MARKET UPDATE - OCTOBER 2010

STILL UPSIDE DOWN – REFINANCE OPTIONS MAY NOW BE AVAILABLE


There are still no miracle government programs to solve most homeowner’s woes if you owe more than your home is worth; but you still may have some options.

Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.

FHA Streamline Refinance: FHA streamlines do not require an appraisal. It does not matter how much you owe verses the value of the home. Anyone with a 5% interest rate or more should look into a streamline refinance. A streamline refinance allows the homeowner to lower their rate with little or no closing costs, and no appraisal. It will not solve your value issues, but it will lower your payment.

“Short’ Refinance: Starting September 7th, FHA will allow “short” refinances. The current first and second mortgage (if applicable) must agree to lower the amount owned to 115% of the property’s current value. The current mortgage(s) must be conventional, and can not be owned or guaranteed by Fannie Mae or Freddie Mac. The mortgage(s) can be negotiated down allowing the homeowner to lower the interest rate and/or improve the terms of the mortgage.

THE LONGEST RECESSION SINCE WORLD WAR II IS OVER – REALLY?

The National Bureau of Economic Research stated that the recession lasted 18 months and was officially over in June of 2009.

Things have been getting better, and for over a year? Did I miss the invite? Less than 10% of the jobs lost during the recession have returned (cnnfn.com). 27 states reported higher unemployment in August. Housing is still in crisis mode. Millions of people are out of work and can not provide for themselves. The economy is not retracting, but who is it expanding for? Statistically the recession may be over, but mainstream America sure doesn’t know it.

NEW HOMES SALES NEAR RECORD LOWS

“New home sales in August came in at an annual rate of 288,000, near record lows, the government says.” – cnnfn.com

AUGUST STATISTICS FOR ARIZONA HOME SALES

Short sales: 29% of all sales.
Median Home Price: $119,000
Closings in August: 7,358 (43% Cash / 28% Conventional / 25% FHA / 4% VA)
Historical:
Most homes sold: 06/2006
In June of 2006, 10,252 homes were sold with a median sales price of $250,000.
Least homes sold: 01/2008
In January of 2008, 2,912 homes were sold with a median sales price of $220,000.
As of 08/2010
In August of 2010, 7,358 homes were sold with a median sales price of $119,000.

Arizona home sales are only 30% off all time highs. Yes, only 30%. If you consider how out of control things were a few years ago; down only 30% is quite remarkable. First time homebuyers and investors are flooding the market. With the median home price now at $119,000, down from $220,000 just a few years ago, there are plenty of opportunities in the Arizona market.
- Statics from Fletcher Wilcox, Grand Canyon Title Agency

HOUSING IN RECOVERY – SLOWLY BUT SURELY

“Housing starts in August unexpectedly rose to their highest level in four months, the U.S. Commerce Department announced today. The 10.5% increase, reflecting a seasonally adjusted annual rate of 598,000 units, is the biggest rise in housing starts since last November.” – fortune.com

PROBLEMS WITH HOMWBUYER TAX CREDIT

“Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government. According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.”

“The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased. Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.”

“It is also taking a look at all those deceased taxpayers who received credits. The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.” – cnnfn.com

CALIFONIA STABALIZES

California home prices have increased month after month for the past nine months. California home prices are up nearly 10.5% in the last year, landing the median home price at twice the national average. The median home price for California homes is now at $315,000.

CHINA AND JAPAN CONTINUE TO HAVE AN APPITIETE FOR U.S. DEBT

“China resumed buying U.S. government bonds in July, but Japan bought more. Treasury said Thursday in its monthly international capital report that China, the biggest U.S. creditor, bought $3 billion worth of Treasury debt in July, bringing its total to $847 billion. The second-biggest lender to the United States, Japan, continues to close the gap with China. Japan expanded its purchases of U.S. bonds for the third straight month, adding $17 billion worth of Treasurys to its stash, now worth $821 billion.” – cnnfn.com

RATE WATCH

Mortgage Type     Interest Rate     APR

30 Year Fixed      3.875%            4.005%
15 Year Fixed      3.500%            3.729%
5/1 ARM             3.000%            3.018%

Interest rates as of 09/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.