Mardi Boettcher's Blog

Many of you have had questions about the new Tax Credit Laws, so I thought it would be helpful to post these links to two excellent Q & A documents for you from http://www.federalhousingtaxcredit.com/

Be sure you check with your tax professional before making any final decisions.

Enjoy!

Click here for a list of frequently asked questions.

Click here for information specifically about the eligibility requirements for existing homeowners.

Existing Home Sales came in better than expected, at 5.57M vs. the expectation of 5.35M.  The very important number….levels of inventory, shrank to a 7.8 month supply, down from a recent high of 10.1 in April.  The National Association of Realtors also reported that last month’s sales were 45% First Time Homebuyers, as they rushed in to take advantage of the $8000 tax credit. 

I still think the tax credit will be extended.  Not only will this help buyes, but the increased demand may cause prices to rise and that will encourage sellers to move forward with listing their homes.  It will be a win win for everybody.

Senate Banking Committee chairman Chris Dodd, D-Conn., went on the record Tuesday calling for a seven-month extension of the $8,000 first-time homebuyer tax credit, which is set to expire in five weeks.  Sen. Dodd said home prices are stabilizing but “we still need to use every tool at our disposal to try and fix this problem.” The White House has yet to reveal its position on the extension. The National Association of Realtors and other trade groups are supporting the extension.  Jay Brinkmann, the chief economist for the Mortgage Brokers Association told the committee that one great unknown facing the market is the affect on interest rates when the Federal Reserve stops purchasing mortgage-backed securities from Fannie Mae and Freddie Mac.  He noted that there is growing concern over the issue saying, “While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts.”

Pay close attention to this last bit.  At our office meeting last week, Dick Selzer said that he thinks interest rates will go up rapidly.

I’ll keep you posted.

Home buyers still are paying less than a home’s asking price, but had slightly less negotiating power in August than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3 percent, less than the last listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July, according to the report. Negotiating power peaked in January 2009, when buyers were paying 4.5 percent less than last listing price, a median of $10,096.

Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.

Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.

“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”

In our local area, inventory is low.  There are multiple offers on many properties and many are selling for more than the list price.   This means that buyers must be well qualified and pre-approved by a lender, and sellers must be realistic about pricing.  We are seeing more listings now that are not bank owned or short sales and they are selling well….if the seller has it priced competitively.

Dick Selzer says that the ecomominc indicators suggest that interest rates are bound to go up in the near future, and he thinks they will go up quickly this time.  Of course, no one knows for sure, but it is his opinion (and he’s often correct) that buyers who wait for a better time to buy, are going to regret it.

At Realty World-Selzer Realty, we don’t try to “sell” people.  We always have our clients’ best interests in mind.  That’s how we’ve build our stellar reputation….and reputation is very important to business success in a small town.

If you are sitting on the fence about purchasing, you may want to reconsider. The lenders are very nervous about getting burned again…and they are being watched very closely. Here is the latest from Rick Costa, President of American Mortgage Partners:

Republican congressmen are becoming more concerned about the Federal Housing Administration’s financial plight and they want to increase FHA’s downpayment requirement to 5%. Rep. Ed Royce, R-Calif., said FHA is operating at the same dangerous leverage ratios that led to the takeover of Fannie Mae and Freddie Mac. Rep. Scott Garrett, R-N.J., said he has drafted a bill that would increase the FHA downpayment requirement to 5% from the current 3.5% level. “There are increasing reports of the likely necessity of a taxpayer bailout for the FHA and this legislation aims to implement reforms to try to prevent such a bailout from occurring,” Rep. Garrett said at a House Financial Services Committee hearing. The Garrett bill also calls for a General Accountability Office study to determine the appropriate leverage ratio for FHA. In the early 1990s, Congress mandated that FHA maintain a minimum 2% capital ratio. A recent audit shows that the federal mortgage insurance fund has fallen below the 2% minimum. But FHA officials say the insurance fund should be able to maintain a positive capital position and FHA will not need taxpayer assistance.

I recently had a conversation with a client who wants to wait a couple of years to purchase because she thinks prices will continue to go down with more bank owned homes coming on the market.  I told her that, in this area, the inventory of bank owned properties has really slowed down.  One colleague of mine described it as “drying up.”  Perhaps that is just a temporary situation.  Time will tell.  In the meantime, the lowest priced homes are getting multiple offers with the winners offering as much as $20,000 or more over the asking price.  The consensus among the local Realtors is that we have passed the bottom and are headed back up. 

Below, is an article from C.A.R. with the latest data for the state, but bear in mind that we are a unique local market here.  The areas that had massive growth are the areas that seem to be hurting the worst.  Our lack of housing keeps our prices elevated.  That’s why there were ten offers (6 of them first-time buyers) on a house I tried to get for some clients last weekend.  (They didn’t want it badly enough to bid as high as I recommended and they didn’t win.)    Here is the article…..

Foreclosure filings decrease less than 1 percent in August
Foreclosure filings, including notices of default, scheduled auctions, and bank repossessions were reported on 358,471 U.S. properties in August, a decrease of less than 1 percent from July, and an increase of nearly 18 percent from August 2008.  The report by RealtyTrac^® also shows one in every 357 U.S. housing units received a foreclosure filing in August.

“The August report demonstrates that there still is an ample supply of properties filling the foreclosure pipeline even while the outflow of bank-owned REO properties onto the resale market is being more carefully regulated,” said James J. Saccacio, chief executive officer of RealtyTrac. “After hitting a high for the year in July, REOs dropped 13 percent in August, but we also saw a record high number of properties either entering default or being scheduled for a public foreclosure auction for the first time.”

California documented the nation’s third highest state foreclosure rate, with one in every 144 housing units receiving a foreclosure filing.  California REOs declined 32 percent from the previous month, but continued to post the highest overall total of any state, with 92,326 properties receiving a foreclosure filing in August. California’s total was down 15 percent from the previous month and was also down 9 percent from August 2009—he first year-over-year decrease in California foreclosure activity in RealtyTrac’s monthly reports.

Six California metro areas documented foreclosure rates among the top 10 in August. Stockton posted the nation’s second highest metro foreclosure rate—one in every 74 housing units received a foreclosure filing—followed by Merced at Number 3 (one in 78), Riverside-San Bernardino-Ontario at No. 4 (one in 80), Vallejo-Fairfield at No. 5 (one in 82), Modesto at No. 6 (one in 84), and Bakersfield at No. 10 (one in 94).

Despite home buyers being advised to issue down payments of at least 20 percent, many home buyers are finding that smaller down payments result in better interest rates—but also higher payments.

 Rules put in place in late 2008 by Fannie Mae and similar rules adopted by Freddie Mac are less favorable to borrowers who put down 20 percent to 25 percent–partially because the GSEs consider these borrowers to be more of a credit risk since they are not required to purchase private mortgage insurance.

I don’t know that there is any evidence to support that position.  It has always been my understanding that statistics showed that buyers making larger down payments were less likely to default.  It appears to me that the lenders are just in fear now and trying to get insurance for their protection.  

According to Fannie Mae, borrowers benefit from this industry practice because they are able to leave themselves a financial cushion by not issuing larger down payments, and can instead save the extra money for emergencies.

 It is important to note though, that smaller down payments mean higher monthly payments because the loan itself will be larger.  

Again, I think this policy is an over-reaction on the part of the lenders.

In any case,  this is what we need to deal with, so be sure you work with a knowledgeable loan consultant who can help you make the best decision for your individual situation.  As always, I am happy to refer you to local brokers I know and trust.

 To read the full story from the New York Times, please click here

As a member of The Bay Area Real Estate Information Service (BAREIS), I just received the details about a scam that has been using MLS (Multiple Listing Service) information.  I’m not aware of this happening in Mendocino County, but I want you, and people you know, to be forewarned.

There is a rental scam taking place in which properties listed in the MLS are advertised on Craigslist and other online classified services for rent and properties are not for rent at all.  The ads run for a very brief period of time. 

The ads typically say something like “A spouse’s sickness and a move to West Africa has made it difficult for me to rent my home (in some wonderful neighborhood…and with all kinds of poorly written bizarre information.)  The property is offered for rent at an extremely discounted rental price. 

When the unsuspecting public responds to the ad, the email response from the scammer gives additional information about the property, and requests a deposit through a wire transfer service.  The renters might sometimes be asked to fill out a credit application that asks for personal information like credit history, social security numbers, and work history.  The crooks can then use this info to commit identity theft even steal more money from their victims.

This is an international scam originating in Nigeria, although local scammers may pick up on this scheme.  

The FBI (in charge of internet scams and fraud) has issued scam alerts and press releases dealing with the issue.  A full description of the scam is available on the FBI site at http://www.fbi.gov/page2/july09/housingscam_072909.html A press release from the FBI in South Carolina is posted at http://columbia.fbi.gov/pressrel/2009/co072209.htm (shows it is not just a local issue) and there is also a link to report internet crime at http://www.ic3.gov/default.aspx

The Nigerians are mining information from internet sites in which listings are posted.  The perpetuators of the scam are using “spoofed” email addresses that would make it appear they are local.  You do not have the ability to trace them unless you are a professional in computer forensics.

 What can you do if a local property is the subject of the scam? 

Contact me or the listing agent and we will Contact the FBI, The State Attorney Generals Office, the County District Attorney, or City District Attorney and file a police report.  These are the entities charged with investigating and prosecuting consumer fraud.   The link to report internet crime is http://www.ic3.gov/default.aspx ), 

The FBI’s guidelines for the general public to avoid being victimized. 

• Only deal with landlords or renters who are local.
• Be suspicious if you’re asked to only use a wire transfer service.
• Beware of e-mail correspondence from the “landlord” that’s written in poor or broken English.
• Research the average rental rates in that area and be suspicious if the rate is significantly lower.
• Don’t give out personal information, like social security, bank account, or credit card numbers.

With housing prices down, mortgage rates at a 30-year low and foreclosures soaring, you have plenty of incentives to jump into the real estate market.  

“Time is of the essence”  right now because the $8,000 tax credit stimulus expires at midnight, Nov 30, 2009.  In order to be sure you make the deadline, you need to be in escrow by October 1, 2009.  So get your pre-approval letter and select your home ASAP.

While foreclosures can offer you big discounts, many bank-owned properties require substantial repairs.  You will need to know what you are getting into and I can guide you safely through the search and buying process.

For a free list of foreclosed properties go to www.bankownedweekly.com/mendocino