tax Credit

“Home builders can now partner with EPA and earn the WaterSense label for their newly built homes, helping create livable communities and quality homes that are easy to maintain,” said Peter S. Silva, assistant administrator for EPA’s Office of Water. “These homes will save homeowners as much as $200 a year on utility bills compared to their current homes.”

EPA worked with hundreds of stakeholders over the past three years to develop this specification, which was designed to complement existing green building programs. WaterSense labeled new homes, which will be 20% more efficient than typical new homes, must be independently inspected and certified by an EPA licensed certification provider to meet the WaterSense criteria for water efficiency and performance.

The new homes will feature WaterSense labeled plumbing fixtures, Energy Star qualified appliances (if installed), water-efficient landscaping, and hot water delivery systems that deliver hot water faster, so homeowners don’t waste water—or energy—waiting at the tap.

By investing in WaterSense labeled homes, American home buyers can reduce their water usage by more than 10,000 gallons per year—enough to fill a backyard swimming pool—and save enough energy annually to power a television for four years.

If the approximately 1.27 million new homes built in the United States each year were WaterSense labeled, it would save more than 12 billion gallons of water.

With this announcement, EPA is inviting home builders to join the WaterSense program and commit to building water-efficient new homes.

WaterSense, a partnership program sponsored by EPA, seeks to protect the future of our nation’s water supply by offering people simple ways to use less water.

For more information, visit www.epa.gov.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Don’t miss these headlines on RISMedia.com:
4 Steps toward a Successful Real Estate Marketing Strategy
Fannie Mae Adopts New REO Policy

The new guidelines prohibit mortgage brokers from directly ordering appraisals for FHA loans. Earlier this year, Fannie Mae and Freddie Mac implemented a similar policy as part of their Home Valuation Code of Conduct (HVCC).

“Our members, the nation’s largest appraisal management companies, already have significant panels of FHA-certified appraisers,” said Jeff Schurman, Executive Director of TAVMA. “There are more than 51,000 FHA-approved appraisers nationwide and our five largest members currently work with over 20,000 of these FHA-approved appraisers. They’re prepared; the AMC industry is ready.”

Based on the vociferous reaction to HVCC, Schurman said he expects that mortgage brokers, independent appraisers with strong business ties to brokers and Realtors will again protest this change. “We expect that there will be significant push-back claiming that the rules will create bottlenecks, shift work to less-experienced appraisers and delay deals,” he continued.

AMCs currently provide approximately 60% of all appraisals used in the mortgage industry, and TAVMA’s 46 AMC members account for about 85% of this volume. More than 60,000 local appraisers currently work with AMCs.

Schurman added, “When you consider that more than 60% of the appraisers in the country work with AMCs, it stands to reason that AMCs will have a presence in virtually every market- including working on FHA transactions.”

For more information, visit www.tavma.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.