Housing starts failed to hit the 600,000 annual pace most economists expected for October. Our report is here: October Starts
Even after a string of monthly gains over the past few months, starts are 30% below their level of a year ago, driven mostly by multi-family starts. Single family home starts are only down 11% from a year ago.
My Real Estate Pagenewsletter for November discusses how to make the most of an appraisal in this market. I've sent this issue to every client doing a refinance and every listing agent I know. Appraisals are the subject of much conversation in our industry and much of the conversation is definately not happy talk. Appraisers are sworn to identify the accurate value of a property to support mortgage loans that are secured by real estate. Appraisers have to deal with a wide variety of factors, not the least of which is the new HVCC structure that limits the contact between the apprasier and the lender.
If you want to obtain the most accurate appraisal of your, or your client's property, you need to be proactive in the process.
I've posted the newsletter on my website and attached a copy of the file to this email. You can access the PDF version to print or download at this link: Obtaining The Best Appraisal in Any Market
Please feel free to distribute to your clients, especially your sellers. I hope it helps your business and if you have any questions, please call or email me at your convenience.
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Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
Here are my newsletters for the month of November. They are posted on my website - www.sjbaxter.com - or you can click on the links below to access the PDF files. Feel free to distribute to your clients.
Condos, especially condos purchased as second homes or investment properties in a resort area, continue to drive buyers, sellers, mortgage lenders, and Realtor's crazy.
One of my referral agents had a client call me about 4 weeks ago to finance a condo in Bear Trap Duneshere at the beach in Delaware. Now, I do loans in Bear Trap all the time and have already fought the battle with my lender and Fannie/Freddie that this is NOT a Resort Condo or a Condotel. And, I understand that if you put less than 25% down on a condo, there is a 3/4 point add-on to the price of the mortgage (assuming it's sold to Fannie or Freddie).
So what happened you ask. The borrower consulted an out of state mortgage broker (referred by a relative) who told her, no problem, I can give you the same rate with 20% down AND "no issue getting a condo approved."
Fast forward, with a "locked" rate in hand, the borrower moved ahead with the out of state broker thinking she'd gotten a GREAT deal. Problem is, I got a phone call late yesterday that the broker's lender can't get the condo approved "by Fannie Mae" and therefore they can't close the purchase loan on Tuesday - can I just take her broker's loan file and close the loan myself keeping the great rate? Unfortunately, I can't. We have to order a new appraisal, submit a new mortgage application, and lock today's rate. I can probably close in 2 weeks if all goes well, but you know, the pipeline is pretty full in our processing shop right now with first time buyers trying to close by November 30th.
Lesson learned? If you are buying, selling, listing or showing a condo in a resort area - know the issues. Use an experienced lender that does condo financing regularly. Then you won't need to worry about a delayed settlement, lost rate locks, and other financial penalties and wasted money.
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
I have to admit, my absolute favorite blogger is Calculated Risk. He writes well, covers real estate and finance, and doesn't sugercoat anything.
When September New Home Sales (Report is a PDF file to print or download) came out yesterday, I wanted to see CR's reaction. You see, sales dropped 3.6% to an annualized rate of 402,000. This was down from a downwardly revised August number. It was also the first drop in 6 months. Not the best news.
New home sales are far more important for the economy than existing home sales, and new home sales will remain under pressure until the overhang of existing homes declines much further. Builders are having a very tough time competing with lower priced distressed sales in the existing home market.
It's going to be interesting to see how the expiration of the FTHB tax credit impacts sales going forward. It probably had more of an effect on new home sales becuase of timing (the sale has to close by 11/30 so a newly constructed home had to be purchased much earlier than an existing home). Also, the recent flurry of stories about a compromise agreement to extend and even expand the tax credit may actually goose sales, both new and existing in coming months. We'll see. What do you think?
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
I think we can probably all agree that interest rates are probably headed higher next year. The Federal Reserve's MBS purchase program, while extended through March 31st, will be wound down. The massive Federal spending spree we've seen this year can only add to inflationary presuure.
Thinking about how the almost dead certainty of rising rates will impact buyers, we've put together an online presentation explaining our concerns and how increasing rates will impact the cost of purchasing a new home. Even beyond rates, your buyers need to be concerned about the continued tightening of underwriting guidlines.
This is a nice presentation to send to your clients that are considering a purchase but are sitting on the fence. Hope it helps!
On October 1, 2009, important changes to the National Flood Insurance Program (NFIP) will take effect. There will be an increase in rates, the standard deductibles will increase, and the basic insurance limits will increase. However, the total coverage available will stay at a $250,000 maximum. These combined changes will result in an average premium increase of 8 percent. The increases will apply only to policies that are written or renewed after October 1, 2009.
I'm going to include much of the detail from the FEMA announcement, so please bear with me. The increase in the minimum deductible and the rate increases are the most important aspects of this annoucement. It's also interesting that they are finally doing away with the paper maps.
The standard deductible of $500 is being discontinued for all properties. The new standard deductible for Post-FIRM (Flood Insurance Rate Map) properties will be $1,000 and Pre-FIRM properties will be $2,000. Owners of Pre-FIRM properties have the option to buy back the $1,000 deductible within 60 days of the renewal of their flood insurance policy. Otherwise, deductibles cannot be reduced midterm unless required by the mortgagee. It is important to remember that there is a 30-day waiting period unless it is a requirement for loan closing. In most cases the deductible is only a fraction of the average flood insurance claim, which can be substantial.
Just as with other lines of insurance with high claim potential, such as wind insurance, it is not unusual for minimum deductibles to increase to foster the soundness of the program. The NFIP's previous deductibles were in place for almost a decade. In taking inflation into consideration over time, the new standard deductibles being changed effective October 2009 are comparable in value to the previous deductibles when they were first established.
The basic insurance limits are also increasing for all categories of buildings and contents:
The basic limit for 1-4 Family Dwelling Coverage will increase from $50,000 to $60,000. Additional insurance limits are $190,000 for a total limit of $250,000.
Other Residential Building Coverage basic limit will increase from $150,000 to $175,000 with additional insurance limits of $75,000 for a total limit of $250,000.
Non-Residential Building Coverage will increase from $150,000 to $175,000 for the basic limit. Additional insurance limits are $325,000 for a total of $500,000.
Residential Contents Coverage basic limit will increase from $20,000 to $25,000. Addition limits are $75,000 for a total insurance limit of $100,000.
Non-Residential Contents Coverage basic limit will increase from $130,000 to $150,000. Additional insurance limits are $350,000 for a total insurance limit of $500,000.
The premium increases vary by Zone. V Zones are coastal high-velocity zones and will have larger rate increases as a result of the Heinz Center's Erosion Zone Study, which clearly indicates that current rates significantly underestimate the increasing hazard from steadily eroding coastlines. The premium increases by zones are as follows:
V Zones
V Zone premiums will increase 10 percent.
A Zones
A Zones, which are non-velocity zones that are primarily riverine zones, will increase by 8 to 10 percent.
Post-Firm A1-A30 and AE Zones will increase 10 percent.
Pre-FIRM AE Zones premiums will increase 10 percent to decrease the amount of subsidy in our Pre-FIRM rate.
AO, AH, AOB, and AHB, which are shallow flooding zones, will have an 8 percent increase in premiums.
Unnumbered A Zones, which are remote A Zones where elevations have not been determined, will have increase of 10 percent in premiums.
A99 Zones, which are approved flood mitigation projects, e.g., levees still in the course of construction, and AR Zones will have premium increases of 10 percent.
X Zones and Miscellaneous
X Zones, which are zones outside the Special Flood Hazard Area, will have an increase of 8 percent for a Standard Risk Policy and no increase in premiums for a Preferred Risk Policy (PRP).
Mortgage Portfolio Protection Program (MPPP) will have an increase in premiums of 10 percent.
Discontinuance of Paper Flood Insurance Rate Maps
Effective October 1, 2009 FEMA will discontinue the distribution of paper maps. The paper maps will be replaced with Digital Flood Insurance Rate Maps (DFIRMs). Replacing the paper map products with digital versions is more environmentally friendly and will improve the usability of FEMA's flood hazard data. It also provides users with a more powerful tool for insurance activities and flood risk management.
As we enter into the last quarter of 2009 and prepare for 2010 I have some concerns that the sun will be setting on the advantages for the first time homebuyer. First and most importantly, the $8,000 tax credit expiring midnight November 30th.
Second, home prices have begun moving up in the lower end of the market - where the first time buyer is typically looking. And third, we are surely going to pay the piper with regard to interest rates in the future.
We've laid out these concerns in our monthly online presentation entitled "Is time Running Out For The First Time Homebuyer?"
If you would like to know more about "Is Time Running Out for First Time Homebuyer?" click below to find out more!
Please feel free to share the presentation with your clients, friends and family. If you are looking for financing in the mid-Atlantic area (DE, MD, VA, PA), please give me a call to discuss.
SCAOR (Sussex County Association of Realtors) sponsored a fun, if rain filled, evening at Jungle Jim's in Rehoboth Beach this past Friday to raise money for RPAC - the Realtor Political Action Committee. Most of the local real estate offices purchase an "Office Duck" to decorate and race as a way to raise money. I decided that Prosperity Mortgage would do the same and challange the real estate offices I service and support. My Pirate Duck, the Rate Slasher, is seen here.
It was down to the wire as office ducks jockey for top duck; small ducks vie to win prizes. Which office had the most REALTORS® attending?..... It was time for the Prosperity Mortgage Pirate Duck to emerge from seclusion and have a little fun.
Although we missed out winning the Dapper Duck Award for "best dressed" to Little Miss RPAC 2009 submitted by the Rehoboth Beach Long and Foster office, I think the trophy was stolen. Here's a picture of Little Miss RPAC and I'll let you decide.
Regardless, the evening was a blast and my Pirate Duck came in 3rd in the overall office duck race, handily beating Little Miss RPAC and the entry from my other Long and Foster office in Bethany Beach - Biker Chick.
Individual realtors also purchased ducks and raced them as well. Entertainment was provided by a steel drum band and everyone had a great time.
Events like this are always a fun way to blow off steam and get aways from the pressures of the business we're in. Whether selling houses or loans, this market can make us all a little crazy.
I produced a "virtual tour" of the event for everyone that couldn't make it in person. Hope you enjoy it:
[Excerpts from Jim Remley (Real Estate Agent, Oregon) new book entitled Sell Your Home in Any Market - 50 Surprisingly Simple Strategies to Sell Your Home Fast and For Top Dollar!]
Your kitchen can make or break the sale of your home. Why? A potential buyer might overlook the fact that the bedrooms are on the "smallish side", but if the kitchen does not measure up, you may want to consider the top 5 kitchen improvements, as recommended by Jim Remley, a top real estate agent in Orego!
•1. Sinks & Faucets - Clean your faucets, re-caulk your sink and if it's chipped, go to your local hardware store for a fixer kit. If it's really beat up, maybe it's time to upgrade the faucets, the sink or both.
•2. Appliance Upgrade - Updated appliances that match will make buyers take a second look. It's not cheap-but can make the real estate sign change from "For Sale" to "Sold". As well, small appliances that take up counter space, and are rarely used, should be packed and stored (break makers, toaster oven).
•3. Kitchen Cabinets - You have two options here - replace old cabinets or opt for the less expensive option of re-facing the older ones. Make sure that whatever you do, that they match your appliances.
•4. New Lighting - Buyers are looking for bright, yet soft lighting which makes working in the kitchen a joy. In addition to upgrading the fixtures, consider installing lighting under cabinets for "task lighting" which throws light to countertop work areas below.
•5. Counter Tops - The countertop is the one thing that ties every piece of your kitchen together. If not, the most expensive and time consuming is to have them totally replaced. However, there is a cheaper update where you can have them resurfaced with stone veneer, tile or wood laminate. And don't forget to update your back splash as a worn out backsplash can make the best countertops look dated or dull.
Hope these tips are helpful.
Jeff Baxter - Prosperity Mortgage - Bethany & Rehoboth Beach, DE
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.
SCAOR (Sussex County Association of Realtors) sponsored a fun, if rain filled, evening at Jungle Jim's in Rehoboth Beach this past Friday to raise money for RPAC - the Realtor Political Action Committee. Most of the local real estate offices purchase an "Office Duck" to decorate and race as a way to raise money. I decided that Prosperity Mortgage would do the same and challange the real estate offices I service and support. My Pirate Duck, the Rate Slasher, is seen here.
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