Misuse of Home Buyer Tax Credit Reported

A report earlier this month from the Treasury Inspector General for Tax Administration estimates that 73,799 taxpayers have incorrectly claimed the first-time home buyer tax credit. The report concludes: “The IRS is unable to verify eligibility for the majority of Recovery Act benefits at the time a tax return is processed.”

The IRS didn’t dispute the claim, but said it was studying the matter further. Some have suggested that this report and others will encourage Congress to put some safeguards in place before more claims result from the extension and expansion of the tax credit.

Source: The New York Times, Lynnley Browning (12/22/2009)

Dallas-Fort Worth home prices dip slightly.

Dallas-Fort Worth home prices were down by just a whisker in the latest gauge of the U.S. housing market.

D-FW homes prices fell 0.6 percent in October from a year earlier in the latest Standard & Poor's/ Case-Shiller Home Price Index released Tuesday.

The dip in local home prices was the half the decline a month earlier and the lowest year-over-year drop since September 2007 in the closely-watched report.

The D-FW decline was also one of the lowest in the country and a fraction of the 7.3 percent overall price drop in the 20 cities Case-Shiller measures each month.

Are home sales map for 3Q 2009

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Why U.S. Home Sales Are Both Up and Down

We can’t blame you for being confused about housing. Tuesday, the market cheered a surge in existing-home sales. Then comes today’s news that new-home sales slid 11.3% in November, falling to the lowest level since April.

Up, down. Up, down. What gives?

Though the two reports both concern home sales in November, they aren’t really in synch and so aren’t comparable. The National Association of Realtors records existing-home sale data when the home closes, while the government records new-home deals when contracts are inked.

For home resales, there is typically a lag of a month to six weeks between the signing of contracts and the closing. So most of the November sales reported by the Realtors are based on decisions buyers made in September or October. At that point, lots of people were scrambling to buy homes in time to qualify for a tax credit that was due to expire Nov. 30. (It was later extended through April 2010.)

For the new-home sales, the decisions were made in November, when there was no such scramble to qualify for the tax credit.

Existing inventory includes foreclosures, which continue hitting the market and typically command a steep discount to new homes. Buyers, particularly first-timers, are rushing to take advantage of these falling prices. As Wednesday’s Journal points out, first-time buyers made up 51% of purchases in November, according to the Realtors. Sales of foreclosed and other “distressed” properties - which includes homes built during the housing boom - accounted for one-third of the purchases.

Median prices are another issue: The price tag for existing homes came in at $172,600, while new homes registered $217,400.

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U.S. existing home sales up 7.4 pct in November

WASHINGTON, Dec 22 (Reuters) - Sales of previously owned homes in the United States surged last month as prices continued to fall and buyers rushed to take advantage of a popular tax credit, the National Association of Realtors (NAR) said on Tuesday.

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The group said that sales rose 7.4 percent to an annual rate of 6.54 million units, the fastest pace since February 2007, and higher than the 6.25 million unit pace expected.

October sales were revised lower to a 6.09 million pace from 6.10 million units. Compared to November last year, sales of existing homes were up 44.1 percent, the largest yearly gain on records dating to 1999.

(Reporting by Corbett B. Daly, Editing by Chizu Nomiyama)

US new home sales slump in November

Sales of new homes dropped dramatically in the US last month as the boost from an $8,000 tax credit for new home buyers wore off.

The Commerce Department revealed a 11.3 per cent drop in November new home sales, down to an annual rate of 355,000, well below the 438,000 sales that economists had expected.

The figures are in contrast to Tuesday’s existing home sales numbers from the National Association of Realtors, which reported a surprise 7.4 per cent jump in November sales, more than double the expected rise.

Economists anticipate a quiet December and January for the property market, before sales pick up again in Spring.

Ian Shepherdson, chief US economist at High Frequency Economics, said: “Homes are now very affordable for people in employment who need only conforming – that is, not jumbo – mortgages, and inventory is well down from its peak.”

Economists attributed the drop in new home sales mainly to the extension of the Government’s tax credit for first homebuyers, which had been due to close on November 30.

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Another Big Gain in Existing-Home Sales

Existing-home sales rose again in November as first-time buyers rushed to close sales before the original Nov. 30 deadline for the recently extended and expanded tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October, and are 44.1 percent higher than the 4.54 million-unit pace in November 2008. Current sales remain at the highest level since February 2007 when they hit 6.55 million.

Lawrence Yun, NAR chief economist, said the rise was expected. “This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” he said. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline.”

Conditions Optimal for Buyers
An NAR practitioner survey shows first-time buyers purchased 51 percent of homes in November, compared with an upwardly revised 50 percent of transactions in October. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.88 percent in November from 4.95 percent in October; the rate was 6.09 percent in November 2008. Last month’s mortgage interest rate was the second lowest on record after bottoming at 4.81 percent in April 2009.

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Report: Home Prices Likely to Hit Bottom in March

Home prices in 45 of the largest housing markets are expected to fall another 4.2 percent before they hit bottom in March, according to First American CoreLogic’s LoanPerformance Home Price Index.

By October 2010, prices are expected to be heading upward again by about 1 percent compared to 2009.

The report warned that this progress could be jeopardized by an increasingly large “shadow inventory” of homes owned by banks but not yet on the market. The problem is particularly acute in Michigan and Ohio cities, the report said. It projected a 12.7 percent further decline in values in Detroit, an 11.4 percent decline in most of the rest of southeast Michigan, and a 6.3 percent fall in Cleveland.

The report expects the strongest recoveries next year in California cities. These include:

1. San Francisco, up 5.7 percent
2. Los Angeles, 5 percent
3. San Diego, 4.7 percent
4. Sacramento, 4.6 percent

Source: Inman News (12/21/2009); Realtor online magazine.

Cities Where Homes Are Losing Most Value

Merced, Calif., is a quiet, residential city an easy drive from Yosemite National and Pacific Coast beaches. It's also a perfect case study for the aftermath of the housing crisis.

Homes at the median level in Merced have lost 62% of their value from the second quarter of 2006, when they peaked at $336,743, the biggest drop anywhere in the country, according to data provided to Forbes by Local Market Monitor, a Cary, North Carolina-based real estate research firm. Earlier, home building and buying grew exponentially in Merced, but the metro now suffers from a whopping 16.4% unemployment rate, according to the Bureau of Labor Statistics, reflecting a drop-off in building industry jobs and a grim housing market.

Providence, R.I., where values sank the most in the Northeast;Detroit, the hardest-hit market in the Midwest; and Port St. Lucie, Fla., the biggest loser of value in the South, have also suffered from their local market's slide.

Photos: Cities Where Homes Are Losing Most Value

Full List: Cities Where Homes Are Losing Most Value

It's not news that Las Vegas, where value has dropped 48%,Miami (down 38%), and Orlando(down 31%) saw a burst of homebuilding fueled by bad loans and rampant house flipping between the years of 2002 and 2006, and that those building bubbles subsequently collapsed. But it's the exurban cities just outside of easy commuting distance from the most desirable West Coast and Sunbelt metros where home values have taken the biggest pounding.

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Mortgages Becoming Easier to Obtain

n some parts of the country, borrowers with good credit are more likely to be able to borrow 95 percent of the purchase price than they were just a few months ago.

In Florida and other troubled markets credit remains tight and mortgage companies continue to scrutinize property appraisals, which makes it difficult for some borrowers to get financing. But in most areas of the country where prices are stabilizing or falling only slightly, standards are relaxing.

“We are starting to see...moderation," said Neil Librock, head of credit risk for Wells Fargo & Co.

Source: The Wall Street Journal, Ruth Simon (12/19/2009)

4 out of 10 Recent Buyers Used FHA Loans

4 out of 10 Recent Buyers Used FHA Loans
According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

“FHA helps provide affordable mortgage financing to home owners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

Distressed Sales, HVCC Concerns
The RCI results also indicated that distressed sales increased to 33 percent of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale. REALTORS® report that many buyers have pricing expectations that treat every property as if it were in foreclosure.

In addition, REALTORS® expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available.

“As the first, best source for real estate information, REALTORS® have their finger on the pulse of current housing trends, and their knowledge and experience offer valuable insights into today’s real estate market,” Golder said. “We know that an economic recovery is not possible without a housing recovery, and we will continue to work with policymakers at all levels to ensure that this happens.”

Source - NAR

Dallas housing poised for a rebound – but how big?

fter slogging through two years of decline, the North Texas housing market is headed for a rebound in 2010. The only question, analysts say, is how strong the bounce-back will be. And that depends on the economy, of course."Any sustained turnaround in sales and construction activity will definitely depend on the economy and job growth," said D'Ann Petersen, a business economist at the Federal Reserve Bank of Dallas. "We do see increasing signs that the local economy has bottomed out, and business contacts say they are through cutting staff."

Petersen said there are signals that the worst is over for the Dallas-Fort Worth housing market. Next year will look better for builders and buyers.

"It will be slow going in 2010, but I do think that Dallas' housing market is in a better position than many other areas of the country to respond to positive economic growth," she said.

During the last two months, sales of pre-owned homes have increased significantly from year-ago numbers, and price declines have slowed. At the same time, the number of homes for sale in North Texas has fallen to the lowest level in more than two years.

Given the demand from homebuyers, builders will have to start more houses in 2010, said David Brown, an analyst with Metrostudy Inc.

"There now is currently less than a six-month supply of homes priced under $250,000 and just over a six-month supply of homes priced between $250,000 and $500,000," Brown said.

"If homebuilders are not able to start as many homes as they are closing because of lending constraints, then some of those buyers may be forced into the resale market and could cause new home closings to fall further next year."

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New listing in "Townhomes of District A"

New listing in our subdivision"Townhomes of district A" 15742 SEABOLT PL. Addison, TX 75001 and already has a contract. Houses sales when they are priced well.

Loan Modifications Coming Up Short

Only about 4 percent of the home owners who signed up for loan modifications—fewer than 31,000—had received them by the end of November, according to figures released Thursday by the U.S. Treasury Department.

Of the largest lenders, Bank of America Corp. had the worst results. It completed a total of 98 modifications. With 7,100, GMAC Mortgage completed the most.

Lenders have blamed their lack of success in part on the failure of borrowers to complete the paperwork necessary for the process.

The government says it will expedite its efforts to push through as many modifications as possible.

Source:Realtor Magazine & Associated Press, Alan Zibel (12/10/2009)

A Good Sign For Housing: Foreclosure Activity Down 8% In November

It may be another sign of a bottoming in the housing market, both in terms of foreclosures and prices. RealtyTrac reports that foreclosure filings fell 8% in November compared to the previous month, down to 306,627. One in every 417 homes in the US received a foreclosure filing during the month. The figure was up 18% from November 2008.

“November was the fourth straight month that U.S. foreclosure activity has declined after hitting an all-time high for our report in July, and November foreclosure activity was at the lowest level we’ve seen since February,” said James J. Saccacio, chief executive officer of RealtyTrac. “Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded homebuyer tax credit, are keeping a lid on the most visible symptoms of the nation’s ailing housing market — foreclosures and home value depreciation.”

Nevada, Florida, and California remain the states hit hardest by the housing crisis and the inventory of unsold homes in those state may force prices to fall well into 2010.

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Why Loan Modifications Are Like ‘Jurassic Park’

As he appeared before the House Financial Services Committee Tuesday to discuss the slow progress of government efforts to force lenders to ease payment terms on home mortgages, Anthony B. Sanders was reminded of the movie “Jurassic Park.”

It might be possible to bring dinosaurs back to life, but does that make it a good idea? Similarly, says Dr. Sanders, a professor of real estate finance at George Mason University, it might be possible to slash interest rates on millions of loans, but that doesn’t mean we should.

What if the government’s Home Affordable Modification Program somehow finally gains traction and manages to reduce interest rates to 2% on millions of loans and extend their terms to 40 years? That would just create fresh problems, Dr. Sanders says.

“Our banking industry, Fannie Mae, Freddie Mac and our Federal Reserve would now be sitting on trillions of dollars of mortgages, many at super-low interest rates and stretched maturities to 40 years,” he writes. Any rise in inflation and interest rates would then slash the value of those mortgages. “When one considers the precarious balance sheets of our lending institutions and our government agencies, we should think very, very carefully about loading up their balance sheets with these mortgages,” he warns, adding:

“Congress and the Administration should bear in mind that it is not just the banks that will suffer, but our pension funds, our own government agencies and the viability of the economy going forward.” Banks would be “stuck with low-interest, long-maturity loans on their books that will prevent them from lending to other borrowers or small businesses for a long, long time.”

The solution, he says, is to encourage financial institutions to sell distressed loans and mortgage securities at big discounts from face value to private investors, who could then restructure the loans on realistic terms related to today’s house prices. Such sales would force banks and other financial institutions to book big losses, but perhaps regulators could allow those losses to be absorbed in stages over five years.

If U.S. financial institutions don’t clean up their balance sheets by shedding dud assets soon, “we will make the Japanese zombie banks look the role model for a healthy financial system,” Dr. Sanders says.

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Home Values Have Been Stabilizing

U.S. homes lost $489 billion in value during the first 11 months of 2009. That’s significantly less than the $3.6 trillion lost during 2008 and evidence that home values are stabilizing, says Zillow.com, online real estate research firm.

Properties in 48 of the 154 markets tracked by Zillow rose in value this year, but Zillow’s Chief Economist Stan Humphries believes prices could decline again in 2010.

“We believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices," Humphries said in a statement.

Areas where home prices rose the most in 2009 were:

• Boston
• Providence
• Denver, Colo.
• Atlanta, Ga.
• Rochester, N.Y.

Areas where homes continued to lose the most value:

• Los Angeles
• Chicago
• New York
• Miami-Fort Lauderdale
• Phoenix

Source: Zillow.com (12/0920/09)

Tax credit fuels skyrocketing Dallas-area preowned home sales

The North Texas housing market came roaring back in November.

Pre-owned home sales rose 31 percent last month from a year ago – one of the biggest increases on record and the second consecutive month of rising sales.

Median home sale prices were up 5 percent, the largest gain in more than two years.

"This is another positive signal that the local housing market may have turned the corner," said D'Ann Petersen, business economist with the Federal Reserve Bank of Dallas. "It is probably still too soon to declare a rebound, but two months of positive sales certainly suggest improvement."

Throughout North Texas, real estate agents sold almost 5,500 pre-owned homes in November through the Multiple Listing Service, according to statistics released Monday by North Texas Residential Information Systems and the Real Estate Center at Texas A&M University.

The jump in residential transactions came as homebuyers rushed to take advantage of the federal homebuying tax credit, which has been extended into the spring.

"While the tax credit likely played a role in some of the activity, increased sales in areas unaffected by the tax credit suggests buyers are becoming more confident that the worst is behind us," Petersen said. "Home prices have firmed locally and nationally, and that may be spurring buyers to make decisions now, especially given that mortgage rates remain very attractive."

Indeed, many neighborhoods that weren't affected by the federal homebuying incentive saw dramatic spikes in home sales.

In the Park Cities, pre-owned home sales soared 81 percent in November from a year ago. Sales in close-in North Dallas neighborhoods were up by 60 percent.

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Option-ARM Borrowers Facing Resets

About 93 percent of option-ARM buyers chose to pay a minimum amount less than the interest due, according to a report released last week by Standard & Poors. That means that nearly all of the 350,000 option-ARM borrowers now owe more than they owed when they first purchased their homes.

Many of these loans were written in 2004 and are close to their five-year reset when the loans convert to a standard amortization. Some more recent loans will reset early if the accumulated interest has pushed the loan-to-value ratio above 110 percent.

In one example outlined in the S&P report, the payment on a $400,000 mortgage goes from $1,287 to $2,593.

The authors of the report say that many ARM borrowers aren’t good candidates for refinancing or modification because their loan-to-value ratios are too high for the government’s Making Home Affordable program. Also, about 80 percent of option-ARM loans were stated-income loans and borrowers could be held legally liable for deliberate inaccuracies on their original applications.

Source: CNNMoney.com, Les Christie (11/26/2009)

Government Announces Short Sales Guidelines

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:

• The property must be the home owner’s principal residence.
• The home owner must be delinquent on the mortgage or close to defaulting.
• The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
• The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)