Jude's Real Estate Rumblings

1. Miami
2. Orlando
3. Phoenix
4. Tampa
5. Los Angeles
6. Washington, D.C.
7. Chicago
8. Baltimore
9. San Diego
10. Denver

An article from The Denver Post, reports that the Colorado Housing and Finance Authority looked at areas where residents were calling in to the Colorado Foreclosure Hotline and areas with high foreclosures between Nov. 27 and April 4.  Of the 11,633 foreclosures started in that time frame on $2.2 billion worth of loans, the CHFA found seven ZIP codes where people were not seeking help.  Included in that list is 80010, the Fitzsimons area of Aurora; 80017, the Buckley area of Aurora; 80916, Peterson Air Force Base near Colorado Springs; 80204, the Invesco Field area of Denver; 80239, the Montbello area of Denver; 80631, north Greeley; and 80134 in Parker.  According to CHFA spokeswoman Jerilynn Martinez, Gov. Bill Ritter will be featured on postcards sent out, to distinguish them from the flood of solicitations sent to people in foreclosure.  On Monday, Gov. Ritter declared this week "Foreclosure Prevention Awareness Week" to promote awareness of the foreclosure hotline.
http://www.denverpost.com/business/ci_9007106

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An article from Business Week and MSNBC.com, reports that spring is traditionally the busiest time for real estate, largely because parents, readying for a summer purchase, don't want to move during the school season.  With the housing slump in its third year, many buyers are reluctant to take a chance on real estate in the face of continuing price declines, foreclosures, record gas prices, job losses, and general economic uncertainty.  The news isn't all bad for buyers.  For some the timing couldn't be better.  There are lower prices in some markets that are making homes affordable for first-time home buyers and more attractive for investors on the lookout for fire-sale discounts.  James Hughes, Dean of the Edward J. Bloustein School of Planning & Public Policy at Rutgers University said, "If it doesn't pick up this spring, then we'll have another year on the down cycle.  If it does pick up, we'll have modest stabilization."
http://www.msnbc.msn.com/id/24245203/

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An article from The Wall Street Journal Online, reports that Congress has gone from considering ways to collect more taxes from homeowners and individual real-estate investors, to coming up with new tax breaks for home buyers.  Congress is now moving toward enacting new tax credits for home buyers, and tax breaks for millions of homeowners who don't currently benefit from the ability to write off property taxes.  Linda Goold, tax counsel for the National Association of Realtors said of the rush by Congress to aid homeowners and the real-estate industry, "The world has changed dramatically."  In order to claim any tax benefits in the current proposals, you must live in the house you are claiming them for.  None of the provisions likely to become law are written to help the small-time investor in a single-family home.  Also, the tax breaks under discussion are temporary, so lawmakers can advertise them as being available "for a limited time only." 
http://online.wsj.com/article/SB120891638382936977.html?mod=RealEstateMain_1

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An article from The Wall Street Journal Online, reports the silver lining of the housing downturn is that it is helping some people buy homes that they couldn't afford a couple of years ago.  The Wall Street Journal's quarterly survey of housing-market conditions in 28 major metro areas points to continued downward pressure on prices in much of the country, which is causing some buyers to continue holding out for better deals.  Prices in many areas are adjusting back toward more affordable levels, a process that could take several years.  According to Richard DeKaser, chief economist at National City Corp., in most of the country, "we're getting a return to normalcy" in the relation between home prices and incomes.  Jan Hatzius, Goldman Sachs' chief U.S. economist, says the share of a typical family's income needed to pay mortgage payments on a median-priced home averaged about 17.5% from 1993 to 2003, before jumping to 26% in 2006.  That number has now has fallen to 20% and is likely to keep declining as home prices fall, he said.
http://online.wsj.com/article/SB120900800448540861.html?mod=RealEstateMain_1

http://www.judesandvall.com

An article from The Denver Post, reports that with homes built mostly in the 1940s and 1950s, home resale prices are falling in the unofficial Park Hill east neighborhood.  According to Kathleen Clifford, a broker with Re/Max of Cherry Creek, the average price for a house in Park Hill's eastern bloc is about $176,000, far lower than much of the neighboring Park Hill areas.  She said the first few months of 2008 have seen that average price drop to $145,000.  "Because of the area's proximity to Stapleton, with all its amenities, the area is becoming more and more desirable," she said.  Park Hill east typically offers modest brick homes and row-house types left over from the mid-20th century.  A broker associate with HQ Homes in Denver, Christine Barton, says location makes the eastern section of Park Hill a plus for homebuyers.  She added, "You can't go wrong buying that close to the city."
http://www.denverpost.com/business/ci_8979674

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An article from CNNMoney.com, reports that key legislators, Bush administration officials, banking regulators and the presidential candidates have agreed on the idea of letting the Federal Housing Administration back new loans for homeowners at risk of foreclosure.  All of the plans that have been proposed would let the FHA insure mortgages for troubled borrowers whose lenders voluntarily write down loans to an affordable level.  Once refinanced, the loans could be sold to investors, which in turn could jump start the mortgage market as a whole.  Details, such as which borrowers would be eligible and how the program would be funded, still need to be worked out between Democrats and Republicans.  Jaret Seiberg, senior vice president at the Stanford Group said, "Given election-year pressure and the lack of differences between plans, it's hard to see how they can't get this done."  House Financial Services Chairman Barney Frank said, "I think there's a very good chance - much better than even - that we could put together a package that, while the president wouldn't be thrilled with every piece of it, there'd be enough that he wanted so that we could get his signature."
http://money.cnn.com/2008/04/18/news/economy/fha_rescue_plan_odds/index.htm?postversion=2008041815

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Today's tip is just a quick review of how to get 100% financing with FHA loans.  FHA loans require a 3% mandatory cash investment.  On any other type of loan, the seller is not allowed to pay the down payment for the buyer because doing so would effectively lower the sales price by 3%.  It would be viewed as a kick back from the seller to the buyer (an "inducement to purchase"), which of course, is not allowed.   However, FHA allows a seller to contribute the 3% to a non-profit organization such as the Nehemiah Program, and at closing, the 3% is transferred to the buyer as a gift.  This is how most FHA loans are structured, and it allows the buyer to purchase the property without any money out-of-pocket (100% financing).  Nehemiah charges a $499 processing fee, and the seller is allowed to pay for that as well.   The reason this is so important is that FHA and VA loans are the only loans right now that do not have issues with declining markets or distressed markets (the mortgage insurance term for declining markets).  FHA loans have mortgage insurance (MI), but the MI is not private mortgage insurance and as such, is not subject to the distressed market MI guidelines.

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An article from the Denver Business Journal, reports that according to a survey released this week, Denver residents are feeling more optimistic about the economy than people living in the rest of the country.  The Country Financial Security Index is released every other month by Country Insurance & Financial Services and showed a rebound in the financial security felt by Denver residents, with the local index up by 0.9 points from February, to 71.2.  The index fell nationally by 0.7 points, to 67.8.  The survey also found 89% of Denver residents were confident in being able to pay their bills, up 8 points from February and 62% said they were able to set aside money for savings or investments, up from 59% in February.
http://denver.bizjournals.com/denver/stories/2008/04/14/daily21.html?surround=lfn

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An article from Mortgage News Daily, reports that according to a study released late last month by the National Association of Realtors® (NAR), second-home sales declined with the overall market in 2007, but second home sales still accounted for 33% of all new and existing home sales.  In 2007, 21% of all homes purchased were for investment purposes compared to 22% the year before.  In addition, 12% of the home purchases were vacation homes, down from 14% in 2006.  Lawrence Yun, NAR chief economist said lifestyle factors and strong demographics remain positive for the vacation home market.  He said, "Investment considerations are secondary for vacation-home buyers, so there is some dormant underlying demand.  A peak of population is moving through the prime years for buying recreational property.  It is welcoming to see investment sales returning to pre-boom sales activity."
http://www.mortgagenewsdaily.com/4172008_Vacation_Property.asp

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