The 2007 real estate market report for San Antonio from the Texas Real Estate Center is now available on my website. The report covers census data, employment and unemployment, major industries, business climate, education, transportation and infrastructure issues, growth patterns and much more. Click here or on the link below to download this report.
Some highlights from this report for the San Antonio area are as follows...
The median price for a San Antonio residential home in 2006 was $140,100. The required income to qualify for this home was $35,324, while the median family income in San Antonio during 2006 was $53,992. This means that a residential home continues to be attainable for the average San Antonio family.
Subprime loans are high-interest rate loans that are offered to people who do not qualify for market rate mortgages. Often, traditional lenders have turned these borrowers away because of low credit ratings or other factors that suggest to traditional lenders that borrowers could default on their loans. Since the start of 2007, foreclosures of subprime mortgages has risen rapidly leading to more than 36 subprime mortgage companies failing.
The subprime lending market's woes will impact all home buyers, not just those with "subprime" credit scores. Underwriting guidelines are tightening and we are seeing decent rates for the 100% stated-income loan disappear. With foreclosures and shortsales increasing it is easy to look back and say this should have been seen coming from a mile away.
However, stated income loans impact how various market segments obtain loans. For instance, this has a huge impact on tipped income jobs. The restaurant industry alone is a huge employer and it would be safe to assume that a good portion of these jobs are tipped income jobs. Also, small business owners and commissioned contractors will be hit hard by these changes as well.
As Realtors, it is more important than ever to ensure that we understand these mortgage loan market changes and that we team up with a lender who has a good knowledge of how these changes will impact loan applicants. We will see more of the "teaser rates" advertised only to have the rug ripped from under the applicant and the rates raised when the loan goes to underwriting.
Also, this will not only impact buyers. A good Realtor will need to go the extra mile to make sure buyers for our listings are qualified, asking the difficult credit questions, and that the buyer's agent realize the impact of the tightening credit changes. Every listing offer with loan contingency should be scrutinized before consideration by the sellers!
Some home buyers will be receiving a bit of a tax break for the 2007 tax year thanks to new legislation that will make mortgage insurance (MI or PMI for private mortgage insurance) tax deductible.
PMI, is a type of insurance that insures the lender in case the buyer defaults on the loan. The lender usually requires PMI when the buyer has a down payment less than 20% of the asking price of the home. Many homeowners will be eligible to deduct 100% of the PMI they paid in 2007 on thier federal tax returns. This law applies to all new mortgage transactions between January 1, 2007 and December 31, 2007. There are some other deductibility stupliations including:
• The tax deduction only applies to mortgages closed in 2007 • There are income limits. A 100% deduction is applicable for gross incomes of $100,000 or less. • No tax deductions are available for gross incomes over $110,000.
Note that this law has only been approved for tax year 2007 and there is no guarantee that it will be renewed, but at least it will be a nice benefit to new homeowners for this year.
Texas Commissioner of Insurance, Mike Geeslin, ruled that all title insurance premium rates be lowered by 3.2 percent, across the board. Starting Feb. 1, 2007, all Texas title companies must follow the new, lower rates.
The decreasing premium rates are nothing new to Texas title companies. In 2004, the state ruled that premiums should drop by 6.5 percent. And, over the last eight years the rates have been cut by 17 percent, according to numbers from the Texas Department of Insurance.
Jerry Hagins, a spokesman with the Texas Department of Insurance, said the premiums are decreasing simply because of profits. “They’ve been paying out less than what they’re taking in,” Hagins said of the title companies. The department staff analyzes title companies’ profit targets, expenses and losses when gathering data for each biennial rate hearing, he added.
As an example of cost savings, the title insurance for a $150,000 home under the current rates would be $1,227 and will be $1,110 starting February 1, 2007 under the new rates.
When it comes to home loans, buyers have more options now than just the traditional 15 and 30 year mortgages. Now 40 year, and in some cases 50 year, home loans are being offered. Last year 40 year loans accounted for 5 percent of all new mortgages in the United States. The question is, how economical are these loans?
Almost all 40 year and 50 year mortgages start as fixed rate and then are converted to an ARM (Adjustable Rate Mortgage) sometime in the first 10 years. This means that in return for an average savings of $33.00 per month per $100,000 of mortgage, the borrower takes a long term interest rate risk. This usually means that the risk of a mortgage payment rising in 5 or 10 years may far outweigh the benefits of the reduced payments at the beginning of the loan.
The 2006 real estate market report from the Texas Real Estate Center is now available on my website. The report covers census data, employment and unemployment, major industries, business climate, education, transportation and infrastructure issues, growth patterns and much more. Click on the link below to download this report.
Some highlights from this report for the San Antonio area are as follows...
Average Home Prices in San AntonioThe median price for a San Antonio residential home in 2005 was $131,100. The required income to qualify for this home is $30,899 while the median family income in San Antonio during 2005 was $50,500. This means that a residential home is still attainable for the average San Antonio family.
In the past, homeowners who protested property-tax values and were unsatisfied with the Appraisal Review Board's (ARB) decision had only one recourse, appeal the ARB's decision to district court. But the cost of filing in district court could be high, with $5,000 being the average cost of filing.
But as of Jan. 1, 2006, a new, less-expensive, way to appeal the decision rendered by the appraisal review board is available: binding arbitration. Binding arbitration may only be used in cases concerning property values and you may not resort to arbitration if you were denied a tax exemption. Also, you may not use binding arbitration if the property is valued at more than one million dollars.
However, if you do go forward with binding arbitration, be aware that once a decision regarding your appraisal is reached the agreement is binding, hence the term, and must be accepted by the appraisal district and the property owner.
The process is farily simple. The property owner is responsible for paying a $500 deposit up front, which covers the cost of arbitration. Then, the two parties, homeowner and appraisal district, must agree on an arbitrator or one will be randomly selected by the Texas comptroller's office, which administers the appointment of arbitrators. The arbitrator will decide only the value of the property, and that decision is final. If the arbitrator's decision is closer to the value the property owner claimed, the property owner's deposit will be returned (less a $50 administrative fee). If the arbitrator decides a value nearer what the appraisal district claimed, then the $50 administrative fee and the arbitrator's fee is paid out of the property owner's deposit, and any remaining funds are then returned to the property owner.
It is common knowledge that housing in Texas is more affordable than in most other parts of the country. Just how much more affordable is clearer in light of changes to the Real Estate Center's Texas Housing Affordability Index (THAI). The Texas median-income family earns 79 percent more than necessary to acquire the median-priced Texas home at $129,100.
The equation for the affordability index is: Index = Median Family Income (MFI) Required Income to Qualify for a Conventional Purchase Mortgage (RI) Where: RI = Required Monthly Mortgage Payment × 12 Qualifying Ratio (QR)
The qualifying ratio is the lender-stipulated maximum ratio of monthly mortgage payment to gross monthly income allowed for a borrower to qualify for a mortgage loan. The required monthly mortgage payment is the amount the borrower will have to pay on an 80 percent, conventional mortgage at the effective interest rate for the area.
What this all means in generic terms is that it is easier for the average family living in Texas to purchase a home than for the average family living in most other areas of the country.
Effective, Monday, July 10, 2006, I joined Keller Williams Realty. Keller Williams Realty is one of the fastest growing real estate companies in North America and has been voted one of the best places to work.
I have had a great 12 year relationship with RE/MAX, but feel this move is right for me, my team, and our clients. With the change of real estate brokerages comes the opportunity to expand the services that I and my team may provide to you, our most valued clients.
Should you have any questions or comments, please don't hesitate to contact me.
Christina Whipple Alamo Home Team Keller William Realty
How does limited service representation affect a property's time on the market and selling price? Research sponsored by the Texas Real Estate Center revealed that limited service representation can indeed have significant impacts.
Limited service representation and discount brokerages in single-family residential markets have been widely scrutinized by the real estate industry. The Internet portal Yahoo! moved from the sixth most visited real estate website to second (behind realtor.com) through its series of partnerships with limited service and discount brokerages. Some of these brokerages offer consumers menu-based pricing, with fees for specific services, such as listing the property on a MLS system, rather than an across-the-board fee for full representation. Others advertise sharply lower commissions while still promising to provide consumers with all of the traditional services.
Limited Service Research Results Most of the study results were statistically significant, indicating valid relationships exist between limited service representation and marketing performance (time to sale and sales price). The empirical results show that limited service listings sold for 1.7 percent less than typical exclusive-right-to-sell listings and took 17.1 percent longer to sell. Given that the typical discount offered by limited service brokers is approximately 2 percent, there does not appear to be any net gain to sellers using limited service representation.
For example, if the limited service broker charges a total 4 percent commission, then the commission plus the 1.7 percent lower price is approximately equivalent to a 6 percent commission from the seller's perspective. This would indicate that limited service brokerage offers no dollar advantages to the seller over typical brokerage when using the exclusive right to sell contract.
If "time on maket" is taken into consideration as well, then limited service brokerages could actually COST the seller depending on the fixed costs of carrying the property on the market (mortgage, maintenance, etc...).
But what about agent experience?
Other research has shown that agents with limited service brokerages, either no service or menu-based-pricing, tend to be less experienced than those with traditional brokerages. The Texas Real Estate Center study revealed Sellers using listing agents with less than two years of experience received 1.1 percent less for a house compared with sellers who used agents with two to five years of experience, and the marketing time was 1.9 percent longer. While 1.1 percent may not seem to be a large amount, it represented more than $1,900 for the average property in the study. If the listing agent had more than five years of experience, the seller received 0.8 percent more than sellers who used agents with two to five years of experience, and the property sold 1.5 percent faster.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
The process is farily simple. The property owner is responsible for paying a $500 deposit up front, which covers the cost of arbitration. Then, the two parties, homeowner and appraisal district, must agree on an arbitrator or one will be randomly selected by the Texas comptroller's office, which administers the appointment of arbitrators. The arbitrator will decide only the value of the property, and that decision is final. If the arbitrator's decision is closer to the value the property owner claimed, the property owner's deposit will be returned (less a $50 administrative fee). If the arbitrator decides a value nearer what the appraisal district claimed, then the $50 administrative fee and the arbitrator's fee is paid out of the property owner's deposit, and any remaining funds are then returned to the property owner.
;)
;)
