As of Oct 1st Fannie Mae/Freddie Mac and FHA reduced their conforming loan limits in High Cost Areas to the limits established under the “permanent” high-cost area loan limits that were established under the the Housing and Economic Recovery Act (HERA) of 2008. in some areas the reductions are not significant but in major metro areas the reduction is significant. in the D.C. Metro area the limit was reduced more than $100,000 to $625,500. If you were planning on a loan over $625,500 you will have to come up with a greater down payment or get a jumbo loan which generally means a higher interest rate will be applied.

This past week the inventory could not keep pace with buyer demand and listed homes welcomed many agents with buyers in tow, resulting in multiple bids on homes all over the area.   January activity seems to be making up for the December slump.  Whether it is the fear of rising interest rates or a simple supply and demand scenario the winter is heating up.

During the boom many lost sight of the long term positives of owning real estate. They saw Real estate as a quick money vehicle and when the quick money disappeared somehow real estate was deemed, by some, as a bad deal. But today’s typical buyer and owners are thinking more long term.   Todays’ owners are in their homes for 8 yrs up from 7 years in 2009. and today’s average buyer is looking to stay even longer, and with good reason. Sellers that have held their properties for at least these time frames are still seeing healthy gains despite price declines in recent years. This underscores something that we have always known about home ownership, Real Estate was and still is a good long term investment. A recent survey suggests that 85% of homeowners see their home ownership as a good thing. They cite tax incentives, stability and the ability to make it their own through renovation and design. Today’s buyers see those things and others like, low interest rates, low price points and, yes, ultimately the rent vs buy calculation keeping in mind that the market will sort itself out and the laws of supply and demand will pervail as population increases and more housing is needed.

Andy Higgins

Re/Max Premier, www.higginshomesales.com info@higginshomesales.com

Just this week a report told us of increases in new home sales of 6.6% and existing home sales of 10% in September noting that this is the second straight month since a dip following the tax incentive expiration. The report also referenced increases in median sale prices and a drop in unsold homes compared to 2009. These are all good things. Yet another report, indexing home prices, pointed to an overall slowdown from July to August.  According to the Index, New York and Washington D.C. were among only 5 cities that showed marginal improvements in home prices in the same period.  Throw in a news headline about a complicated foreclosure documentation scandal and Robo signatures, no wonder the market is filled with uncertainty.  How are we to make sense of all this information and draw any conclusions at all. Perhaps that is better left to the policy wonks.  But how can the rest get the information they need.

Don™t get me wrong, I understand that these statistics need to be analyzed and acted on by governments, business and individual decision makers, but readers beware, reports that come out in the same week are often referencing different periods, use different data sets and are designed to measure the performance of different sectors in an effort to make the reports relevant to a very targeted audience of policy makers.

Although I do take note of the economic reports that come out weekly, as an active Realtor, with my boots on the ground, I advise my clients according to what I see happening in real time, combined with the most recent data in our local market. The economic reports that we are feed need to be taken into consideration for sure, but considering the margins of error involved are certainly not to be taken as gospel.  If you want to understand what™s going on in your market?  consult a good local Realtor, and ask how all this fits together. A good Realtor will have thought this through a bit and can help connect some of the dots.

A few things we need to keep in mind when these economic reports come out are that these statistics are historical, sometimes lagging behind several months, they are usually national in scope and the margins of error associated with these reports are often higher than the gains and losses they report (16.9% margin of error is cited, in the new-home sales report).

Andy Higgins, Re/Max Premier

571-238-0904/Andy@HigginsHomeSales.com

www.higginshomesales.com

The reports referenced in my comments are from materials on Marketwatch.com and Case-Shiller

If you have been hearing about a 3.8% tax that the health care legislation has tacked on to all real estate transactions, it appears to be false. Although I have not read the 2000 page monstrosity, I am hearing the tax will apply to a very small group and only in a small subset of transactions. It sounds like it does not apply to the vast majority of transactions. Here are the basics. Although we are not accountants, sources out there are saying that the health care legislation does have a provision for a 3.8% tax on some gains on real estate transaction, but it will pertain to a rather small number of transactions. The 3.8% tax will be calculated only on sellers with gains (profit) over the first… 250k for individuals or 500k for couples. Further the tax will only apply to persons with higher incomes. look @ http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/

Andy Higgins, Higgins Home Sales
Re/Max Premier, Direct 571-238-0904
andy@higginshomesales.com

National headlines read that July housing sales decreased a reported 27.2%. The headline is grim but let™s look deeper. Home prices are up .7% nationally. In the D.C. area prices are up 4% compared to Jul 2009 and July sales only off by 18.4% as compared to 27.2% reported nationally. Remember real estate markets are local. The biggest percentage decrease in single family homes were at the 100k to 250k range which are nonexistent in N. Virginia & most metro areas and pertains largely to smaller cities and other suburbs.  The biggest overall decreases were in the following cities: Minneapolis, Kansas City & St. Louis ranging in the 30% & 40s% range. The D.C. area does not have the severe unemployment that plagues many other cities and suburbs. Although the market has slowed a bit this summer, I see this as a simple correction due to the increased activity in the last month or two of the home buyer tax credits that recently expired. Although there may be hurdles yet to overcome, thankfully, the D.C. area will likely be spared the bulk of the doom & gloom scenarios being discussed on the national scene.

Andy Higgins – Re/Max Premier

Fannie Mae announced they will be seeking deficiency judgements and not allow another Fannie Mae loan of 7 years for home owners that strategically default. A strategic default is when the owners have the income to pay the loan but chose not to  as a way or escaping  the huge lose of their home’s value.  It is estimates that  1/3rd of the mortgage defaults fit in to this category.  And yes Virginia does allow the banks to seek this remedy. This is being done as a move to encourage home owners to work out there payment issues with the banks rather then walking away from their homes which causes problems for the banks,   housing market and the community. I am in favor of this move by Fannie Mae to stop the rash of strategic defaults for all of the reasons mentioned above but also for a little thing called personal responsibility. If it is your debt why shouldn’t you own it.

Well the tax credit is over but the buyers are still out in force. The week after the tax credit ended the buyers seemed to take a quick breath but they are now out hunting for homes in great numbers.  The buyers would appreciate a little more inventory. It is a great time to sell a home.  This may not be true in other areas of the country, being close to the nation™s capital  we don™t have the unemployment issue that continues to depress markets in many area of the country.  Being a Realtor close to the nation™s capital has its perks.  In the end I think the tax credit created a sense of urgency for some but people buy homes because they want a place to live and they would rather not  rent,  not to get a  one time tax break.  

As some rush to take advantage of the tax credit that expires on April 30^th my clients are asking if it pays to rush to get the tax credit, given the low inventory in the area or should we wait?    I believe that the competition will grow stronger in the coming weeks as the deadline approaches making multi bids and inflated prices possible.  I think waiting for the right home is primary and the tax credit is secondary. Choosing the right home to live in is  most important.  The right decision on a home will yield much more then an 8,000 or 6,500 credit.  The home that is right for you should be the first priority.      

Foreclosures have been in shorter supply in recent months. The banks still have many delinquent home owners but the banks are learning that loan modifications for qualifying homeowners, together with a little help from a number of government programs are a better way to go than foreclosing. Banks are also learning that an occupied home is a protected investment. New programs are being announced daily that incentivize banks to listen to homeowners inquiring about  loan modification.    There are still many hurdles  and for some true gating issues  in the loan modification process. Many of the programs  put  into place have fallen short for most homeowners  facing the prospect  of losing your homes but there are some features in more recent announcements and more cooperation with lenders that are getting much  closer to solving the real problems faced by distressed homeowners.