“As of October, the deadline for starting a home that could be completed in time for purchasers to take advantage of the $8,000 first-time home buyer tax credit had come and gone, and builders had no clear sign of whether Congress would extend the credit beyond the end of November,” explained Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, now that Congress has wisely moved to extend the tax credit into next year and expand its eligibility to more buyers, we hope and expect that this will have a substantial stimulative effect on home sales and help keep the housing market solidly on the road to recovery.”

“Builders were clearly in a holding pattern in October as the future of the home buyer tax credit hung in the balance,” agreed NAHB Chief Economist David Crowe. “This is not surprising, given the fact that the tax credit had been the primary driver of construction and sales in the summer and early fall. However, the fact that permits for single-family construction remained roughly unchanged in the month is an indication that builders are preparing for the possibility of more favorable housing market conditions in the future. That said, significant challenges continue to confront builders with regard to obtaining financing for viable projects and appropriate appraisal values on newly built homes.”

Single-family housing starts declined 6.8% in October to a seasonally adjusted annual rate of 476,000 units, the slowest pace since May of this year. Meanwhile, multifamily housing starts fell by a dramatic 34.6% to a seasonally adjusted annual rate of just 53,000 units – the slowest pace on record.

Combined starts activity fell across the board in October, with the Northeast posting an 18.8% decline, the Midwest a 10.6% decline, the South a 9.6% decline and the West an 8.5% decline, respectively.

Permit issuance, which can be an indicator of future building activity, fell 4% overall in October to a seasonally adjusted annual rate of 552,000 units, due primarily to a double-digit drop-off on the multifamily side. While single-family permits held virtually flat at 451,000 units, multifamily permits were down nearly 18% to 101,000 units.

Regionally, permit activity was mixed, with the Northeast posting no change for the month, the Midwest registering a 2% gain, the South posting a 5.8% decline and the West posting a 6.7% decline, respectively.

For more information, visit www.nahb.org.

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“The tax credit has already proven to be an effective means of boosting economic activity,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “We hope that the government’s action to enhance it will have the intended additional stimulative effect that will help get housing and the economy back on solid ground.”

The new law extends the $8,000 first-time home buyer credit through April 30, 2010, giving buyers who have signed a sales contract by that deadline until June 30 to close their deal. A new credit of up to $6,500 was created for repeat home buyers who buy a principal residence if they have been residing in the home they currently own (or previously owned) for five consecutive years out of the eight years preceding the purchase of the new home.

“It’s not just a first-time buyer tax credit anymore,” Robson said. “Move-up buyers, move-down buyers, and others who have previously owned a home can now qualify as well. In fact, close to 70 percent of all potential home buyers should now qualify for some form of the credit.”

Income limits for eligible buyers have also been increased to allow more consumers to qualify, particularly those in markets with a higher cost of living. Now single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 may be eligible. Partial credits are available to home buyers who earn up to $20,000 more than the limits.

A leading source of consumer information on the tax credit is NAHB’s website at www.federalhousingtaxcredit.com, which saw a huge increase in visits in the days after the new law was signed. It provides basic information about the first-time and repeat buyer credits, detailed question and answer sections, and links to additional home-buying resources for consumers.

“The federalhousingtaxcredit.com website had more than 70,000 visits on the Monday after the President enacted the law,” said Robson. “Since the site was established in mid-2008, there have been more than 6 million visits by people seeking information about the home buyer tax credits. That tells you how hungry consumers are for easy-to-understand information on this great opportunity that has been opened to them.”

NAHB estimates that the home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.

For more information, visit www.nahb.org or www.federalhousingtaxcredit.com.

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Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

The 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows first-time buyers accounted for a record 47% share of home sales over the past year, up from 41% in the 2008 survey. The share has risen steadily since a cyclical low of 36% in 2006.

Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0% over last year, and then are forecast to rise 13.6% to 5.69 million in 2010. “A steady draw down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy,” Yun said.

New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.

The 30-year fixed-rate mortgage will probably average 5.3% in the fourth quarter, rising gradually to 5.8% by the end of next year. NAR’s housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.

“We’ve seen a steady downtrend in housing inventory for well over a year and home prices appear to be in the early stages of stabilizing. With the expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5% in 2010, but with wide geographic differences,” Yun said. He expects growth in the U.S. gross domestic product to be at a pace of 2.5% in the current quarter, with GDP up 2.8% in 2010.

The unemployment rate is close to peaking and is projected to ease to 9.5% by the end of next year.

“The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4% this year, then rising 1.6% in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4% this year and 1.2% next year.

For more information, visit www.realtor.org.

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A great way to deliver this is through audio podcasts. With podcasting, the sky is the limit. And most importantly, it can help position you as the authority on the market in your area. If you are thinking about starting your own podcast, you may want to think about a couple of different approaches. For example, your report could focus strictly on the “numbers” of what is happening in the market for the month or the quarter. Or you could talk about a timely issue, such as the homebuyers’ tax credit. Or you could create pieces that are relevant for a longer period, such as how to buy a home during the holidays.

Relaying the information through someone’s voice is much more personal than receiving a postcard or e-mail, so hosting a podcast can be effective in not just showing that you are a knowledgeable resource, but also for building relationships and trust with clients.

For example, at Evers & Co., we have been providing comprehensive market updates and tips on buying and selling in the current Washington, D.C., region market to our clients for years.

Recently, we have taken these market updates to a new level through audio posts or podcasts. These 2- to 3-minute audio files are easily uploaded to our firm’s website and distributed via e-mail to our contacts.

In addition, people interested in these market updates can subscribe to an RSS feed and receive the information as it is released, through a forum such as Google Reader. Tracking the number of subscribers is beneficial because it allows podcasters to see growth in their following, which helps justify the time commitment involved with planning, recording and promoting the podcasts.

Another group many real estate professionals may wish to connect with on a regular basis is the news media. Like agents, journalists’ schedules are becoming increasingly hectic as media outlets are reducing staff and vamping up reporters’ responsibilities to include blogging, conducting online chats and promoting their stories through social media platforms like Twitter.

When in need of a reliable source for an article, journalists value responsiveness so they can meet their often tight deadlines, as well as the “quotability” of the expert. This means that the source is able to express their ideas or opinions in a clear, succinct manner that is easily understood by a consumer audience with statements that can be seamlessly incorporated into the article as quotes.

Rather than scheduling an interview or waiting for a call back, journalists who receive an informative podcast often quote directly from the audio and save time without even having to connect with the source. Also, since the journalist can listen to the podcast multiple times, there is less of a chance that the source will be misquoted.

While podcasting is a great tool that may provide real estate professionals with an “edge,” agents should be mindful of the time commitment before jumping in. It’s also important to establish the frequency of podcast recordings and to keep up in order to convey reliability to potential clients and the media. To get started, podcasting equipment is available at electronics stores like Radio Shack, and editing software is available for purchase online. It’s certainly a valuable tactic to consider for your marketing toolbox.

Donna Evers, president and broker of Evers & Co. Real Estate (www.eversco.com) in Washington, D.C., has been communicating with media and the public through monthly audiocasts for about six months. She has more than 30 years of experience in residential real estate and is a frequent resource for print, radio and television journalists who cover housing market trends in the Mid-Atlantic region.

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In some markets, buyers continued negotiate large discounts. The Vero Beach, Florida market topped the list again in September, with buyers paying a median 8.1% off the final price of homes. Based on a median listing price of $235,000, that translates to a discount of nearly $19,000. The other top negotiating spots were also in Florida, with buyers in the Naples, Sarasota and Panama City markets negotiating more than 7% off the final listing price of their new homes.

On the other end of the spectrum, buyers paid more than asking price in seven metro areas. Most of these were the California markets that have been hardest-hit by foreclosures. In Stockton, buyers paid a median 2.4%, or about $4,500 more than asking price. In Las Vegas, buyers also paid more than asking price (a median 0.5% or $836).

Here is a list of 10 markets where sellers are getting more than asking price.

One note about homes still on the market: 22.7% of them had a price cut as of the end of September, and sellers cut a median 6.5% off.

For more information, visit www.Zillow.com.

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Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.”

During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2% below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales- foreclosures and short sales- accounted for 30% of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes.

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market,” Yun said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16% in the third quarter from a record low 5.03% in the second quarter, but was dramatically lower than the 6.32% average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30, 2010.”

The biggest sales gain between the second and third quarters was in North Dakota, up 42.3%; followed by Rhode Island which rose 26.5%; and Pennsylvania, up 25.6%. The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2% from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3% to $115,600, followed by Oklahoma City, at $144,100, up 9.1% from a year ago.

“The wide range of market performance and reversals around the country, ranging from double-digit gains to double-digit losses in both sales and prices, underscores just how local real estate truly is,” Yun said. “The wide changes and mix of numbers also indicates a market in transition, hopefully to one that is becoming more balanced and stable.”

Median third-quarter metro area single-family home prices ranged from a very affordable $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area in the third quarter was San Francisco-Oakland-Fremont at $538,100; followed by the Anaheim-Santa Ana-Irvine area of California at $498,800.

Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $70,700, and Lansing-East Lansing, Mich., at $86,600.

In the condo sector, metro area condominium and cooperative prices- covering changes in 55 metro areas- showed the national median existing-condo price was $178,000 in the third quarter, down 15.4% from the third quarter of 2008. Four metros showed annual increases in the median condo price and 51 areas had declines.

The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos, at $215,100, up 13.3%; followed by the Cincinnati-Middletown area, up 2.0% to $119,700; the Toledo, Ohio, area, where the median price of $130,400 rose 1.7% from the third quarter of 2008; and the Indianapolis area at $114,400, up 0.8%.

Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise, Nev., to $432,800 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was New York-Wayne-White Plains at $297,500, followed by Boston-Cambridge-Quincy at $293,700. Other affordable condo markets include Reno-Sparks, Nev., at $81,300 in the third quarter, and Jacksonville, Fla., at $91,600.

Northeast

Regionally, existing-home sales in the Northeast surged 16.7% in the third quarter to a pace of 930,000 units and are 6.9% higher than a year ago. The median existing single-family home price in the Northeast declined 9.4% to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8% from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6%; and the Pittsburgh area, where the median price rose 1.5 percent to $124,600.

Midwest

In the Midwest, existing-home sales jumped 13.2% in the third quarter to a pace of 1.20 million and are 5.2% above a year ago. The median existing single-family home price in the Midwest was down 5.5% to $150,200 in the third quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Cedar Rapids, Iowa, where the median price of $145,700 was 7.6% higher than a year ago; followed by Bismarck, N.D., at $157,200, up 7.5%; and Ft. Wayne, Ind., where the median price rose 6.9 percent to $102,500.

South

In the South, existing-home sales rose 11.3% in the third quarter to an annual rate of 1.97 million and are 5.9% higher than the third quarter of 2008. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from a year earlier. After Cumberland and Oklahoma City, the next strongest price increase in the region was in Shreveport-Bossier City, La., at $152,300, up 8.6% from the third quarter of 2008; Jackson, Miss., at $141,200, up 4.6%; and Durham, N.C., where the median price rose 3.6% to $184,300.

West

Existing-home sales in the West increased 5.6% in the third quarter to an annual rate of 1.19 million and are 4.6% above a year ago. The median existing single-family home price in the West was $224,000 in the third quarter, which is 16.4% below the third quarter of 2008. The best metro price performance in the West was in Yakima, Wash., where the median price of $158,400 rose 2.7% from a year earlier; the Denver-Aurora area at $229,100, up 1.8%; and the Kennewick-Richland-Pasco area of Washington, where the median price rose 0.7% to $172,200.

For more information, visit www.realtor.org.

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Erin Mitchell

Director of Program Development

The Move Advocate

www.themoveadvocate.com

Few things are scarier than moving long distance.

Ask people about their last move and you are likely to hear a few horror stories that rival some of the best Halloween films out there.

As a successful real estate professional, you can add value to your clients’ total transaction by referring them to a reliable move management company. Move management companies are able to pass on significant discounts and benefits not available to individual customers. Some even provide dedicated “move advocates” to help clients manage the logistics of their move.

Because they typically operate on a referral basis, be sure the move management companies you speak with have a policy that ensures high-quality van line providers.

The Move Advocate, an international move management company based in Scottsdale, Arizona, prescreens the van lines it recommends and manages them to strict service-level agreements.

Flip open the Yellow Pages or type “moving” into a search engine and you are deluged with all sorts of moving services and van lines. People are frequently overwhelmed with the research involved to determine which companies are reputable and whether they are going to receive the best value. The Move Advocate takes the legwork out of that process.

Move management companies differ in the level of service and number of van line and relocation partners in their network.

When you are referring your clients to a move management company, or they are looking for one on their own, consider the following:

1. How long has the move management company been in business?

2. How many van lines are in their network of providers?

3. What are the service level requirements van line partners must meet?

4. What extra benefits does the move management company provide?

5. Does the move management company charge for its services?

6. Can the company service both U.S. and international moves?

7. Is a representative available 24/7 if there is an issue?

8. What extra benefits can the move management service provide your customers?

9. What is the van line referral process?

10. How is the move management company compensated?

There are times when surprises are fun, and a little bit of scary is a good thing. Not when it comes to moving long distance. By referring your clients to a reliable move management company, you are demonstrating your commitment to their total relocation needs.

For more information, visit www.moveadvocate.com.

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“Previous versions of the homebuyer tax credit were successful in helping put a floor on declining home prices and the economic recession as a whole, but they lacked a few key elements necessary to create a sustainable recovery,” said Weichert. “Congress and the President should be commended for not only recognizing the impact the existing credit has had on our economy but for also understanding the need for even further action.”

The new bill extends the existing $8,000 tax credit for first-time homebuyers until April 30, 2010. The enhanced tax credit also gives financial incentive to a larger crop of buyers by providing a $6,500 tax credit to current homeowners, who have lived in their home for five consecutive years in the past eight years, and by increasing the income limits for eligible home buyers to $125,000 for singles and $225,000 for couples.

To avoid the demand for quick closings that was created by the previous tax credit, time has also been added to allow for closing the home purchase. As long as buyers have a binding contract by April 30, they will then have through June 30, 2010 to close the transaction and be eligible for the tax credit.

In Weichert’s view, the most vital component of the current bill is the expansion of the tax credit to include repeat buyers. While the tax credits that have been in effect have clearly stimulated home sales and eased price declines in the affordable, first-time buyer market, they have not had the desired “trickle-up” effect on mid- to high-priced homes.

“This new bill should help spread the recovery we are seeing at the entry-point level to the rest of the housing market. Clearly it was already a great time to purchase for first-time buyers. But this expanded credit coupled with low interest rates and affordable home prices makes it a great time to purchase now for current homeowners too. If you have been wanting to trade up or think that might be in your near future, the current market conditions really make it financially attractive to do so before April 30,” said Weichert.

Weichert was also optimistic about the effectiveness the enhanced tax credit would have on the overall economy. “Housing has always been a key economic driver. It is no surprise then that as housing has begun to recover that we are also seeing a rebound on Wall Street, a decline in the job loss rate and the first quarterly increase in our gross domestic product in a year. I think the extension and expansion of the homebuyer tax credit will help keep that positive momentum going.”

For more information, visit www.weichert.com.

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The FHA, the federal agency that insures low-down-payment home loans for private lenders recently said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.

“The best way to bring back some level of security is to get new buyers into those vacant units. You can’t do that until new homeowners have access to financing,” said Meg Burns, director of the FHA’s single-family program development. The new rules—which are temporary—come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.

“This might be an entree for traditional and conventional lenders to return to the marketplace. Symbolically, it’s a pretty significant move,” said Peter Zalewski, a condo market analyst and broker with Condo Vultures in Bal Harbour, Fla.

The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.

Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.

Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even “scared” to lend money, prompting the agency to step in as a way of calming nerves. “We’re coming in and saying we’ll approve the projects and back them so you will feel confident and comfortable lending in this environment,” Burns said.

Securing the blessing of the FHA is important because it allows borrowers to get loans that require down payments of only 3.5% and qualify under less burdensome terms. Most conventional loans now require 20% down, keeping creditworthy borrowers on the sidelines. In some new projects, lenders have asked for down payments of as much as 40 to 50%.

Among the new, temporary rules is a measure extending a deadline allowing lenders to submit mortgage loans for spot approval in buildings that have not been approved for FHA lending. The administration had said the so-called spot loans would be eliminated by the end of the year but the new deadline is February 2010.

The new guidelines also:

-Increase from 30% to 50% the number of units in a project that can be financed with FHA loans. FHA, however, will make exceptions, even allowing up to 100%, when buildings meet an additional set of more stringent criteria.

-Require at least 50% of units in a complex to be owner-occupied or sold to owners who plan to live in the units. Bank-owned units may be disqualified from the percentage calculation.

-Reduce a presale requirement in new construction to 30%, compared to 70% for loans from conventional lenders.

“This temporary guidance represents incredible leniency in terms of financing standards and loan standards,” Burns said. It’s hard to say how many buildings may benefit from the new rules, but mortgage brokers and real estate observers applauded the reprieve. “This should really help some of the stalled projects if they can get their buildings approved,” said Grant Stern, a mortgage consultant in Bay Harbor Islands, Fla., who specializes in Fannie Mae and FHA guidelines. “A lot of these buildings looking to sell out the rest of their inventory should be able to get FHA approval to close out the projects.”

But there will be more hurdles to overcome beginning Dec. 7. That’s when a bevy of additional regulations take effect, including a provision that withholds approval from buildings where more than 15% of unit owners are past due on association fees.

(c) 2009, The Miami Herald.

Distributed by McClatchy-Tribune Information Services.

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Statewide sales of existing condominiums in the third quarter rose 56% compared to the same time the previous year. This marks the fourth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.

Statewide sales activity in 3Q 2009 also increased over 2Q 2009’s sales figure in both the existing home and existing condo markets, Florida Realtors’ records show. For 3Q 2009, statewide sales of existing homes rose 2.82% over the 2Q 2009 figure; existing condo sales statewide in 3Q 2009 increased 0.37% over the 2Q 2009 level.

To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts. “Most economists think the recession is over, but people are afraid to spend money as unemployment keeps going up, which creates problems for every sector of the real estate market,” said Tim Becker, the center’s director.

On the positive side, survey respondents expressed increasing optimism about their own business outlook, and predicted great opportunities for future investment. Becker noted that the euro’s favorable exchange rate against the dollar and the availability of desirable commercial property at low prices is encouraging international investors. “Everybody thinks that Florida will rebound because we have so much going for us – the sun shines every day and there are a lot of advantages to living here,” he said. “Foreign investors see that too and believe their prospects are good for long-term investments.”

All of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the third quarter compared to the same three-month-period a year earlier, while 17 MSAs showed gains in condo sales.

The statewide existing-home median sales price was $145,400 in the third quarter; a year earlier, it was $185,600 for a decrease of 22%. The 3Q 2009 statewide existing-home median sales price was 1.25% higher than 2Q’s statewide existing-home median sales price of $143,600. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for condo sales, 14,797 units sold statewide for the quarter compared to 9,488 in 3Q 2008 for a 56% increase. The statewide existing-condo median sales price was $106,100 for the three-month period; in 3Q 2008, it was $160,100 for a decrease of 34%.

Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.16% in 3Q 2009; one year earlier, it averaged 6.32%.

For more information, visit www.floridarealtors.org.

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

“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the fundamental forces driving foreclosure activity in this housing downturn—high-risk mortgages, negative equity, and unemployment—continue to loom over any nascent recovery. And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.” 

Nevada, California, Florida post top state foreclosure rates
Despite a 26% decrease in foreclosure activity from the previous month, Nevada continued to document the nation’s highest state foreclosure rate—one in every 80 housing units received a foreclosure filing in October. A total of 13,842 Nevada properties received a foreclosure filing during the month, a 4% decrease from October 2008 and the first ever year-over-year decrease in Nevada since RealtyTrac began tabulating the year-over-year change in January 2006. Nevada default notices were down 10% from October 2008, and scheduled foreclosure auctions were down 6% from October 2008, while bank repossessions were up 8% from October 2008. A new foreclosure mediation program implemented by state law (AB 149) in July may be slowing the inflow of distressed properties into the foreclosure pipeline. 

With one in every 156 housing units receiving a foreclosure filing in October, California posted the nation’s second highest state foreclosure rate for the second month in a row. A total of 85,420 California properties received a foreclosure filing during the month, a decrease of 1% from the previous month but still nearly 50% above the total reported in October 2008. The state’s default notices and scheduled foreclosure auctions were up 120% and 73% respectively from October 2008, when California foreclosure activity was in the midst of a three-month trough after a law (SB 1137) requiring lenders to give distressed homeowners extra notification before initiating foreclosure took effect in September 2008. 

Florida posted the third highest state foreclosure rate, with one in every 168 housing units receiving a foreclosure filing in October. A total of 51,911 Florida properties received a foreclosure filing during the month, a nearly 6% decrease from the previous month and a decrease of 4% from October 2008. It was the first year-over-year decrease in overall Florida foreclosure activity since July 2006. 

Other states with foreclosure rates ranking among the nation’s 10 highest were Arizona, Idaho, Illinois, Michigan, Georgia, Maryland and Utah. 

Four states account for more than 50 percent of national total
Four states accounted for 52% of the nation’s total foreclosure activity in October: California, Florida, Illinois and Michigan. 

Illinois posted the third highest state total after California and Florida, with 19,946 properties receiving a foreclosure filing in October—a 56% spike from the previous month and the highest monthly total for Illinois since RealtyTrac began issuing its report in January 2005. The state’s foreclosure rate jumped from No. 11 in September to No. 6 in October, and it was the only state with a foreclosure rate in the top 10 to post a monthly increase in foreclosure activity. A recent state law (SB 2513) that gives distressed homeowners an extra grace period to seek counseling to help avoid foreclosure may have created some pent-up foreclosure activity in the state. After the law went into effect in April, Illinois foreclosure activity decreased for three straight months before beginning to climb again. 

Michigan registered the fourth highest state foreclosure activity total despite a nearly 2% decrease from the previous month. A total of 16,468 Michigan properties received a foreclosure filing in October, an increase of nearly 45% from October 2008. 

Other states with totals among the 10 highest in the country were Nevada (13,842), Arizona (13,345), Georgia (12,468), Texas (11,798), Ohio (11,646) and New Jersey (7,435). 

Three states account for all top 10 metro foreclosure rates
Despite a 27% decrease in foreclosure activity from the previous month, Las Vegas continued to document the nation’s highest foreclosure rate among metropolitan areas with a population of at least 200,000. One in every 68 Las Vegas housing units received a foreclosure filing in October—more than five times the national average. 

Seven of the top 10 metro foreclosure rates were in California, led by Vallejo-Fairfield at No. 2 and Modesto at No. 3, both with one in every 81 housing units receiving a foreclosure filing. Other California cities in the top 10 were Riverside-San Bernardino-Ontario at No. 4 (one in 83), Bakersfield at No. 6 (one in 97), Merced at No. 7 (one in 100), Stockton at No 8 (one in 116), and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 130). 

Metro areas in Florida accounted for the remaining two spots in the top 10: Cape Coral-Fort Myers at No. 5 (one in 92) and Orlando-Kissimmee at No. 9 (one in 117). 

For more information, visit www.realtytrac.com. 

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

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“Although we had been saving money and thinking about getting into the real estate market for some time, the tax credit was the motivating factor behind our decision to move forward and purchase a home,” says Huisking. This sentiment echoes that of many first-time buyers who decided to take advantage of the tax credit at a time when home prices and mortgage rates are at all time lows. “Knowing that the credit was going to expire was a huge push into our moving ahead with the search,” he adds. Now that the credit has been extended and expanded, more first-time buyers as well as move-up buyers have the opportunity to take advantage of a benefit that won’t be around forever.

For Bond and Huisking, the process of buying their first home and utilizing the tax credit is another success story in what will hopefully become a turning point for the real estate industry. Starting the process of searching for a home on their own, Bond and Huisking reached out to Vanderblue and Vartuli to enlist their help to be able to purchase a home before the tax credit expired. Vanderblue and Vartuli showed Bond and Huisking a dozen or so properties before they found the one that was right for them and recently purchased the home in a process that took just 30 days. “We recognized the value of the home as soon as it came on the market and moved quickly in order to close on it within 30 days,” adds Huisking.

Even though Bond and Huisking could afford the home without the tax credit, it was a nice bonus for them. “If we had been on the edge of being able to afford the house, we might have been more hesitant,” says Huisking, “but we saw an opportunity to be able to purchase the home and then use the credit to invest back into the house.” Looking back on the entire process, Huisking sums it up in one word: simple. “In order to use the tax credit to purchase our home, all we had to do was file an amended 2008 tax return and we got the money within 6 weeks or so,” he says. “The biggest confusion we had throughout the process was whether or not we would be eligible for the entire credit or just a partial credit because of our income level.” Since Bond and Huisking filed as separate returners and she qualified for the entire credit, they were able to take advantage of the entire $8,000.

“The first-time homebuyer tax credit has been a great tool to get prospective buyers off the fence,” says Vanderblue. “Now that the credit has been extended and expanded, buyers are going to sit up and take notice and will move to take advantage of it now, as it won’t last forever,” she adds. The increase in income level is a huge advantage of the extended tax credit ($125,000 for single filers and $225,000 for joint filers). “This is crucial, especially in a market such as Fairfield County,” says Vanderblue. “One of the biggest problems with the initial tax credit was the income level because most first-time buyers in our market didn’t qualify for the credit because of their income,” she says.

Educating prospective buyers about the advantages of the tax credit has become an important task for Vanderblue and Vartuli. “We stress the overall picture of what the credit is about to our clients but advise that they speak with an accountant or attorney to get the specifics. The extended homebuyer tax credit gives us something to talk about as well as a way to shine as Realtors while educating our clients,” concludes Vanderblue.

About the Vanderblue Team
One of the many benefits to using the Vanderblue Team is the specialized skill sets each team member offers, such as Short sales, New Construction, Investment Division, etc. Vartuli is highly-skilled in representing first-time buyers in the Fairfield and Trumbull areas and was chosen specifically to represent these buyers for her ability to guide them and educate them on the many options available to first-time buyers.

For more information, visit http://vanderblue.com.

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RISMEDIA, November 10, 2009—That is one of the most common objections to purchasing real estate where there is a community Association requiring the payment of regular dues and fees. These can range from less than a hundred dollars per month, if for example the only service is streetscaping, to upwards of a couple of thousand dollars for a luxury penthouse. Depending on square footage and amenities, most fees range between $250 and $750. 

Taken out of context, the amount can seem outrageous. But, when considered from a prospective of value received, you can be pretty certain that you are getting one of the last great bargains. 

When evaluating the HOA monthly fee, it is important to consider three things: how was the number arrived at, what does it cover, can anything be done for less? 

1. How is the HOA fee determined? 

In California, and probably most other states, developers must obtain state approvals before their projects can be offered to prospective buyers. Part of the submission process for developments with an Owners Association is the creation of a detailed budget for the operation and maintenance of the common area and the provision of necessary services. 

Developers want to project the most positive scenarios in order to keep HOA dues low and not discourage prospective buyers. And, they are also aware that a $500 per month Association fee equates to another $100,000 that the buyer could have spent for the home. The higher the Association fee, the less the borrower/buyer can spend. 

On the other side, the State wants to establish a realistic budget that will allow for proper funding well into the future. For the consumer, that process of compromising means that the budget is as realistic as it can be at the time it was created. 

The main thing to keep in mind is that the developer will be paying the Association fees on all unsold property within the Association. The developer is not the one benefiting from high fees so there is no reason to blame them. 

2. What does the HOA fee is cover? 

It’s also important to consider what is included. Amenities very widely from project to project; high-rises cost more to operate and maintain than low rise buildings. 

One of the responsibilities associated with real estate ownership is the obligation to maintain and protect the improvements from deterioration, damage, weathering, etc. Living out in the burbs you need a garage full of tools and a lot of weekends to stay ahead of nature. 

Depending on the type of development, there could be a need for a lot of landscape maintenance. That takes labor, and labor is expensive 

If there are common areas such as a lobby, pool, gym, or even hallways, they need to be cleaned regularly, maintained occasionally, painted often, and replaced over time. Garages must be swept and windows washed. 

Then there is liability, property and other forms of insurance, and possibly a security force. 

What utilities are included? Are water, sewer, electric, gas, trash and cable billed individually or are some paid collectively through the Association? 

Then there is usually a management Association looking after things, paying the bills, and communicating all of that to the homeowners. 

3. Can it be done for less? 

Add it all up and you’ll see that the economies of scale allow for a high level of service at a true cost far lower than you could do it yourself. 

And remember, it is your building and your Association. You want to protect your investment and to have the kind of amenities that will allow for profitable reselling in the future. Serve on your Association board. If you can economize, you can lower your HOA fee. 

But, don’t lose sight of the fact that you are paying for important services with a volume discount. It isn’t just an expense; it’s protecting your investment.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

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

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Example 1:
Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.

Example 2:
Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.

Example 3:
Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight. 

The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. “If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010,” Nicholas said. “It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.” 

The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. “This means that more people will qualify for the credit – especially in parts of the country with higher costs of living,” Nicholas said. “This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.” 

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples: 

-The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others

-If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit).

-The credit applies even if you have co-signers on your mortgage loan 

For more information, visit www.CMPSInstitute.org. 

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The annual College HPCI released by Coldwell Banker Real Estate LLC provides an apples-to-apples comparison of similarly sized 2,200 square foot, four-bedroom, two-and-a-half bathroom homes in college markets home to the 120 Football Bowl Subdivision schools. This year, Akron, Ohio (University of Akron) is ranked as the most affordable college town, where a typical four-bedroom home costs $121,885. Muncie, Ind. (Ball State University) took the No. 2 spot at $144,996. Ann Arbor, Mich. (a quintessential college town home to the University of Michigan) came in as the No. 3 most affordable college market, where the sample size home only costs $148,000. 

Overall, the 2009 College HPCI revealed that real estate buyers can find a typical four-bedroom home for less than $250,000 in 62% of the college markets surveyed (72 total), including iconic American college towns such as: 

-Syracuse, N.Y (Syracuse University): $171,711
-South Bend, Ind. (University of Notre Dame) $183,938
-Athens, Ga. (University of Georgia): $205,862
-Oxford, Miss. (University of Mississippi): $212,000
-Knoxville, Tenn. (University of Tennessee): $223,850 

Further research indicates that the charm and affordability of college towns is appealing to more than just students. According to the U.S. Census Bureau’s 2008 American Community Survey; Austin, Texas (University of Texas), Provo, Utah (Brigham Young University), and Raleigh, N.C. (North Carolina State University) were among the metropolitan cities with the greatest population growth in 2008. In all three rising cities, home buyers can find a four-bedroom home for very a reasonable price; only $226,642 in Austin; $231,000 in Provo; and $241,462 in Raleigh. 

“College markets have long-been one of the real estate industry best-kept secrets,” said Jim Gillespie, president and chief executive officer of Coldwell Banker Real Estate LLC. “Real estate professionals have been investing in college towns for years, often purchasing homes for their children who are attending school. However, these vibrant cities are not only for students; many empty nesters and families are attracted to the health care systems, culture and overall quality of life that college towns offer.” 

While real estate in college markets may be an undiscovered gem, pride for teams and alma maters are definitely not under-wraps, regardless of how pricey the school or city. For an added perspective, Coldwell Banker asked fans to share “what’s best” about living in their college towns for its new Coldwell Banker On Location video: http://www.youtube.com/watch?v=E0S7eKOih7k. 

More expensive college towns are also worth the investment for many people. For example, students have been competing for years to get accepted into prestigious schools like Stanford University, despite its high tuition and cost of living. Located in the most expensive college market in the nation (Palo Alto, Calif.), an average 2,200 square foot home costs a whopping $1.49 million. 

2009 Coldwell Banker College HPCI – Highlights & Interesting Real Estate Related Facts: 

This year, there is a $1,367,841 price difference between the sample size four-bedroom home in the most affordable college town (Akron, Ohio) and most expensive college market (Palo Alto, Calif.). 

Five schools with football-teams-to-watch this year currently ranked in the BCS top 25 standings are also front-runners for home buyers:

-Fort Worth, Texas (Texas Christian University), $153,450
-Houston, Texas (University of Houston), $159,847
-Cincinnati, Ohio (University of Cincinnati), $189,750
-Boise, Idaho (Boise State University), $215,432
-Iowa City, Iowa (University of Iowa), $217,500 

The Mid American Conference is the most affordable conference overall, where a typical four-bedroom home costs an average of $182,322.

For more information, visit www.coldwellbanker.com. 

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

Flexibility may be the buzzword of the millennia. Flexible schedules, flexible work hours, flexible space—Americans are regaining control by rearranging the flow of their day-to-day lives. Very few of us lead cookie-cutter lives, so cookie-cutter home solutions don’t always work. If every family has a unique configuration and life pattern—consider single moms, empty nesters with visiting kids and grandkids, families with young children, multigenerational families—shouldn’t the architecture that surrounds them be flexible enough to accommodate their needs? The opportunity is to identify houses that offer “adaptable possibilities” and develop talking points aligned with your client’s situational needs. 

Buying a home today is an emotional, economic and deeply considered purchase. That home will be a base station for family, friends, neighbors, school, work and play and its layout and traffic pattern will need to accommodate the “busy-ness” of life. As buyers imagine themselves in a potential home, adaptable space may be a selling point over and above simple staging. Here are a few spaces to consider: 

-Kitchen: We cook, we do homework, we entertain, we do crafts there. Open or co-located areas for simultaneous activities and multiple people usually top the wish list. If space is limited, suggest a corner of the kitchen or an adjoining dining room as a homework/conversation area.

-Open, accessible plans: If your client is single, an open plan delivers a great space for entertaining. An older or multi-generational family may view it in terms of accessibility. Either will have visiting family members, so having a “visitable” home offers the opportunity to welcome anyone regardless of age or ability. One zero-threshold entry, wide doorways and a main floor bathroom offer ease of use and accessibility whether you’re unloading groceries or have a temporary or permanent physical impairment.

-Home office/library/reading space: Part of a dining room, den, extra bedroom or even an extra closet can be furnished to create a small space for quiet activities. Bookcases lining a wall speak volumes regarding functionality far beyond the original intention of the room.

-Basement: This extra square footage offers many options so even if the space is un- or partially-finished, paint the vision for tomorrow’s media room, game room, exercise or craft area.

-Outdoor living spaces: Whether it’s a tiny lot or large open space, suggesting ideas that go “beyond the deck” with landscaping, pathways and sitting areas brings even the mundane to life. 

Seeing a home through a different lens may help your clients imagine the space as they would actually use it and gain a new perspective on possibilities. Going beyond the basics of BR/BA-speak to engage your clients in lifestyle discussions will not only help you find solutions that are right for each family; it will help them find the perfect fit for the architecture of their lives. 

Melissa Birdsong is vice president for Trend, Design & Brand, Lowe’s Companies, Inc. 

For more information, visit www.lowes.com. 

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

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The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. 

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years. 

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee. 

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008. 

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

For more information, visit www.realestateeconomywatch.com and www.wsj.com. 

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In a recent interview, Fox-Pitt Kelton analyst Robert Stevenson said the Senate’s proposal for extending the $8,000 tax credit for new homebuyers will have a “limited impact” on home sales.

A Senate committee reached a deal last week to extend the $8,000 tax credit and offer a smaller $6,500 credit for some existing homeowners. The main pitfall of the proposal is that it only pushes back the expiration of the tax credit to the end of April, Stevenson said. It is currently set to go away on Dec. 1. Stevenson said he’s skeptical the tax credit will drive activity during the slower winter months. The prime selling season for the housing market kicks off in the spring and tends to run through the warmer months. “Of course, Congress could come back and extend it again,” the analyst said. “When the next selling season starts, the housing market will depend on the state of the economy and mortgage rates, rather than tax credits.” 

The $6,500 credit for some repeat homebuyers would let more buyers participate albeit at a lower level, “but a lot of those people are effectively trapped in their current homes,” Stevenson said. 

From their peak in 2006, U.S. home prices have fallen about 30% through the end of August 2009 during the housing downturn, according to the S&P/Case-Shiller home price index. More Americans are falling behind on their mortgage payments or losing their homes in the recession as job losses pile up. Rising foreclosures are another key worry. Yet hopes that a recovery is in place were fueled by a report showing the fourth straight month of rising home prices. Some attributed the tentative rebound to buyers rushing to cash in on the expiring $8,000 tax credit. The push to extend and expand the credit has been led by home builders, Realtors and other groups connected to the housing market. 

“Failure to act now could derail the fragile housing recovery even before it has time to take root,” said Jerry Howard, president of the National Association of Home Builders, in a statement urging Congress to stretch the tax credit. “The consequences would be devastating for both housing and the economy.” Howard said the tax credit has already helped create nearly 200,000 jobs, drive home sales, stem foreclosures and stabilize prices. Homebuilder stocks were up sharply in the wake of the news on the Senate compromise. Still, some economists say the incentive’s impact is overblown. 

“I am not applying the recent home-price rebound to the tax credit,” said Cameron Findlay, chief economist at LendingTree, in a recent interview. “I don’t think the tax credit makes as big an impact as people make it out to be, although it certainly motivates first-time buyers,” he said. “If it expires, I don’t think it would shake the housing market as much as some have predicted.” 

The compromise on extending the tax credit doesn’t mean it’s a sure thing, and the proposal still face votes in Congress. One potential snag is a recent government report that uncovered fraud and abuse associated with the tax credit. Thousands of ineligible taxpayers have received millions of dollars under the program, according to the report. 

Stephen East, an analyst at Pali Research, said the proposed new $6,500 credit would likely have some impact on the lower-end of the move-up market. “In essence, this could slowly start to prime the pump,” East forecast. “That said, we remain wary that any measurable impact will be seen until after the holidays and investors need to reconcile their expectations to that.” 

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services. 

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Maria Patterson: Please begin by explaining what the 203k program is.
Dennis Walsh: The FHA Section 203k program was originally introduced by HUD in 1978 as a program to rehabilitate and repair single-family homes. HUD considers this an important tool for revitalizing neighborhoods and increasing homeownership. What’s unique about the 203k is that it’s a single mortgage loan that provides funds to purchase a home and make repairs and improvements. It’s intended for owner-occupants to purchase and renovate one- to four-unit residential and mixed-use properties. A simpler version, the Streamline 203k, was introduced in 2005. This version offers less documentation and lower loan fees for renovations that don’t exceed $35,000. 

MP: Why does today’s market present the ‘perfect storm’ conditions for the 203k program?
DW: The reality is, the market has changed and, as always, change brings new opportunities. First, look at all the distressed properties out there that need repair and renovation. So many of these homes haven’t been properly maintained and others have been damaged somewhere along the line—the furnace is missing, the kitchen is gone, or the carpeting rolled up and carried away. 

Secondly, conventional financing is simply out of reach for the majority of people. Without 20% or 25% to put down on a home and a perfect credit score, most Americans can’t get a conventional loan. However, with less-than-perfect credit and as little as 3.5% down, you can get an FHA loan, including the 203k. FHA financing opens up home-buying opportunities for many more people. 

Teresa Walsh: Keep in mind that with FHA financing, it’s critical that the house meet certain code standards—if it doesn’t, you can’t get an FHA loan. There are lots of homes out there that could be sold if the needed work was done. And most people recognize that homes needing repair and updating are some of the best deals available—great homes in great neighborhoods that need a little love.

So the question is, how does a buyer take advantage of a great deal on a home that needs work done? Where does the money come from to make the improvements? Some might run up charge cards at higher interest rates, or tap into savings or even retirement funds, but that’s usually not the best financial decision. The 203k loan offers an ideal solution. 

MP: Given these advantages, why haven’t 203k loans been more prevalent?
DW: There was no need to go through the process of FHA loan approval a few years back. We went through a long period of time where mortgage money was easily available to almost anyone who could fog a mirror—so use of FHA financing all but disappeared. It’s a whole new world now and, as a result, the use of FHA financing has grown to record levels. 

It’s also about awareness. You may have noticed that the U.S. government has not won many marketing awards! The FHA has had no mandate or funds allocated for marketing the 203k loan or providing training and support to real estate professionals. 

There’s also the fact that the 203k approval process is also a little more complicated than a conventional loan. For example, you’re required to secure renovation costs from an established, licensed contractor and deliver a package of the proper paperwork to the lender to secure FHA approval. This can be challenging for the average buyer, as well as agents without the training and resources. 

MP: Is an FHA loan a government loan? Will an increase in FHA lending add to the country’s deficit and overall economic problems?
DW: The great news for taxpayers is that this is not a program that requires the federal government to allocate billions of dollars of support. The FHA does not actually provide mortgage funds, but instead provides lenders with insurance that protects them against losses in the event of homeowner mortgage default. This reduces the lenders’ risk, allowing them to offer loans to buyers with less-than-perfect credit and with lower down payments. Lenders must follow specific guidelines established by FHA to qualify for this insurance. 

The FHA is funded entirely by proceeds from mortgage insurance included in the mortgage payments. As a result, the FHA is the only government agency that is entirely self-funded—operating at no cost to the American taxpayers! Additionally, the home construction and community development driven by FHA programs stimulate the economy through job creation, tax revenues and more. 

MP: What’s the concept behind RE-buildUSA?
DW: RE-buildUSA is designed to simplify the 203k loan process for everyone involved—to drive greater awareness, provide training and a support platform to allow real estate professionals to work most successfully with buyers, lenders, contractors and inspectors. 

Realtors involved in the program receive training to earn a 203k Specialist designation, a membership program for ongoing support and a technology program to facilitate 203k projects. We will work with Lowe’s to provide premier service to RE-buildUSA members and their customers. 

MP: Mark, why was it important for Lowe’s to get involved with RE-buildUSA?
Mark Malone: We, at Lowe’s, fully understand and empathize with each agent out there trying to keep and grow their business in today’s economy. We are here to support their business any way we can, and 203k presents new opportunities for Realtors to build business. We want Lowe’s to be the back-pocket resource for all things home improvement, so it’s a natural for us to be involved in RE-buildUSA. 

MP: Has RE-buildUSA officially launched?
DW: The first phase of our website, re-buildusa.com, is now live, with additional development under way. We’re scheduled to be launching the password-protected membership area some time in December. 

To become a 203k Specialist, an agent must complete approximately five hours of interactive self-paced coursework online. They then gain membership in the RE-buildUSA program, which helps them reach consumers interested in the 203k program, plus continued training and support. 

MP: What does an agent receive for becoming a member of RE-buildUSA?
TW: Agents will be featured in an online membership directory so that home buyers interested in working with a 203k Specialist can go to RE-buildUSA.com and find them. Members will also be able to identify themselves as a 203k Specialist on their websites and in their marketing. Members can access the RE-buildUSA membership site to download forms, checklists and sample marketing materials, as well as forums and a blog, highlighting up-to-date news, trends and best practices. RE-buildUSA is a one-stop shop for members, providing them with access to marketing materials, inspectors, lenders and a direct connection to Lowe’s to help their customers coordinate the bidding and renovation activities. 

MP: If I’m a real estate professional, why do I want to become a 203k Specialist?
DW: We’re showing real estate professionals how the 203k program works because it will help them sell more homes and help more Americans move into homeownership. We’re also excited that we can work together as an industry to reduce the inventory of foreclosed homes and get our housing industry back to greater stability. 

TW: When the market started to turn, a lot of agents steered away from listing foreclosures because it’s difficult business. There are a lot of out-of-pocket expenses, loads of paperwork, security issues and other challenges. Many other agents steered away from short sales because they didn’t want to deal with those headaches. Those, however, who recognized the opportunity and jumped in with both feet, are reaping the benefits today. So, I advise agents not to sit back and pass up the opportunity that now presents itself with the 203k program. Right now, the door is wide open all across America. 
DW: I think it’s also important to recognize that while this is a here-and-now opportunity, it’s also a long-term opportunity as well. Many people are not aware that more than 80% of the homes in America were built before 1990—that’s over 100 million homes that are 20 years old or older. Almost every one of these homes need some amount of repair and updating. It’s our belief that almost every single real estate professional is going to need the education we provide through RE-buildUSA to offer expertise in the 203k as well as other similar loan programs that come along in the future. 

MP: How is Lowe’s helping Realtors in today’s difficult market?
MM: Lowe’s has three main ways in which we help Realtors close more business. First, our free marketing tool, available to all Realtors, allows agents to send 10%-off coupons to their clients before they buy to help them envision how they can turn that house into a home. Second, we know what an effect foreclosures and distressed properties have had on housing and we want to empower agents to get those homes fixed up as quickly and cost effectively as possible. Realtors can download a 10%-off coupon to pass along to a trusted contractor or use it themselves to get these distressed properties to a presentable and, hopefully, sellable state. Third, and probably the most exciting, RE-buildUSA will help deliver a turnkey solution for agents who have buyers utilizing the 203k loan. 

MP: If I’m a consumer, why do I want to work with a 203k Specialist?
TW: First off, most consumers don’t really understand the program, what improvements can be made, how to find a lender, steps in the process…there are an awful lot of questions that need to be asked and answered. A RE-buildUSA 203k Specialist will help them understand 203k details and options, evaluate available properties, compare neighborhoods and introduce them to an FHA-approved 203k lender. They’ll also coordinate the appropriate home inspection and help them evaluate the renovation work and the potential impact on the value of the home.

Just as in short sales and foreclosures, home buyers find it very difficult to wade into these waters without the help of an expert. 

MP: How will a buyer benefit by choosing to work through Lowe’s for their 203k improvements?
MM: Safety, satisfaction and savings. All of Lowe’s installers are licensed*, bonded and insured so you can trust our team with the safety and the security of your buyer’s new home. We also stand behind the quality of our work with a 100% satisfaction guarantee. Don’t forget, the everyday low prices of the product in our stores insure home buyers will get the most value for their hard-earned dollars. 

MP: How will working with a 203k Specialist benefit the lender?
DW: Lenders tell us all the time that it’s very difficult to work with a consumer or agent who doesn’t understand the program. They also agree that working with real estate agents supported by RE-buildUSA training and resources will make life much easier for them—leading to smoother loan approvals and closings. Because of this, a number of lenders are already gearing up to work more closely as partners with RE-buildUSA members. 

MP: Why is the 203k program a critical program for today’s particular market conditions?
MM: We know that this is a different real estate landscape than we have ever dealt with before. Consumers are not in the same mindset as three or four years ago. More first-time home buyers are entering the market than ever before and we all need to be ready to help them learn how to make a house a home. Realtors are repositioning themselves to be even more of a trusted resource for home buyers, many of whom are gun-shy as they re-enter the market. Lowe’s is committed to the partnership we have with the National Association of Realtors and now with RE-buildUSA. We want to support Realtors in any way we can. 
DW: I hear a number of agents telling buyers and sellers that we’re in a “correcting market” and waiting for things to return to “normal.” So what does the typical buyer or seller do? They’ll most likely sit back and wait until the market’s corrected! 

We’re in a different market—a new market with new realities and new opportunities. Agents who are the first on the block to become 203k Specialists can take advantage of these opportunities right here, right now—and position themselves for the future as well. RE-buildUSA is about all of us working together to solve today’s problems and making a long-term investment in the stability of America’s housing industry and economy. 

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The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September 2009, rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8. 

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.” 

NAR estimates approximately 3 million renters are now financially well-qualified to buy a median-priced home. “As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” Yun said. “Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans.” 

The Pending Home Sales Index in the Northeast slipped 2.0% to 83.6 in September but remains 16.9% above September 2008. In the Midwest the index rose 8.1% to 98.2 in September and is 17.8% higher than a year ago. In the South, pending home sales increased 4.9% to an index of 109.7 and is 22.8% above September 2008. In the West the index jumped 10.2% to 143.8 and is 23.7% above a year ago. 

Yun added that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.” 

For more information, visit www.realtor.org. 

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

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