Dawn Rivera’s Fremont & East Bay Real Estate Blog

A spurt in home sales in 2009, aided by low interest rates and the first-time home-buyer tax credit, has led some economists to forecast a turnaround in the housing market this year.

Among those who see improvement in the 2010 market is Lawrence Yun, chief economist for the NATIONAL ASSOCIATION OF REALTORS® (NAR). Yun hopes that the extension of the first-time home-buyer tax credit will provide a new pool of buyers to absorb the additional foreclosures that will hit the market this year.

He expects existing-home sales to rise 13.6 percent in 2010; home prices should go up 3 to 5 percent, with wide geographic differences. The average rate on 30-year fixed mortgages will range from 5.3 percent in the first quarter to 5.8 percent by year end. This forecast assumes there will be no major economic surprises. The weak job market remains a concern.

The Mortgage Bankers Association (MBA) has a slightly different take on the 2010 housing market. MBA predicts existing-home sales will increase approximately 11.2 percent. Interest rates should be about 5.6 percent by the end of 2010. The unemployment rate is expected to peak at 10.2 percent and gradually decline in 2011. National average home prices should stop sliding during the first part of the year and stabilize, depending on area and price range. 

In my office we have seen a marked improvement in the number of first time buyers calling for help buying a home.  I have been doing floor time (answering calls) and in the last five days I have acquired 5 new clients, one a day.

I have been answering a lot of questions from uninformed first time buyers on websites Like Homeresearch.com and Trulia.com, these sites have realtors who will answer real estate questions.  The majority of questions are regarding if one house or another is available.  They do not have a Realtor nor are they pre-approved……So I am writing this for the benefit of the many first time home buyers who do not know that their first step should be to find a Realtor they feel comfortable with.   The buyers Realtor is paid by the seller and so the expert help of an experienced Realtor comes at no cost to them. 

Their next step should be to obtain a pre-approval from their bank or other lender.  Without a pre-approval, any offer they submit will likely be ignored.  If they do not have a particular lender or bank they want to do business with their Realtor can help them with that as well.

You can play in the snow with your family without having to drive all the way to Lake Tahoe or Reno. 

At Leland Meadows you can have fun in the snow.  They have inner tubes that have tow straps on them so you can be towed up the hill and then you slide down.  So much easier for us older folks who do not want to drag the tube, while we walk up the hill.   For the younger and more energenic, you can still do it the old fashioned way. 

My Family and some friends enjoyed both the towing as shown on left and the old fashioned way pictured below.  If you like to ski (like I do) you can also visit dodge ridge which is about 15 to 20 minutes away.  Go to www.snowplay.com  to find leland meadows and you can find dodge ridge at http://www.dodgeridge.com/site/index.php  You can play for the day and go home or if your prefer you can stay at one of the wonderful cabins or hotels and spend more days in the snow.

The FHA has come up with some new rules when it comes to their loans. 

Beginning April 2010, the up front mortgage insurance will increase from 1.75% to 2.25%

There will be no more spot appraisals.  So it will be harder to get an approval on a condo. 

This is a big one.  Effective for all case numbers issued on or after February 1 of this year, all previous FHA condo approvals will be eliminated and condominium projects must be recertified by HUD.

You can pretty much forget about buying a condo until the project has been blessed by HUD or one of HUD’s approved lenders.

Going forward there will be two approval methods for FHA Case numbers ordered after February 1, 2010; 

Hud Review and Approval Process (H-RAP)

DE Lender-Approval and Review Process (DEL-RAP)

On another note>>> 
For all purchase contracts dated after February 1st, 2010, FHA has waived the flipping rule.
Private Sellers & Investors can now sell their properties to FHA buyers without having to wait 90 days.

when the economy gets bad and people get desperate, some people have no scruples and will try to scam any way they can.

If you are trying to get a mortgage, beware of online scams who are trying to just get your information so they can steal your identity and ruin your credit and your life. Also beware of brokers or lenders who tell you one rate and then give you another (higher rate). Be sure you do business with a “Realtor” or someone else you know and trust. Realtor’s have specific ethics they have to abide by.

Some people are already finding ways to scam the tax credit, and it makes it tougher for those of us who are trying to complete honest business transactions. keep heart there are good, honest, people who will help you get the mortgage you need.

The Federal Housing Administration (FHA) has delayed the implementation of rules that could make life more difficult for condo buyers across the country. The delay should be especially helpful for those hoping to qualify for the first-time buyer tax credit that expires after Nov. 30.

The new FHA rules, which were to take effect Oct. 1, 2009 will now be effective on Nov. 2. They are designed to improve the lending process, but they could cause some short-term delays in completing loans and closing purchases. The FHA was wise to delay the implementation of these changes. Now, buyers trying to close a transaction by Nov. 30 should be able to file their FHA loan applications early enough to qualify under the old regulations.

The importance of FHA financing has grown substantially in the last few years because conventional mortgage financing has become harder to obtain due to more stringent underwriting requirements. According to some estimates, 25% of homes purchased this year in the United States will use an FHA insured mortgage, up from 2% just three years ago.

About 1/3 the transactions I’ve closed this year involved FHA backed mortgages, and most of those folks were first-time buyers purchasing a condo. Many first-time buyers are short on cash and turn to FHA financing because it allows them to put down as little as 3.5%, in contrast to the 10% down payment required for most conventional loans.

The new FHA regulations now will apply to all mortgage applications received on Nov. 2 or later. Files that were initiated prior to Nov. 2 will be processed under the old regulations, even if the loan does not close until after Nov. 2.

The major reason the new regulations may slow down the purchasing process when they become effective is that they end what are known as spot approvals of individual condominium units. Instead, the entire condominium property will need to be approved before an FHA-insured loan can be used.

Many condominium properties have never received FHA approval. However, even those condo complexes that now have FHA approval will need to be recertified after Nov. 2 if their approval was recieved more than two years ago. It may be possible to expedite that certification process by seeking a loan from an institution that is also an FHA Direct Endorsement Lender. That status allows a lender to directly carry out the certification process needed to grant FHA approval to a condominium complex.

The new FHA regulations taking effect Nov. 2 also contain other restrictions that could make life more complicated for condo buyers. Here is a partial list:

-At least 50% of units in the project must be owner occupied or under contract to owners who intend to occupy them. For new construction, the 50% owner-occupied rule applies to those units closed or under contract.

-For new construction condominiums, at least 50% of the total number of units planned must be sold or under contract before an FHA insured mortgage can be closed.

-No more than 25% of the total floor area of a condo property can be used for commercial purposes.

-No more than 15% of the units can be more than 30 days past due on their assessment payments to the condominium association.

There is, however, some good news for borrowers in the new FHA regulations. For example, they eliminate the long-time prohibition against the FHA financing units in condominiums where the homeowners association retains a right of first refusal.

Another change allows the FHA to insure loans in new condo conversions for any qualified buyer. Previously, only former rental tenants could get FHA financing for the first 12 months.

The changes in FHA regulations are just one example of the current environment. It has seemed as if lending requirements have been changing on a daily basis this year.Thjose looking for a condo will benifit greatly by working with a Realtor who knows the local condominium market. An agent with in-depth knowledge of the local market offers two important advantages to buyers right now, First, they are going to know which condo buildings offer the best opportunity to secure good financing, whether it’s conventional or FHA. If you have a building where the association has financial problems or one with a high percentage of renters, it can be almost impossible to get a mortgage right now. Second, the agent will help buyers avoid the potential potholes that can come with condominium ownership. For example, before I even show a condo building now, I will study the minutes of the condo board meeting to learn what plans and problems might be on the horizon. An agent who doesn’t normally work in an area just can’t develop that kind of knowledge.

In the state of California you can apply for two different tax credits one from the state Gov. and one from the Federal Gov.

The federal Gov. is giving a tax credit in the amount of 10% of the sale price or 8000.00 which ever is less.

The state of California is giving a tax credit in the amount of 5% of the sale price or 10,000.00 which ever is less.

Neither is a loan nor does it have to be repaid.

What’s the catch, you ask? Well the federal tax credit has a limit on the income amount on the buyer can earn 75,000 for a single taxpayers and 150,000 for married taxpayers. Also, they must be first time buyers and purchase the home between 01/01/2009 and 12/01/2009

The state tax credit does not have a limit on your income, but it does require you to be purchasing a newly built home, between 03/01/2009 and 03/01/2010. the credit is not a loan as long as the home remains your primary residence for two years.

Home buyers can tap both programs and get a possible 18,000 tax credit, but time is running out to cash in on the opportunity. California set aside 100 million for the program and it is depleting faster than expected. Also the end of the federal program (12/01/2009) is fast approaching. Home buyers who don’t act now could end up out of luck…..

Buying a home

Homebuyers can make the most of several tax breaks that help lower their tax bill based on the purchase of an existing or new home. For instance:
-First-time homebuyers: The Recovery Act provides a credit of up to $8,000 if a taxpayer buys a home between Jan. 1, 2009 and Nov. 30, 2009. The homebuyer also must not have owned a home in the previous three years and the home must be the primary residence.
-Points: The points paid on a mortgage are generally deductible as interest if taxpayers paid enough of a down payment or earnest money at closing to cover the points. Homebuyers can deduct the points even if the seller paid them.
-PMI premiums: Buyers who make a down payment of less than 20% of the home’s cost usually pay private mortgage insurance (PMI). But the PMI premiums generally can be included in your home mortgage interest deduction.
-Job relocation: Taxpayers who moved due to a job change can deduct the cost of moving. In order to take the deduction, they must move within one year of starting the new job, work full-time at least 39 weeks during the first 12 months at the new location, and the new job must be at least 50 miles further than the old residence was from the old job. Qualified moving expenses include your out-of-pocket cost of moving yourself, your family, and belongings to the new location.

Owning a home

If a taxpayer typically has claimed the standard deduction, owning a home will likely mean itemizing for extra deductions. Some tax breaks for homeowners include:
-Mortgage interest: For most taxpayers, the biggest tax break comes from deducting mortgage interest. Taxpayers can deduct interest on up to $1 million of the loan used to buy, build, or make substantial improvements to a main or second home. Interest on a home equity loan up to $100,000 secured by the main or second home is deductible too.
-Real estate taxes: Taxpayers can deduct real property taxes they pay on real estate to their municipalities, whether made directly or through their lending company.
-Home improvements and energy credits: The Recovery Act gives incentives to homeowners making improvements and energy-efficient upgrades to their homes. Taxpayers can get credits for 30% of the cost of qualifying doors, windows, HVAC, water heaters, roofing and insulation, up to a maximum credit of $1,500. Solar energy and wind energy systems are each 30% of cost with no maximum.

Selling a home
Sellers won’t have to pay taxes on a profit up to $250,000 for single filers and $500,000 for joint filers. Taxpayers must have lived in the home for at least two of the past five years to claim this exclusion. In some cases, taxpayers can claim a partial exclusion if they are selling due to a change in employment status, health reasons, divorce or other unforeseen circumstances.

Taxpayers whose homes were foreclosed may be able to exclude the mortgage debt that was forgiven in connection with the foreclosure. This provision applies to debt forgiven in calendar years 2007 through 2012, of up to $2 million is eligible for this exclusion ($1 million if married filing separately).

The U.S. housing market continues to show signs of stabilization with a drop in the number of Multiple Listing Service (MLS)-listed homes for the twelfth consecutive month. The number of single family homes and condos listed for sale according to MLS data decreased in June 2009 from May by 2.1%, bringing the total number of active listings in 28 major U.S. markets to 696,858.

Other highlights from ZipRealty’s Housing Inventory Index, compiled from local Multiple Listing Service (MLS) data, for June 2009 include:

-Las Vegas, Los Angeles and Phoenix all recorded a decline in inventory which may have contributed to some homes receiving multiple bids.
-Median list prices have flattened or increased in Las Vegas, Phoenix, San Francisco Bay Area and Los Angeles, pointing toward stabilization in those areas.
-While South Florida has substantially fewer homes for sale than last summer, housing inventory there is plentiful. For example, Miami has 27.1% more homes listed for sale compared to Los Angeles even though Miami has a significantly smaller population than Los Angeles.
-California is seeing the most dramatic inventory declines with massive year-over-year inventory reductions: Los Angeles saw a 53.9% decrease year-over-year while Bakersfield/Fresno tracked a 56.2% decrease.
-Several major metros that have been hit hardest by foreclosures had limited inventory in June 2009, which is at levels not seen or experienced in years.

“‘Affordability’ has been the buzz word in real estate this summer, and with a significant number of listed homes bank-owned, we’re seeing instances in some areas of banks dropping prices to generate more offers from buyers,” said Zip RealtyZip Realty President and CEO Patrick Lashinsky. “If the number of home listings continue declining and buyer interest and activity remains strong, we should see sales prices and home values increase as we head into the fall.”

In these economic times, the decision to purchase a home has become a very serious consideration, with cost of ownership in both the short and long term being in the forefront of the buyer’s mind. One of the most important factors consumers should consider when buying a home is its energy efficiency rating, as this can add up to substantial savings over the life of the home. Today’s energy efficient manufactured home is no different from any other home, except it has been built off-site, usually in a controlled factory environment, using the latest in energy efficient technologies. Coupled with a lower cost per square foot as compared to site-built homes, today’s manufactured home is a smart investment for savvy homebuyers.

Each manufacturer may have a different label, but one that stands out is the Energy Star designation. The Environmental Protection Agency (EPA) created the Energy Star logo as the symbol for energy efficiency because of the direct link between wasted energy and air pollution. Manufacturers and builders voluntarily display the logo on products and new homes that meet or exceed high energy efficiency guidelines. Some of these everyday products include heaters, air conditioning units, household appliances, residential light fixtures, and new homes. The Manufactured Housing industry is proud to display this designation on its quality homes.

By implementing these standards into the construction of today’s manufactured home, consumers and builders alike can reap the benefits of energy efficient housing solutions, further emphasizing a manufactured home is not any different when it comes to energy efficiency. Manufacturers who utilize energy efficient light fixtures and appliances show that they are doing their part to help preserve and protect our precious natural resources, while offering the consumer significant savings on their utility bills. Combined with an almost 30% savings on heating, cooling and hot water, manufacturers make it possible for the consumer to afford more home, due to the lower cost per square foot that is inherent to the factory construction process.