Posts from — October 2009

The Obama Administration is sending more help to the housing market. 

On Monday, a new government program was revealed that will help support local and state finance agencies.  The plan will help finance mortgages for first-time homebuyers and also create more properties that will be available for rent. 

Recently, these agencies have had a difficult time raising money due to the credit crunch and the state of the housing market.  These agencies have sold about $4 billion in tax-exempt bonds this year.  This number is down from the past which is putting a limit on the amount of loans they can make. 

The new plan from the Obama Administration will use Fannie Mae and Freddie Mac to help alleviate some pressure on credit.  Together, the companies will package their mortgages and sell them as bonds to the treasury department. 

“It’s an additional layer of assistance to borrowers who are seeking a mortgage at a time when credit is scarce,” said Howard Glaser, a mortgage industry consultant in Washington. “It doesn’t solve all the problems of the housing market, but every little bit helps.”

There has been much talk about the sale of luxury homes in the real estate industry as a result of our current economic conditions.  Research appears very positive for the short term future of luxury home sales. 

Million dollar homes are selling in many markets for steep discounts.  As mentioned in a previous post, this can largely be attributed to low interest rates on jumbo loans, which have dropped significantly over time. 

In cities such as San Francisco, $1 million dollars in 2007 bought about 1150 square feet; now it buys an additional 400 feet.  In Las Vegas, time on the market increased from 220 to more than 260 days, and the size of the house available for $1million has increased by 50% to 5400 square feet.  In South Florida, homes listing for $1 million and more average well over 100 days on the market. One particular waterfront home has been waiting for a buyer for almost 4 years. 

Here on the Outer Banks, there a plenty of $1 million dollar plus homes that are on the market.  However, with interest rates the way that they are, this inventory is steadily shrinking.  Now may be the time to buy that Outer Banks dream home.

A Fed report released today shows that housing, along with manufacturing, is driving the economic recovery.

There is no doubt that first-time homebuyers have been stimulating the housing market in these tough times.  In fact, most of these first-time homebuyers are between the ages of 35 and 45.  This age demographic has accounted for around 45% of all sales for the year.

“This is a historic time,” says George Jaramillo, a 35-year-old business analyst in Atlanta, who recently bought three homes, two of them foreclosures. “It’s a great opportunity to make some great gains in the future.”

A study by investment company T. Rowe Price points out that investing when prices are low can result in amazing gains.  For instance, between 1970 and 1990, the annualized rate of return for the S&P 500 was 11.5%.  With affordability the way it is, it may be time to pursue your dream home.  In times like these, it is more feasible to make these dreams a reality.

Real estate professionals on the Outer Banks continue to see a positive shift in real estate activity.

Recent statistics demonstrate that there are many interested buyers in OBX real estate.  For the fifth month in a row, the number of homes sold on the Outer Banks was above 100. On top of the sale of homes, the sale of raw land also saw an increase.

Low mortgage rates have helped stimulate sales in the area.  Professionals are also seeing the number of luxury homes sold increase as well.  This could be because rates for jumbo loans have been dropping and 10% down programs are being offered to 2nd home buyers.

Distressed sales have also been helping some to boost the Outer Banks real estate market.  In September, 25% of homes sold were considered distressed.  Out of the 100 plus number of homes sold, 17 were bank owned and 7 were short sales.

There is little doubt the $8000 tax credit is helping to drive home sales and stimulate the housing market/economy.  Since the tax credit was offered at the beginning of the year, thousands of home sales have been closed.  Many more sales will be closed within the next month as buyers work on closing their properties by the November 30 deadline. 

Actual numbers on this incentive will not be available for a couple months, but many industry experts are questioning whether or not the housing market will fully recover without an extension of this credit.  Kelly Cobb, a broker with Fonville Morisey Realty, said four of the six listings her office put under contract in the last month involved first-time buyers.  Cobb said that as the deadline gets closer, she’s seeing more lower-end homes with multiple offers on them. “It has really, really fueled our market,” she said. “I think anybody who waited until now is going to pay top dollar.”

Many brokers believe that people who are interested in taking advantage of the tax credit have 5 more weeks to begin closing on a home.  It’s not too late to take advantage of this tax credit, this might be a once in a lifetime opportunity.  In many situations, there could not be a better time to buy.

The number of existing home transactions increased in August more than expected. 

The index of contracts for existing home sales rose 6.4% after a 3.2% gain for the month of July, as reported by the National Association of realtors.  This is the seventh month in a row that this index has risen. 

Many experts believe that these sales are being stimulated by factors such as: declining home prices, low mortgage rates and government stimulus programs.  These factors are helping alleviate the housing market downfall that we have been experiencing. 

Federal Reserve policy makers announced last week that they are committed to buy $1.25 trillion mortgage back securities.  “We are in a recovery,” said Gary Thayer, macro strategist at Wells Fargo Advisors LLC in St. Louis, before today’s report. “There were a lot of people who were on the fence. Prices are firming up and people are getting back into the market.”