Proposed assessment may ding banks’ bottom lines
Area bankers are waiting to see if they will take a hit from a major one-time assessment from the Federal Deposit Insurance Corp. to insure their deposits.
Charles Brown III, president of Insignia Bank in Sarasota, says the special assessment proposed to help shore up the FDIC’s insurance fund would translate to a six-figure payout from his bank.
“We pay about $70,000 (annually) right now, and it could be anywhere from $200,000 to $300,000,” Brown says. “It would have a significantly negative impact in a banker’s eyes.”
Not surprisingly, the move has been controversial. And it is still up in the air.
The FDIC will discuss the proposed assessment of 20 cents on every dollar of deposits at a meeting Friday.
In late February, the FDIC declared an emergency in its insurance fund, which reimburses deposits to consumers in the event of a bank closure. The fund fell nearly 50 percent in the fourth quarter to $18.9 billion.
FDIC Chairwoman Sheila Bair announced that the FDIC would impose a one-time increase on insurance premiums equivalent to $15 billion on the nation’s roughly 8,300 banks.
The move brought protests from bankers, who are already struggling with non-performing loans and the financial damage caused by the subprime mortgage crisis and current recession.
Critics also said the move would further stifle lending, seen as important to jumpstart the economy again.
Others, like Barney Frank, chairman of the House Financial Services Committee, have suggested that the fees should be tiered based on the size of the banks, with the largest banks bearing more of the burden.
Since then, the FDIC has said it would reduce the special assessment if Congress expands its borrowing power to shore up reserves.
“Our chairman has indicated that there would be a meaningful reduction if Congress approves an increase in our borrowing power from $30 billion to $100 billion,” said David Barr, an FDIC spokesman. “The reason we came up with that number is the $30 billion number was put into place in 1991 and over the last 18 years, the amount of deposits at banks has tripled. So we’re essentially looking at a tripling of the borrowing authority.”
Barr said the FDIC would meet Friday to discuss how much of a reduction in the assessment would be given if Congress approves the expanded borrowing power.
Allen Langford, president of Manatee River Community Bank, said he’s still waiting to see what action the FDIC will take.
Langford said he would see a tripling of his fees if the FDIC implemented the 20-basis-point assessment.
Currently, banks already pay an average of 10 to 14 cents per dollar of deposits, depending on their deposit mix.
The increase would come at a time when all banks are struggling with declining real estate values on their books, Langford said.
But the FDIC may have no other choice but to impose an assessment, he added.
“Unfortunately, I think it (an assessment) is going to be necessary,” Langford said. “But I think the FDIC insurance is the most important thing a bank can have.”
Thursday, May 21, 2009
Tuesday, May 19, 2009
Foreclosure Tsunami Expected in Second Quarter of 2009
RISMEDIA, May 14, 2009-National Short Sale Center, a short sale company, has announced that the nation is on track to experience record-setting amounts of foreclosures and bank-owned properties in the second quarter of 2009. After the first quarter of 2009 set a new record with 803,489 foreclosure filings, the company is predicting a first-ever quarter with more than one million foreclosure filings.
“We’re returning to pre-moratorium percentages, with a rather large initial increase in the second quarter as properties that have been in the moratorium flood through,” says Travis Hamel Olsen, president of National Short Sale Center. “From our data, we are forecasting more than one million foreclosure filings in the second quarter of 2009.”
After a 10% decrease in foreclosures for January, foreclosure activity across the nation increased 6% in February. The so-called “Sand States”-California, Florida, Nevada, and Arizona-top the lists of foreclosure rates.
“The dam is breaking for foreclosures and bank-owned properties,” added Olsen. “In the next three months, we are going to see more than one million foreclosures hit as the foreclosure moratorium is lifted.”
For more information, visit www.shortsalecenter.com.
“We’re returning to pre-moratorium percentages, with a rather large initial increase in the second quarter as properties that have been in the moratorium flood through,” says Travis Hamel Olsen, president of National Short Sale Center. “From our data, we are forecasting more than one million foreclosure filings in the second quarter of 2009.”
After a 10% decrease in foreclosures for January, foreclosure activity across the nation increased 6% in February. The so-called “Sand States”-California, Florida, Nevada, and Arizona-top the lists of foreclosure rates.
“The dam is breaking for foreclosures and bank-owned properties,” added Olsen. “In the next three months, we are going to see more than one million foreclosures hit as the foreclosure moratorium is lifted.”
For more information, visit www.shortsalecenter.com.
Foreclosure and Short Sale Discounts Weigh Down Metro Area Median Prices
First-time home buyers responding to improved affordability conditions, and lower prices of foreclosures and short sales, impacted metropolitan area median home prices in the first quarter, while existing-home sales remained sluggish in many parts of the country, according to the latest survey by the National Association of Realtors®.
With first-time buyers accounting for half of all purchases during the first quarter, 134 out of 152 metropolitan statistical areas1 reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains.
Many buyers sought deeply discounted distressed sales – foreclosures and short sales – which accounted for nearly half of transactions in the first quarter and weighed down median home prices in most markets.
The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal. The median is where half sold for more and half sold for less, but distressed homes typically are selling for 20 percent less than traditional homes and are downwardly skewing median prices.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are two levels of pricing in the current market. “Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices. Most sellers can expect a good return if they’ve been in their home for a normal period of homeownership and haven’t excessively tapped their equity,” he said.
“Given the unusual mix of conditions around the country, the expertise and negotiating skills of a Realtor® have never been more important,” McMillan said. “Unparalleled knowledge of local markets is crucial for consumers.”
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 4.59 million units in the first quarter, down 3.2 percent from 4.74 million units in the fourth quarter, and are 6.8 percent below the 4.93 million-unit pace in the first quarter of 2008.
Seventeen states experienced sales increases from the fourth quarter, and six states were higher than a year ago; complete data for one state was not available. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.
Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. “Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased,” he said.
“Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market – they’re critical for a housing recovery,” Yun said. “Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06 percent in the first quarter from 5.86 percent in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008.
Yun said some areas showed dramatic drops in home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” Yun said. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”
There were bright spots in the first quarter. The largest sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent, Arizona, up 50.2 percent, and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.
The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800.
Other affordable markets include Akron, Ohio, at $50,100, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $51,200.
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.
Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.
Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.
Regionally, existing-home sales in the Northeast fell 10.3 percent in the first quarter to a pace of 693,000 units and are 20.1 percent below a year ago.
The median existing single-family home price in the Northeast declined 15.9 percent to $235,500 in the first quarter from the same period in 2008. The best gain in the region was in Syracuse, N.Y., where the median price of $113,700 rose 3.1 percent from the first quarter of 2008, followed by Buffalo-Niagara Falls, N.Y., at $99,200, up 2.7 percent, and Binghamton, N.Y., where the median rose 0.5 percent to $110,300.
In the Midwest, existing-home sales slipped 2.2 percent in the first quarter to a pace of 1.04 million and are 13.1 percent below a year ago.
The median existing single-family home price in the Midwest was down 6.8 percent to $132,400 in the first quarter from the same period in 2008. After Davenport-Moline-Rock Island and Columbia, the next strongest metro price increase in the region was in Springfield, Ill., where the median price of $111,400 was 3.9 percent higher than a year ago, followed by Topeka, Kan., at $106,500, up 3.1 percent, and Bloomington-Normal, Ill., at $153,800, up 1.9 percent.
In the South, existing-home sales declined 2.5 percent in the first quarter to an annual rate of 1.70 million and are 12.7 percent lower than the same period in 2008.
The median existing single-family home price in the South was $146,600 in the first quarter, down 10.8 percent from a year earlier. After Cumberland, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with a 5.0 percent gain to $129,100, followed by Oklahoma City, at $129,900, up 4.0 percent, and Shreveport-Bossier City, La., at $136,000, up 3.4 percent.
Existing-home sales in the West slipped 0.9 percent in the first quarter to an annual rate of 1.16 million but are 24.3 percent above a year ago.
The median existing single-family home price in the West was $237,600 in the first quarter, which is 19.8 percent below the first quarter of 2008. The strongest price gain in the West was in the Salt Lake City area, where the median price of $230,100 rose 1.9 percent from a year earlier, followed by Farmington, N.M., at $191,200, up 0.7 percent.
# # #
Data tables for both metro area home prices and state existing-home sales are posted at: www.realtor.org/research/research/metroprice. For areas not covered in the tables, contact your local association of Realtors®.
1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. A list of counties included in MSA definitions is available at: www.census.gov/population/estimates/metro-city/0312msa.txt
Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quartercomparisons do not compensate for seasonal changes, especially for the timing of familybuying patterns.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series was launched at the beginning of 2006, with several years of historic data.
Because there is a concentration of condos in high-cost metro areas, the national median condo price sometimes is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
2The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales series in 1981.
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
Each May when first quarter data is published, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data for the previous three years based on the most recent findings. Revisions have been made to quarterly seasonally adjusted annual sales rates for 2006 through 2008; there are no revisions to price data beyond the normal quarterly revisions.
With first-time buyers accounting for half of all purchases during the first quarter, 134 out of 152 metropolitan statistical areas1 reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains.
Many buyers sought deeply discounted distressed sales – foreclosures and short sales – which accounted for nearly half of transactions in the first quarter and weighed down median home prices in most markets.
The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal. The median is where half sold for more and half sold for less, but distressed homes typically are selling for 20 percent less than traditional homes and are downwardly skewing median prices.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are two levels of pricing in the current market. “Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices. Most sellers can expect a good return if they’ve been in their home for a normal period of homeownership and haven’t excessively tapped their equity,” he said.
“Given the unusual mix of conditions around the country, the expertise and negotiating skills of a Realtor® have never been more important,” McMillan said. “Unparalleled knowledge of local markets is crucial for consumers.”
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 4.59 million units in the first quarter, down 3.2 percent from 4.74 million units in the fourth quarter, and are 6.8 percent below the 4.93 million-unit pace in the first quarter of 2008.
Seventeen states experienced sales increases from the fourth quarter, and six states were higher than a year ago; complete data for one state was not available. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.
Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. “Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased,” he said.
“Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market – they’re critical for a housing recovery,” Yun said. “Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06 percent in the first quarter from 5.86 percent in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008.
Yun said some areas showed dramatic drops in home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” Yun said. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”
There were bright spots in the first quarter. The largest sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent, Arizona, up 50.2 percent, and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.
The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800.
Other affordable markets include Akron, Ohio, at $50,100, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $51,200.
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.
Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.
Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.
Regionally, existing-home sales in the Northeast fell 10.3 percent in the first quarter to a pace of 693,000 units and are 20.1 percent below a year ago.
The median existing single-family home price in the Northeast declined 15.9 percent to $235,500 in the first quarter from the same period in 2008. The best gain in the region was in Syracuse, N.Y., where the median price of $113,700 rose 3.1 percent from the first quarter of 2008, followed by Buffalo-Niagara Falls, N.Y., at $99,200, up 2.7 percent, and Binghamton, N.Y., where the median rose 0.5 percent to $110,300.
In the Midwest, existing-home sales slipped 2.2 percent in the first quarter to a pace of 1.04 million and are 13.1 percent below a year ago.
The median existing single-family home price in the Midwest was down 6.8 percent to $132,400 in the first quarter from the same period in 2008. After Davenport-Moline-Rock Island and Columbia, the next strongest metro price increase in the region was in Springfield, Ill., where the median price of $111,400 was 3.9 percent higher than a year ago, followed by Topeka, Kan., at $106,500, up 3.1 percent, and Bloomington-Normal, Ill., at $153,800, up 1.9 percent.
In the South, existing-home sales declined 2.5 percent in the first quarter to an annual rate of 1.70 million and are 12.7 percent lower than the same period in 2008.
The median existing single-family home price in the South was $146,600 in the first quarter, down 10.8 percent from a year earlier. After Cumberland, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with a 5.0 percent gain to $129,100, followed by Oklahoma City, at $129,900, up 4.0 percent, and Shreveport-Bossier City, La., at $136,000, up 3.4 percent.
Existing-home sales in the West slipped 0.9 percent in the first quarter to an annual rate of 1.16 million but are 24.3 percent above a year ago.
The median existing single-family home price in the West was $237,600 in the first quarter, which is 19.8 percent below the first quarter of 2008. The strongest price gain in the West was in the Salt Lake City area, where the median price of $230,100 rose 1.9 percent from a year earlier, followed by Farmington, N.M., at $191,200, up 0.7 percent.
# # #
Data tables for both metro area home prices and state existing-home sales are posted at: www.realtor.org/research/research/metroprice. For areas not covered in the tables, contact your local association of Realtors®.
1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. A list of counties included in MSA definitions is available at: www.census.gov/population/estimates/metro-city/0312msa.txt
Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quartercomparisons do not compensate for seasonal changes, especially for the timing of familybuying patterns.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series was launched at the beginning of 2006, with several years of historic data.
Because there is a concentration of condos in high-cost metro areas, the national median condo price sometimes is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
2The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales series in 1981.
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
Each May when first quarter data is published, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data for the previous three years based on the most recent findings. Revisions have been made to quarterly seasonally adjusted annual sales rates for 2006 through 2008; there are no revisions to price data beyond the normal quarterly revisions.
Friday, May 15, 2009
Greenspan: Dangers of Further Price Drops
Even with hopeful signs in the economy, afternoon panelists at the NATIONAL ASSOCIATION OF REALTORS®’ Real Estate Summit, “Advancing the U.S. Economy,” here today agreed that:
Stabilizing housing prices is essential to a recovery.
The federal government needs to inject great consumer protection into home lending.
Financial industry reforms should address and protect against systemic risk from institutions deemed “too large to fail.”
Home prices are one of the biggest question marks in the economic recovery. How low can they go? Nationally, on average, prices have declined 30 percent. That’s been great for affordability, but it has been a blow to home owners who find themselves in a position of needing to sell while significantly underwater on their mortgages.
The Danger of Further Price Declines
To exacerbate the problem, increased inventory of unsold single-family homes continues to depress prices, said former Federal Reserve Chairman Alan Greenspan, whose keynote address led off an afternoon of speakers discussing the future of real estate finance.
If prices fall beyond another 5 percent or so, problems in the subprime and Alt-A categories will spill over into the conforming loan category, where defaults are still relatively low, Greenspan warned.
“After September 15—the date of Lehman was allowed to fail—equities fell off a cliff,” he said, losing $35 trillion in value. But in recent weeks, Greenspan said he has seen reasons for optimism.
Since March 9, he said, investors have added $10 trillion of value back into the global system. Real estate markets, he said, are at the beginning of a major liquidization of excess inventories.
“As a result, I expect, I hope, we’ll see stabilization,” Greenspan said. “While there are still great concerns, we’re beginning to see the seeds of bottoming, not in prices yet, but in sales.”
Asked about the future of Fannie Mae and Freddie Mac, Greenspan sounded the theme heard often here today. Organizations that grow “too large to fail” are a danger to the country’s economic health. During the boom, Fannie and Freddie became overlarge and overleveraged. To protect the “very important role of mortgage securitization,” they should be split into smaller organizations, he said. “I don’t think the existing structure is sustainable.”
Stabilizing housing prices is essential to a recovery.
The federal government needs to inject great consumer protection into home lending.
Financial industry reforms should address and protect against systemic risk from institutions deemed “too large to fail.”
Home prices are one of the biggest question marks in the economic recovery. How low can they go? Nationally, on average, prices have declined 30 percent. That’s been great for affordability, but it has been a blow to home owners who find themselves in a position of needing to sell while significantly underwater on their mortgages.
The Danger of Further Price Declines
To exacerbate the problem, increased inventory of unsold single-family homes continues to depress prices, said former Federal Reserve Chairman Alan Greenspan, whose keynote address led off an afternoon of speakers discussing the future of real estate finance.
If prices fall beyond another 5 percent or so, problems in the subprime and Alt-A categories will spill over into the conforming loan category, where defaults are still relatively low, Greenspan warned.
“After September 15—the date of Lehman was allowed to fail—equities fell off a cliff,” he said, losing $35 trillion in value. But in recent weeks, Greenspan said he has seen reasons for optimism.
Since March 9, he said, investors have added $10 trillion of value back into the global system. Real estate markets, he said, are at the beginning of a major liquidization of excess inventories.
“As a result, I expect, I hope, we’ll see stabilization,” Greenspan said. “While there are still great concerns, we’re beginning to see the seeds of bottoming, not in prices yet, but in sales.”
Asked about the future of Fannie Mae and Freddie Mac, Greenspan sounded the theme heard often here today. Organizations that grow “too large to fail” are a danger to the country’s economic health. During the boom, Fannie and Freddie became overlarge and overleveraged. To protect the “very important role of mortgage securitization,” they should be split into smaller organizations, he said. “I don’t think the existing structure is sustainable.”
Thursday, May 14, 2009
Home Sales May Get a Push
First-time homebuyers soon could get even more incentive to buy a house this year, officials for the U.S. Department of Housing and Urban Development said Tuesday.
HUD Secretary Shaun Donovan said the department is days away from finalizing a plan that would allow first-time homebuyers to use the federal government's $8,000 tax credit on a down payment and closing costs instead of waiting until they file their tax returns to get it.
Under the proposed plan, HUD-approved lenders, nonprofit groups and government entities would issue bridge loans to borrowers before their closings. The loans would be paid back from the borrower's tax credit.
Real estate and homebuilding groups have been pushing for the change and say it will spur home sales and lead to a quicker recovery of the troubled housing market.
"This will help homebuyers who are a little short on down payment but want to get into the market," said Paul Bishop, an economist with the National Association of Realtors.
"That's a pretty substantial segment of the market, and they'll be able to obtain a more affordable loan since they'll now have a larger down payment," Bishop said.
About 50 percent of the nation's homebuyers are first-timers and would qualify for the tax credit, according to the real estate group.
The new tax credit will stimulate an estimated 160,000 home sales across the nation - 101,000 of which would be first-time buyers who will receive the credit, he said.
An additional 59,000 homeowners would be able to buy another home if a first-time buyer purchases their home.
States such as Florida, which have been hard-hit by foreclosures and dropping home prices, really could benefit from the change, said Cynthia Shelton, president of the Florida Association of Realtors.
Enticing people to act now would help work off the backlog of homes, Shelton said.
HUD Secretary Shaun Donovan said the department is days away from finalizing a plan that would allow first-time homebuyers to use the federal government's $8,000 tax credit on a down payment and closing costs instead of waiting until they file their tax returns to get it.
Under the proposed plan, HUD-approved lenders, nonprofit groups and government entities would issue bridge loans to borrowers before their closings. The loans would be paid back from the borrower's tax credit.
Real estate and homebuilding groups have been pushing for the change and say it will spur home sales and lead to a quicker recovery of the troubled housing market.
"This will help homebuyers who are a little short on down payment but want to get into the market," said Paul Bishop, an economist with the National Association of Realtors.
"That's a pretty substantial segment of the market, and they'll be able to obtain a more affordable loan since they'll now have a larger down payment," Bishop said.
About 50 percent of the nation's homebuyers are first-timers and would qualify for the tax credit, according to the real estate group.
The new tax credit will stimulate an estimated 160,000 home sales across the nation - 101,000 of which would be first-time buyers who will receive the credit, he said.
An additional 59,000 homeowners would be able to buy another home if a first-time buyer purchases their home.
States such as Florida, which have been hard-hit by foreclosures and dropping home prices, really could benefit from the change, said Cynthia Shelton, president of the Florida Association of Realtors.
Enticing people to act now would help work off the backlog of homes, Shelton said.
Thursday, May 7, 2009
What's up in Real Estate??
It appears as though there are many buyers on the street. There are some serious ones and alot of curious seekers. Pricing is the key right now, many of them are looking for those good deals $100,000 and under. There are some of those out there trust me.
Others are still fence sitting and not sure whether to act now or wait.
No one can tell when the bubble will burst so to speak. It will happen over night and the values will start to rise again for the market to recover.
We do still have some time before that will happen. With an inventory of 24 months or more, it is going to take some time to sell it all.
If buyers would "Act" then we could deplete the inventory. Otherwise, it will sit here stagnant.
Buyers the $8000 free money is out there, all you have to do is "buy now"!
Others are still fence sitting and not sure whether to act now or wait.
No one can tell when the bubble will burst so to speak. It will happen over night and the values will start to rise again for the market to recover.
We do still have some time before that will happen. With an inventory of 24 months or more, it is going to take some time to sell it all.
If buyers would "Act" then we could deplete the inventory. Otherwise, it will sit here stagnant.
Buyers the $8000 free money is out there, all you have to do is "buy now"!
Friday, May 1, 2009
Selling in a Slow Market
If your local real estate market is slow, consider offering buyer incentives. They don't have to cost you a lot, but they will give your home the edge over similar homes on the market.
Offer a home warranty.
Offer to buy down the buyer's mortgage interest rate. This may cost a couple of thousand dollars, but that's likely to be less than what it will cost you if your house languishes on the market.
Offer to pre-pay a year's worth of association fees.
Offer a year's worth of professional lawn mowing.
Offer credit toward the buyer's closing costs.
Offer a weekend getaway at an attractive lodge or hotel.
Lower your asking price.
Offer a home warranty.
Offer to buy down the buyer's mortgage interest rate. This may cost a couple of thousand dollars, but that's likely to be less than what it will cost you if your house languishes on the market.
Offer to pre-pay a year's worth of association fees.
Offer a year's worth of professional lawn mowing.
Offer credit toward the buyer's closing costs.
Offer a weekend getaway at an attractive lodge or hotel.
Lower your asking price.
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