Back in the Dark Ages there may have been a better time to buy your first home. Maybe around 1950. There were many new homebuyer programs at the state and local level, but none compares to the new first-time homebuyer tax credit.
If you have not owned a home in the past 3 years, you can purchase a home or condo and deduct $8,000 from the amount of tax you owe for either 2008* or 2009.
You have to purchase before December 1, 2009 to qualify.
If you file your 2008 Federal tax return and subsequently purchase a home, you can amend your tax return to get the refund.
This tax credit does not have to be paid back!!!
FHA mortgage interest rates have been below 5% for borrowers with good credit. Add to this astonishing rate the lowest home prices since before the run-up in 2004, and you have a recipe for home ownership that is truly remarkable.
If you have a job and have paid your bills on time, start looking for homes. You are blessed with good timing.
The real estate market is in one of its more complex modes as we deal with a tide of market changes, appraisal problems, and shifting supply and demand conditions. The most fundamental element of the Sacramento, Roseville, and Rocklin markets is CHANGE. Each day brings incremental changes that ripple through the housing market. Keeping up with these changes takes constant attention and outreach.
Declining prices and varying rates of price decline are making appraisals and comparable market analysis very challenging. Lenders very critical of appraisals and appraisers are worried about being banned by lenders if their appraisals are reviewed and found to be suspect. The end of each transaction is loaded with suspense, wondering what the final appraised value will be.
Foreclosed property demand is very stratified. While most smaller/cheaper properties have 10+ offers, many large foreclosed properties are sitting on the market, getting big price reductions. These larger properties can be very good buys relative to replacement cost, but remain the target of appraisal problems.
Short sales may be the most lucrative buys. Short sales require the lender(s) to approve a pay-off which is less than the original amount borrowed. Banks are flooded with these requests, creating long delays for approval of purchase offers. The good ones also generate multiple offers, and are often bid beyond the eventual appraised value. This results in the need for new approvals, and substantial delays. All of these conditions have the potential to create extraordinary situations that can be deal-killers.
Realize that these situations are all part of the real estate market's recovery, but buyers have to be ready for unusual situations and a willingness to work closely with their agents to solve problems that arise.
Patience is the virtue that creates successful buyers in today's market.
The distressed housing market, and the related financial industry meltdown, are real and affecting more and more homeowners every day. Its not unusual to see the names of realtors among the distressed sellers. The U.S. Treasury has created a web site that provides some basic qualification questions for homeowners who have, or may soon have, mortgage problems. The site address is: www.MakingHomeAffordable.gov There is some helpful information on this site:
Basic questions to see if you qualify for the Federal loan modification programs,
A way to look up whether your current loan is held by Fannie Mae or Freddie Mac; the two organizations directly impacted by Federal policy,
Finding a home mortgage counselor
Resources, including calculators.
My advice is: Don't be afraid to call your mortgage lender and be very persistent. If you need help, CALL ME. I deal with them regularly and can tell you what to expect.
Last week I visited a company that works with homeowners to facilitate loan modifications. It's called New Leaf Modifications in Roseville. They contacted me because of my success with short sale listings. I was shown some of the modified loan documents, and I must say that like so many other things in life, the value depends on your situation. I can see just as many people getting in trouble with these modifications as those who signed up for "pick-a-payment" and low-downpayment loans in years past.
When considering loan modification offers, look past the monthly payment savings to the long-term effects of the other loan terms. If it looks like your lender is giving away money, look harder! Most of the time they are giving you short-term relief, but you still owe all the money!
Placer County and Sacramento Counties have seen very high rates of short-sales, foreclosure, and bank-owned properties since 2006, causing home prices to drop 20-40%. Roseville, Lincoln, and to a lesser extent Rocklin, have been effected because of competitive pressures from bank-owed foreclosures and short-sellers desperate to unload their homes.
Fannie Mae and Freddie Mac are the "wholesalers" of the home mortgage market. About 50% of homes in Rocklin have mortgages that are guaranteed by one of the government-sponsored enterprises (GSE's).
What happens if Freddie and Fannie go away? The market for home mortgages would be like driving out into the Central Valley once a week to buy your produce. Imagine home buyers going down to their mortgage broker or bank and being told, "I'll be back to somewhere between a week and a year. We have to find someone who is buying loans and convince them that you are a good risk."
Mortgage banks take their deposits and loan them to home buyers. Freddie and Fannie would buy packages of those loans from local banks, which refilled the local banks accounts and allowed them to loan the money again, or to give you money from your account.
Freddie and Fannie in turn add insurance to those loans, then sells "mortgage-backed securities" (bonds) to investors with favorable rates of return, and with the assurance that if some of the loans go bad, they would pay the investor any losses. They used to offer insurance based on "the full faith and credit of the Federal Treasury", but that was changed to insurance offered by the Government National Mortgage Association (GNMA), or "Ginnie Mae".
This arrangement provides a "safe" place for investors to loan money for home mortgages, and banks a "warehouse" from which to replenish their depositors accounts. It worked very well for a long time.
On Sept 7, 2008, the Federal Housing Finance Agency took over both Freddie and Fannie in an attempt to keep them functioning.
The take-over shows that the Federal Government is committed to shoring up the residential real estate market, especially those areas like Sacramento, where the market has been hard-hit by falling prices, foreclosures, and short-sales.
The Rocklin real estate market should see the benefits immediately. This news will assure buyers that the properties they purchase will have value in the future. It also creates the expectation that the market will have better days ahead, creating more demand, and higher prices.
We are already seeing strength in Rocklin, Roseville, and Lincoln for homes under $600,000. Granite Bay is still slow, along with Loomis, Penryn, and Newcastle. Auburn is seeing a resurgence and good properties are hard to find.
For more detailed information about the local market, contact me, J.Scott Carpenter, Carpenter Properties, or
The process of realizing a short-sale is arduous and risky. So many problems can arise during the process which will render days of an agent's work completely lost.
The loss-mitigation departments are attempting to show their prowess by not honoring the listing agreements of short-sellers, but insisting, without legal authority, to dictate what real estate commission with be paid.
I recently negotiated a 5.5% commisson with WAMU on the basis that a buyer's agent could take their buyer down the street to a foreclosed property paying 3%, rather than take a reduction to 2.5%. We agreed to split 5.5%. WAMU almost lived up to the agreement until the last moment when they attempted to STEAL $627 from the commission via the wording of their demand. I was successful in recovering that amount because I refused to modify my broker demand. My protest was further strengthened when the escrow officer refused to distrubute funds until the dispute was resolved.
Now, I have a short-sale with Indymac, where they refuse to pay the 6% commission, despite receiving full-market-value for the home. We have worked very hard on their behalf to achieve a sale which will net them much more than a foreclosure, and the seller is hanging in there with us because they've witnessed all the time and effort that went into the process so far.
Short-sales should demand higher commissions because they require so much time to complete. It makes sense that projects that require more effort should earn higher commissions. Why discount your value because the greedy banks got themselves into trouble. A short-sale is a better deal for the bank - even paying full commissions - than a foreclosure.
I would like to recommend that agents blog on their successes and failures with respect to realizing full commissions. If you have had success getting more than 5%, please write me and let me know how you did it, and which lender. By using our ability to communicate we can have some influence over the commission structure, rather than letting the banks take advantage of us.
Don't ever let them tell you what a fair commission is!
J.Scott Carpenter, Carpenter Properties, Rocklin, CA
While they are about as much fun as dental surgery, at least Buyers are coming back.
As properties in the area have become more affordable, buyers are lapping up homes at an astounding rate. The number of listings has dropped across the board; down about 40% from last year, while maintaining a consistant ratio of 40% distressed properties. Pending sales are up about 66%, helping to further reduce inventory.
This is helping to firm prices a bit.
Other good news is that the "Delta Breeze" is beginning to return. This is a euphamism for buyers coming from the more-expensive Bay Area. The Breeze was strong during the boom of 2003-05, but had dropped to nearly zero for the past couple years. Now, we are returning to about about 25% of buyers from out-of-town.
The housing market is perfect for foreign investors looking for an opportunity to see appreciation in both the Dollar and local real estate prices. Purchase of residential income property, or even single-family properties would be a spectacular investment. Rents are moving higher as more families are forced from their homes. I spoke with a short-sale seller yesterday looking for home to rent, and he told me the minimum rent is about $1,800/month for a $300,000 home.
J.Scott Carpenter, Carpenter Properties, Rocklin, CA
If you were waiting for the "bottom", here we are.
Bring you pink slip and your check book" the radio ad would blare. That was to signal that when you went shopping, you needed to be prepared to buy.
So it is for Sacramento buyers this spring. Once the temperature hit 80 degrees in April, the genie took the cork out of the bottle and the phone has not stopped ringing.
Not only are REO's (foreclosures) hot, but short-sales are starting to flow. Even seller-occupied sales are seeing a resurgence. Sacramento and Placer Counties are seeing transaction volumes jumping as much as 93% over last year, while median prices fell about 20%. That sounds like the bottom to me.
Your Thoughts????
The Federal Reserve Bank of New York offers an interesting way to see non-prime mortage statistical information at the state, county, and zip code level. Values are shown using a "relative strength" comparison by color code.
There are 12 different statistical displays for both sub-prime and alt-A mortgages. These range from the number of loans per 1000 homes, to how many have had a late payment in the past 12 months.
This should give the visitor a way to visualize how potential mortgage difficulties could affect future home values.
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.
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