Realty World – Elite Realty

New home sales rose 6.2% to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September, much higher than the 2% economists had expected. The surge in sales was driven by a 23% increase in the South. Sales fell about 5% in the West and Northeast, and 20% in the Midwest. Despite the lack of certainty about the tax credit that buyers faced in October, sales were up 5.1% from a year ago, the first yearly increase since November 2005. The median sales price of $212,200 was almost even with $213,200 a year earlier, but up almost 1% from September’s level of $210,700. This is likely something of a blip, since home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to some existing homeowners. The credit now covers contracts signed by April 30.

Many home buyers are not aware that there are properties out there that are priced way below market value, requires minimum down payment, (3.5%), and down payment assistant from the city,(about $35,000). Yes, I am talking about homes known as BMR with down payment assistant from the city. There are levels of income depending on the number of people per household to qualify. Buyer does not have to be a city, county, or government employee to qualify. As a matter of fact, the qualification and requirement is not that difficult to meet. Almost every city has a BMR program to help you, the home buyer, own a home. Most cities, like Pleasanton, Livermore, Newark, Dublin, Hayward, Union City, Livermore, and San Ramon are some that require a new development to reserve certain amount of properties per subdivision to be allocated for such program. This is one of the ways to help home buyers purchase a home without having to pay a high monthly mortgage. Recently, I was fortunate enough to have helped a home buyer with BMR purchase in Dublin. We were able to close the transaction in a short time and the monthly mortgage was the same as his rent but with the benefit of homeownership.

The current $8,000 tax credit available to first time homebuyers is set to expire November 30, 2009. Lobbyists for national housing and broker associations are campaigning to have the credit expanded and extended for an additional six months to a year in hopes that the credit will continue to lure buyers into the housing market. Extension proponents cite the many “trickle-down” benefits of the credit extension (i.e., sales of furnishings, appliances, etc.), and Congress members have responded by introducing bills to grant the extension.
The affordability of housing is too populist a political issue for Congress to abandon, hence expect the extension bill to pass. Given the size of the federal deficit though, it is unlikely that the credit would be expanded or offered to those other than first-timers buying newly-constructed or real estate owned inventory.
The saga of the housing credit continues. $8,000 in tax credit may be of help to those who are already poised to break into the housing market during the next six months. The credit will probably have no effect on those who haven’t the resources to scrape up the down payment. The number of potential homebuyers who are influenced by this extension is not likely to exceed the number of current homeowners who are walking away from their properties or being foreclosed upon. So it appears we are really just providing an $8,000 tax credit for shuffling ownership of property from one owner to the next.

The backlog of homes in default is growing. In July, default notices were up 12% from a year earlier but repossessions were down 40% .
The backlog of California homes in default, but not yet repossessed, keeps growing.
At some point, many of these properties will be repossessed and put back on the market. Until then they remain, clogging the system as “shadow inventory,” most likely to be foreclosed and sold again.
* Default notices, which are sent when a borrower has missed several payments, were up 12% in July compared with a year earlier. Default notices are the first stage of foreclosure.
* Auction notices, in which an auction date is set, were about even with last year’s level. Auction notices are the second step in foreclosure. After a default notice is sent, and even after an auction date is set, the borrower and lender can get out of foreclosure by reaching a loan modification agreement or selling the property.
* Repossessions were down 40% from a year earlier even though default notices were up and auction notices were flat. Lenders are delaying the final step in foreclosure. This is what’s creating the growing backlog of distressed properties.
* Foreclosures scheduled for sale — that is, properties awaiting auction — increased 93% from a year earlier.
The jump in foreclosures scheduled for sale reflects the widespread practice of lenders stalling the final sale of distressed properties. There are more than 124,000 of these properties in California.

Many renters debating whether to buy or rent their homes are realizing that the increase in affordability, coupled with low interest rates and tax incentives, are tipping the scales toward homeownership.
• An analysis of 45 metro areas by the Associated Press found that the gap between the monthly mortgage payment on a median-priced home and the median rent has decreased from $777 a month to just $221 in the past three years.
• In markets across the nation, including the inland areas of California, prices have declined by nearly 40 percent, resulting in rising sales as first-time buyers use a federal tax credit that covers 10 percent of the home price, up to $8,000.
• Favorably priced foreclosures in some markets are drawing multiple bids. Many housing experts believe that as supply and demand even out, home prices will eventually begin to rise, but for now most buyers are having little difficulty finding affordable homes.
• Qualified first-time buyers may be eligible for loans insured by the Veterans Administration (VA), which does not require a down payment. Another loan product gaining popularity are those insured by the Federal Housing Administration (FHA), which require only a down payment of 3.5 percent.
• It is important that potential home buyers not only look at the monthly mortgage payment compared with their monthly rent payment, but that they also consider other costs associated with homeownership. These can include homeowner association (HOA) fees, insurance, maintenance, and utilities, which most renters are not responsible for paying.