WHEN IS IT THE RIGHT TIME TO BUY A HOME?

 The Zillow Home Value Index fell 26% from its peak in June 2006.  That’s a greater decline than seen in the Depression-era years of 1928 to 1933.

According to Zillow.com, “November marked the 53rd consecutive month of home value declines, with the Zillow Home Value Index (ZHVI) falling 0.8% from October to November, and falling 5.1% year-over-year.”

Although the news on housing seems bad, we do have some bright spots in the economy.   According to Zillow Research, the economy is improving.  The improvement is expected to be slow, but job creation and consumer confidence are improving gradually, and this is good news for everyone.   

The improvement is expected to gradually increase “household formation and consumer confidence”.  But the housing market may still face greater declines due to “excess inventory of homes, high negative equity and foreclosure rates, and weakened demand due to elevated unemployment,” reported Zillow.com.  

If you have been waiting and watching this unfolding situation, take note.    Although no one can tell you with absolute certainty, the opportunity for buyers today is very favorable.  Now is the time to buy

The interest rates are still very good, but no one is expecting them to stay at this low rate indefinitely.  If you buy a home for $250,000 at a 5% interest, you would have to find the same house later for $205,000  price to qualify at the same mortgage payment if the interest rate went to 7%.   Affordability will go down significantly when interest rates move up.   

All things are coming together to provide first-time home buyers with a unique opportunity to grab their chance at the American Dream.  Home prices are trending at low levels.  Sellers are prepared to negotiate to move on to their next homes.  There is a good inventory of homes in many price ranges.    

A few things to consider:  Do you need a place to live?  (Rents are going up.)  Would you plan to stay in your home for at least a few of years? (Most buyers live in their home on average seven years).  Do you want to own a home of your own?  Have you saved some money for a down payment?

Remember that homeownership has many benefits including tax deductions, the opportunity to make your own creative changes to your home, the opportunity to plant your own garden to grow organic food, and future increase in equity when you sell your home some day.   

Appreciation may be slow in coming in the short term, but the National Association of Realtors reports that homeowners have between 31% and 46% higher net work over renters.  This will make a big difference in your future.  Now is the time to buy!

HOMEOWNERSHIP MATTERS

 

Home ownership has a significant impact on net worth, educational achievement, civic participation, health, and overall quality of life. And, home ownership helps create jobs—lots of them—right here at home.

Home Ownership matters…to people, to communities, and to America. Why?

Every additional 1,000 home sales this year over last year create 500 new private-sector jobs in the U.S.

Every home sale touches 80 occupations. America needs jobs, and a strong housing market can provide them.

Each purchase generates as much as $60,000 in economic activity.

The home ownership debate

 

Some who care about creating jobs also argue that home ownership may be overrated, and that we might be better off as a nation of renters—including some in the Obama Administration and Congress.

 If that’s of concern to you, follow the debate about federal government incentives to home ownership—the outcome of which will determine whether the average American can still get an affordable mortgage and whether home owners can continue to deduct their mortgage interest  as a benefit of home ownership. 

Owning your own home is not only beneficial to you; it also helps create jobs and stimulate the economy

  • Read about the issues affecting you as a home owner right now:

Home ownership

It pays to support responsible home ownership.  Protect your home’s value and build stronger communities.

Mortgages

American home owners need affordable mortgages, REALTORS® say.    The president’s proposal for a new secondary mortgage market structure needs to ensure home owners have access to a constant source of reasonably priced home loans.

Losing Fannie Mae, Freddie Mac would increase mortgage interest rates, which will slow down the economic recovery.  Without government-supported mortgage programs from Fannie Mae, Freddie Mac, FHA, and VA, interest rates on home mortgages would rise by 2 percentage points.

 How Fannie Mae, Freddie Mac Save You Money  Home owners who use Fannie Mae and Freddie Mac mortgages save thousands of dollars in interest payments each year.

Show Your Support for FHA
   FHA supports home values by providing a steady source of mortgage financing for families across the country, but critics worry it has taken on too much risk.

Mortgage deduction

Mortgage Interest Deduction Vital to Housing Market    The mortgage deduction saves the average home owner thousands of dollars at tax time, supports home values at the community level, and helps American home buyers get into their first house.
 Deduct Mortgage Interest and Home Equity Loans   
Deducting mortgage interest, as well as interest on home equity loans and HELOCs, can save you money on taxes.

Published: February 11, 2011  House Logic

What is the Real Estate Forecast for 2011?

Foreclosure?The media covers the real estate market with an eye to creating headlines to capture reader attention. So what is the real story?

The banks have just had their hands slapped for foreclosing on perhaps thousands of properties with out the proper documentation. A Massachusetts Supreme Judicial Court ruling on the “Ibanez” case declared the two bank, Wells Fargo and U S Bancorp, improperly foreclosed on these two homes because they could not prove the owned the mortgages at the time of foreclosure. This may have a significant effect on thousand of people who have already purchased homes, especially if they did not purchase title insurance for themselves.

Some economists believe that we will not see a rebound in prices for a while, and there will be some regional variations in local markets.    The Boston Market Forecast

 Robert Shiller is the Yale professor who created the closely watched Case-Shiller Home Price Indices.  He has a great interactive map which demonstrates the percentage changes with Moody Analytics forecasting what the real estate market for the various cities will look like.  The Price Indices does indicate that the prices seen at the high of the market in 2005 will not be seen until 2015.  Some people have decided to wait for their equity to return, so they will have quite a while to wait.   

Real Estate TV NewsMany economists believe that over the next 12 to 24 months as many as 60% of the regions will see some appreciation in house pricing, but not at a very rapid rate, as the interactive map indicates.  All this being said, the economy  is improving;  there is more confidence in future; interest rates will not stay this low forever; it is time to think about buying or building you new home.  Visit our Real Estate TV for the latest mortgage interest rate news.  Real estate new is updated every week.

Strong Rebound in October Pending Housing

The National Association of REALTORS® reports that pending home sales jumped in October, showing the first positive uptrend since bottoming in June, when the tax credit expired.

Sold Homes

The PENDING HOME SALES INDEX, which is based on contracts signed but not yet closed, rose 10.4 % in October, but they were 20.5% below a year ago, when the tax cuts were first set to expire. . In the Northeast, the index jumped 19.6 & in October, but was 27.3 % below a year ago.

Lawrence Yun, NAR’s chief economist, says homebuyers are taking advantage of strong affordability conditions and expects home sales to continue to rise. That is the good news.

Although the housing market is in the recovery phase, we have a long way to go to have secure stabiliation.  Banks need to cooperate with a more commen sense approach to the very stringent lending requirements they have implemented since the mortgage meltdown.

Mortgage Application

We now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” Yun said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them.  Home owners already pay between 80% and 90% of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”

Vote No on Question 2

The state of Massachusetts is faced with a serious attack on an important By-Law which provides housing for our workforce population.   Please Vote No on Question 2.   The Affordable Housing Law is working.  It has created 58,000 homes across the state and is responsible for approximately 80% of new affordable housing over the past decade, outside the larger cities. The 12,000 homes in the pipeline that have already been locally approved would add $10 billion in economic activity and 50,000 jobs that come with them.

It means that your children may someday be able to “Afford” to live in the small communities in Massachusetts.  First, affordable (or workforce housing) means people making between $45,000 and $65,000 would qualify for this housing…..young teachers, firemen, police, public works folks, young people just starting their families, and people who work ordinary jobs.

Some people have stated that “Stuff gets jammed down local communities throats,” during a 40B proposal.  As a former member of my local planning board, I understand how our local planning boards have done a fine job making sure the development process so expensive and time-consuming that finding a way to build affordable housing is pretty much impossible in Massachusetts without some reasonable waivers.

It is important to note that Chapter 40B does not cost the tax payer anything. It is a function of the development process and can give people a chance at home ownership.    

The ideas put forth in a Chapter 40B proposal request relief from some extraordinarily stringent local requirements—far beyond state codes—including 2 to 3 acre zoning, doubling Title V (septic system) requirements, doubling all wetlands setbacks and recharge areas.  My town does not allow condo developments or apartments to be built without a special permit.  They reject out of hand any of the new concepts like cluster zoning.

The general thinking in Massachusetts is “I live here, but I don’t want anyone else to move in and burden my town.”   Massachusetts is one of the only states in the union to be losing population, specifically young people.  Check out the articles in the Boston Globe  and the CSMonitor  to see the concern about decrease in a balanced workforce.  Chapter 40B is designed to counter the “snob zoning” we have carefully put in place throughout the Commonwealth, and it is working.

All the candidates for governor agree on this question and our local news paper, the Sentinel and Enterprise, speaks to some very compelling data.  The Chapter 40B By-Law has been held up nationally as a template for a fair and equitable way to provide housing for a wide variety of incomes, including rental property and homes for first time home buyers.   PLEASE VOTE NO ON QUESTION 2!!!  We will need homes for our children and growth for our state.

Making Sense Out of the Current Homeowner Debate

Who do we believe? Time magazine’s Making a Case Against Homeownership or Wall Street Journal’s 10 Reasons to Buy a Home?

TIME magazine has declared it is time to “Rethink Homeownership” because the housing market continues to be troubled.   Making the Case Against Homeownership is an opportunity for TIME to sell more magazines, because people are hungry for answers and the public is hearing many conflicting things.   When the media sensationalizes the reporting to “make headlines”, it forfeits its objective journalistic position in hopes for attention and the opportunity to sell magazines.

The economy is in flux and one week we read it is on the mend and we have been in recovery for 18 months.   The next week we are told that there will be a double dip in the housing market and the stock market is going to be in trouble again.   The intractable job market continues to be a serious area of concern.

The Boston job market seems to be making some progress in recovery, because that unemployment rate is 8% compared to the US rate of 9.5%.   Unfortunately, the unemployment rate in Worcester is 9.6% and in Springfield it is 9.8%, both over the national rate of 9.5%.   Review the data in my Housing Trends Newsletter about other locations in the state.   This presents a very confusing picture.

The Wall St. Journal is taking a stand against the doom and gloom that has pervaded the news lately. Their article – 10 Reasons to Buy a Home – points out why now is a very good time to purchase.   Owning your own home is still the American Dream for many people.   Low prices, good inventory, and great interest rates are just a few points that make the case to buy now, not later.   But it is also important to buy a house to really make it your home, not your investment portfolio.   A home is where you plant roots, enjoy your family, and participate in your community.   We must not look at the home as a place to refinance to pull money out to pay bills, buy luxuries, or take trips.

The recent Case Shiller Report released on August 31, 2010, notes that nationally home prices dropped 29% from a high in 2006.   The good news is that instead of treading at the 2001 price level, which we saw happening in Central Massachusetts in 2009, we are now approaching the fall 2003 price range in some parts of the country.   Stability in the housing market is important to creating stability throughout the economic markets. We may have a long way to go, but the Time article is reminiscent of the Chicken Little days of “The sky is falling, the sky is falling.”    It is not healthy to believe the gloom and doom.   As my mother always said, “This too shall pass.”  Better days are ahead.

Fannie Mae’s Seven Year Penalty

If you are a homeowner who is upside down on your mortgage, you may be considering walking away from this situation.  If you are capable of paying your mortgage, this may be a very bad idea.

Fannie Mae has set guidelines to penalize homeowners who walk away from their underwater mortgages, when they have the capacity to continue to pay them. Fannie Mae is expecting homeowners to work in good faith with their lenders to find an alternative solution, including a loan modification, a short sale, or a deed in lieu of foreclosure.

If the borrower does not participate in an alternative workout, Fannie Mae may penalize the borrower for up to seven years before they would qualify for a Fannie Mae approved mortgage. In certain states, Fannie Mae could go after other assets to satisfy the delinquency.

If the borrower has extenuating circumstances, like a job loss, and they work with their service provider to secure an alternative solution, they may be qualified for another mortgage within two to three years.  This is very good news for troubled borrowers.

The Fannie Mae Selling Guidelines will be in force on July 1.  The Eligibility Matrix can help analyze the situation of a borrower.

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Real Estate Trends in Sterling MA

 

Real estate has been on a roller coaster ride for over five years now. The Sterling Real Estate Market Statistics Chart demonstrates that the highest number of homes sold in recent years was 2004 when we sold 95 homes. In 2009 we sold just 49 homes.

Interestingly enough, the median selling price continued to rise for two more years when the highest median price in Sterling was $400,000 in 2006. The lack of inventory was part of the cause, but many people failed to see warning signs of the overheated market. The median sale price for 2009 was $291,000, and the lost value in homes has hit many people very hard. Even Sterling has had its share of short sales and foreclosures.

Our Annual Sales Trends Report , which we send to our clients on a quarterly basis, helps folks keep abreast of the fast changing real estate market. This report shows the listing and sales activity of many of the local communities.

Our Local Market Conditions Report is a monthly on the current real estate trends in Sterling. Just a couple of weeks ago, there were only 50 homes for sale in Sterling and 17 homes sold in the previous 6 months. Today there are 77 homes on the market, which may be indicative of the spring market. There are 3 homes under agreement and 24 homes sold in the last 6 months. Each time a home sells gives Realtors a different perspective on the changing market. It is one of the reasons we track these trends so closely, and many people appreciate having a better idea what their home is worth.

Bookmark our blog, Massachusetts Real Estate Trends and check for frequent updates.

Short Sale Information


Good news for people who are doing a short sale.  The government has implemented a program to expedite the short sale process.   This will be a great benefit to the homeowners who have made a decision not to keep their homes.

Certain banks and mortgage companies planning a foreclosure of a property must contact their homeowners to offer a mortgage modification.   If homeowners do not quality or do not wish to continue to own the home,  the bank or mortgage company must work with them to either offer a short sale solution or a (DIL) deed-in-lieu of foreclosure.   This video provides a comprehensive  explanation of the new short sale process.

Here a list of the mortgage companies that are a part of the HAMP (Loan Modification) program. Those companies that are signed up for the HAMP program must offer the HAFA (Short Sale) program to homeowners and if the Short Sale does not work, they have the option of the DIL (Deed in Lieu) of Foreclosure.

Homeowners should check this list only if they do not have a FHA financing loan. Fannie Mae is the actual overseer of the HAFA program guidelines.

Servicers Participation

1.American Home Mortgage Servicing, Inc
2.Assurant, Inc.
3.Aurora Loan Services
4.Bank of America
5.Bayview Financial
6.Carrington Mortgage Services, LLC
7.Citigroup, Inc. (Citi Mortgage / Citi Residential)
8.First Horizon Home Loans and First Tennessee Home Loans
9.GMAC Mortgage
10.Home Loan Services, Inc. (d/b/a First Franklin Loan Services & NationPoint Loan Services)
11.HomEq Servicing
12.HSBC Finance-Beneficial
13.HSBC Finance-HFC
14.HSBC Mortgage Corporation
15.HSBC Mortgage Services
16.JP Morgan Chase
17.Litton Loan Servicing
18.LoanCare Servicing Center
19.MetLife Home Loans
20.Nationstar Mortgage, LLC
21.Ocwen Loan Servicing, LLC
22.OneWest Bank
23.PMI Mortgage Insurance Co.
24.PNC Mortgage
25.Quicken Loans
26.Residential Credit Solutions
27.RoundPoint Mortgage Servicing Corporation
28.Saxon Mortgage Services / Morgan Stanley
29.Select Portfolio Servicing, Inc.
30.State Farm
31.Strategic Recovery Group
32.SunTrust Mortgage, Inc.
33.Vericrest Financial Inc.
34.Wells Fargo and Company (Wells Fargo Home Mortgage / Wells Fargo Financial)
35.Wilshire Credit Corporation

If you have any questions about this process, please contact us.  The Evergreen Realty Team members have been Loss Mitigation Certified (LMC).  We will be reviewing bankruptcy options shortly for those folks who have those type of financial questions.

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Will a Short Sale Be the Best Decision for the Long Term?

When someone is unable to refinance their mortgage and unable to pay their mortgage for any reason, it can feel like everything is against you.  Information can be very confusing, and no one seems to have good answers.  Even some attorneys and financial consultants don’t have the right answers.

Bankruptcy attorneys have suggested to me that a short sale, once negotiated, may be the best solution for a difficult situation.  The credit bureaus do not view a short sale like a foreclosure, which can show up on a credit report as a strong negative for 7 to 10 years.    Some of the banks are taking one to three years to complete the foreclosure, and if the foreclosure is mishandled, it could be even longer.  The real problem is that process is up to the bank, not the borrower.

Rebuilding credit and making timely payments will start as soon as the short sale is complete.   Making the decision to do a short sale may be difficult, but the results will give people a jump start on a new financial life.

The administration has created a reasonable way to deal with the short sale issues. The new program is called the Home Affordable Foreclosure Alternative (HAFA), and it will make a big difference to people who need to get out from under crushing debt.  The clear deadlines and parameters will make a short sale much easier for both the sellers and the buyers.  The guidelines incorporate mandatory deadlines for the offer to acceptance and then a reasonable time for closing.  The buyer will have time to have a home inspection and get a bank commitment.

The most important date for homeowners is the 14 day response time once the bank makes an offer for a short sale.  Homeowners RESPOND within the 14 days, and you will have adequate time to sell your home through the short sale process.  There are also financial incentives for the homeowners to cover relocation costs and fees to banks to make this program work.  If the homeowner qualifies, the bank will fully release any future liability for the first mortgage debt.  There are several ways to deal with a second mortgage, so call if you have a second mortgage for additional information.

The banks and mortgage companies that participated in the Home Affordable Mortgage Program must offer this solution to their borrowers.   If you have any questions about this program, contact a Realtor who has had special training in Loss Mitigation Certification or Short Sale Designation.  They will help you figure out this process.

If you would like a brochure about the HAFA program, make a comment with your email.