Real Estate Information

We are now consistently seeing the signs that the housing market is making a comeback.  Have we really bottomed out?  It is too early to tell--you never know for sure until it is past. But, we do know that we have seen month over month increases in sales.  New home sales were up 11% in June in spite of the ongoing foreclosures out there.  Some purchase incentives are drying up as communities begin to sell.  Resales are up too--not just distressed properties.  These are all good indicators that pent up demand is moving to the market.

How many people are waiting to know for sure if we have hit bottom?  Quite a few I am willing to bet.  But--here is why you should not wait:

1) Prices are as low as they have been since before the real estate "boom"

2) Interest rates are great but will go up.  A 1% increase in interest rate will offset 10% in depreciation!

3) An approved and ready to purchase buyer be able to take advantage of an opportunity as soon as it comes up. 

4) You get equity and tax benefits immediatley and you are not wasting money on rentals.  The First Time Homebuyer Tax Credit is set to expire December 1, 2009--not the end of the year.

Great News for First-Time Home Buyers!

HUD recently announced that qualified First-Time Home Buyers who want to take advantage of the available tax credit of up to $8,000 now have another option available to them to help them become homeowners.

It's clear that first-time home buyers have been having a major impact on the housing market this year. The National Association of Realtors announced that first-time buyers, who typically account for less than 40% of home sales each year, have been especially busy…in March, homes that were purchased by first-timers accounted for 53% of all sales, and this percentage is expected to hold true for all of 2009.

With home affordability higher than ever, available tax credits and some of the lowest interest rates ever recorded for home loans, who can blame them? Particularly as a first-time buyer, there may never be a better time to buy a home than right now.

However, the availability of a tax credit, while a great incentive, does not put the money in the hands of a buyer right away. HUD's announcement now allows for prospective and qualified home buyers to borrow the money from approved agencies and lenders.

While details of participating lenders and HUD-approved agencies are not yet available, this should turn up the heat on prospective buyers to get busy searching for their next home. As further details become available, I will get them to you.

In the meantime, alert your database that one more barrier to homeownership is being removed and the time to start shopping is now!

Sincerely,

Chris Hutchens
Alpha Mortgage

910-256-8999

Pending Home Sales Rise, Housing Affordability Near Record

Washington, May 04, 2009

Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the National Association of Realtors^®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and is 1.1 percent higher than March 2008 when it was 83.7.

Lawrence Yun, NAR chief economist, said it should take a few months for the market to gain momentum. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” he said. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.” NAR’s Housing Affordability Index² remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”

A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Link to original Story:

http://www.realtor.org/press_room/news_releases/2009/05/march_phsi

Our friend and trusted mortgage advisor, Michael Lopez, shares some good news:

Here we go again, with the talking heads on financial news misinterpreting the impact of the Fed's actions on home loan rates.

Here's the scoop. What the Fed just announced is huge – they have committed to buy another $750B in Mortgage Backed Securities, and $300B in Treasuries.

But what does this mean and why do you care?

Their actions provide a demand for Mortgage Backed Securities, which should help keep a ceiling on home loan rates moving much higher in the foreseeable future. That's good news, for homebuyers who are seeing the bargains out there and understanding that now is the time to act. Good news for those who are ready to refinance too.

But an important distinction – this does not mean rates may move significantly lower. Depending on exactly which coupons the Fed purchases when they go shopping for Mortgage Backed Securities, their actions may keep a lid on rates, but not push them very much lower. And based on what they've been buying since the beginning of this year when they started their purchasing program – that is exactly how it has played out.

Present home loan rates are within inches of historic lows. This is great news for anyone looking to buy a home right now with list prices down and rates still low!  NOW is the time to act and purchase that new home.  If you have any questions about how this process works or what Alpha Mortgage can do to help, please contact your preferred Loan Officer or myself anytime. 

Michael Lopez

Alpha Mortgage Corporation

mlopez@alphamortgage.com

For a limited time home buyers can claim a special tax credit worth up to $8,000. The American Recovery and Reinvestment Act offers qualifying homebuyers a tax credit equal to 10 percent of a home's purchase price, up to a maximum of $8,000. The tax credit is offered to first time homebuyers, and those who have not owned a principle residence in the past three years. To be eligible for the tax credit, the home purchase must be recorded between January 1 through December 1, 2009.

The full tax credit is offered to buyers with reported income up to $75,000, or $150,000 for married couples filing a joint return. Partial tax credits are available to for those with income levels up to $95,000, or $170,000 for those filing jointly. Contact us today for more details on this exciting program!

Lawmakers in Washington are finally making positive steps toward fixing the housing problems by including housing legislation in the Economic Stimulus Bill.

Last week, the Lieberman/Isakson Amendment was included in the senate version of the Economic Stimulus Bill by a unanimous voice vote. This amendment would provide a Tax Credit to all home buyers at the rate of 10% of the sales price up to a limit of $15,000. The credit would be available for a one year period to all purchasers of primary residences.

Now, the senate expects to debate Amendment 353, a proposal by Senator John Ensign (R-NV) that would provide 30 year fixed financing at a rate of about 4%, for anyone purchasing a primary residence. This is interesting.

If these two provisions are included in the final passage of a stimulus bill they should have a positive impact on  real estate.

How the homebuyer tax credit would work:

The current version of the tax credit – which still must be approved by the House and signed by President Obama– would work under these rules in the bill passed by the Senate:

• Up to a $15,000 tax credit (claimed as part of federal income tax) for any principle residence by any homebuyer
• Actual amount of credit would be based on 10 percent of the purchase price of a home or $15,000, whichever is less
• The tax credit does not have to be paid back, unless the buyer sells the home within two years or less
• Purchases must take place within one year of the legislation’s enactment
• The credit may be claimed on 2008 income tax form
• If enacted, this new tax credit would immediately negate the $7,500 first-time homebuyer tax credit currently available.

Consider being proactive and contact your senators and representatives to let them know that you believe these are essential components of any stimulus bill. You can go to the official Senate http://www.senate.gov and House http://www.house.gov web sites to locate the email and phone number of your legislators.”

This has passed the Senate, but the entire bill does need to go back to the House, and be signed by the President. There could be multitude of changes before this could happen or, it may not even pass at all.

Some love it, some hate it, but it is definitely snowing here in Wilmington, NC. If you ask my five year old, she is definitely in the "love it" crowd.  I have to admit, I am enjoying watching it as well.  I am sure the folks who moved down from the northeastern States are not as excited but since it is so unusual, you can certainly feel a little excitement in the air.

Since we are so far south and close to the ocean, it seldom snows here.  I believe the last accumulation we had was 4-5 years ago--at least.  It was April and we had about 4 inches on the ground.  The Azalea Festival was 4 days later and we had 80 degree weather!

The worst problem of this snow is that since it seldom occurs, the town pretty much starts shutting down offices and schools since it makes little sense to keep substantial equipment to take care of the roads.  Bridges will be salted/ sanded but that is mostly it.  In all likelihood, what snow we do get, will be gone by the end of the next day.  I have some more work to do but I will make this a shorter day and go home and play with my daughter in the snow!