It's a Great Time to Buy!

A survey by Fannie Mae shows seven out of 10 Americans now agree with half of the proposition put forward by the National Association of Realtors in a notorious 2006 advertising campaign -- that "It's a great time to buy or sell a home."
Seventy percent of Americans polled in June and July think it is a great time to buy a house, compared with 64 percent in a similar survey conducted in January 2010. But 83 percent believe it's a bad time to sell, Fannie Mae said.  And while 78 percent believed that home prices will either remain flat or go up in the next year -- up five points from January -- the number of Americans who think housing is a safe investment has fallen from 83 percent in 2003 to 67 percent today.
The number of respondents saying they would be more likely to rent their next home if they were to move increased from 30 percent in January to 33 percent in the latest survey.

"Although most Americans believe that home prices have bottomed, they are adopting a much more cautious approach toward buying," said Fannie Mae Chief Economist Doug Duncan in a press release. "Homeowners and renters alike continue to be wary of taking on risk, and they are less confident in the long-term outlook for housing."
People with mortgages (74 percent) and even underwater borrowers (69 percent) were more likely to say owning a home is a safe investment than delinquent borrowers (57 percent) and renters (54 percent).

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History Suggests That Recoveries from Debt-fueled Financial Bubbles are Bound to be Slow

If your waiting for the market to return before you sell your home then you may be in for a long wait, we are still in a declining market and have not seen the end of the tunnel yet!  Consider getting out now while interest rates are still at record low for buyers.  Not ready to sell, have you considered renting?  

"With uncertainty hovering over the economy like a gray cloud, we don't visualize a return to trend growth to approach 3 percent or so until late 2011," said David Shulman, a senior economist with the UCLA Anderson Forecast.
"In this environment, the unemployment rate will remain extraordinarily high, ending this year at 9.7 percent and 2011 at 9.5 percent."

That's about where unemployment is now -- 9.6 percent was the official rate reported for August.

The UCLA Anderson Forecast anticipates that housing starts, which plummeted from a peak of 2.07 million in 2005 to 554,000 last year, will total only 606,000 this year and 815,000 next year. It will be 2012 before housing starts break through the 1 million mark again, the forecast predicts, when they are expected to reach 1.2 million.

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Agent Responsibilities

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Want To Sell Your Condo But Your Association Isn't FHA Approved?

Have you recently read about FHA providing a lifeline to new Manhattan luxury condominiums after sales stalled? The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development and several other developments. This enables buyers to make a down payment of as little as 3.5 percent in a building where apartments are listed at $820,000 to $3 million.

Buildings featuring pet spas, concierges and rooftop lounges are applying for agency backing to unlock bank financing for purchasers. Developments where sales began more than two years ago had 10 units go into contract with FHA backing since approval in March.

It’s no secret. If a buyer has to put down 5-10-20% on a condo there are going to be less buyers than just putting 3.5% down to purchase a home.

Not sure if your building will qualify for FHA and you want to make your building more MARKETABLE? Smart Property is partnered up with a lender that has an internal department that takes care of all the paperwork to see if the development is eligible for FHA approval. Sohail and his lender are experts in FHA Condos and want to help you take advantage of this service to make your unit more marketable.

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Buying foreclosures that need, 203K will pay for it!

Yesterday we started talking about a 203K. Most experts are estimating that $473.4 billion in loans that will eventually need to be liquidated corresponds to approximately 1.75 million individual properties. This number represents almost 50% of the existing homes available for sale as of December 2009, and moreover, only accounts for expected defaults for mortgages outstanding in the private securitization market which makes up less than a third of the total securitization market and less than 5% of the total mortgage market. Foreclosures are "as is" properties. There are a lot of opportunities!

Now think of yourself as an asset manager of the bank and all the properties they have in inventory that you have never seen or don’t know what condition the property will be in due to theft, winterizing of the utilities, etc. Most of these asset managers are going to only accept a 203K borrower or a cash buyers because they have already lost money on the property. They want to get the maximum dollar and they want to make sure the deal will CLOSE. In comes a 203K – no certificate of occupancy is needed and the property is sold AS IS with just 3.5% down including the repairs.

What does the 203K loan program cover?
•Remodeling bathrooms or a kitchen
•Replacing a roof, gutters, and downspouts
•Adding a family room, bedrooms, or bathrooms
•Replacing flooring, tiling, or carpeting
•Completing a basement or attic conversion or adding a second story
•Expanding or building a garage or carport
•Renovating a deteriorating property, such as repairing a chimney, termite damage, or structural problems
•Upgrading plumbing, heating, air conditioning, or electrical wiring
•Eliminating health and safety hazards, such as removing lead-based paint or mold
•Installing a well or a septic system
•Adding a porch, deck, or patio
•Adding or repairing siding or repainting
•Installing energy efficient windows or doors
•Purchasing appliances like washer, dryer, microwave, stove

The list is endless – the only thing it doesn’t cover is putting in a hot tub in the back yard or a built in swimming pool..

Not sure you qualify for the 203K loan? Smart Property is partnered up with a lender that wrote the State of Illinois course for 203K and covers 7 states! Sohail and his lender are experts in 203K and want to help you take advantage of this unprecedented time in history to buy Call Sohail Salahuddin at 312-437-7799 or send your email questions to Sohail@smartpropertyusa.com.

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Even the Playing Field With Investors to Buy Foreclosures

Ever heard of a 203K? Well it is the “IT” product for the next 5 years. It’s an FHA loan that allows you to not only refinance your existing home and get some necessary repairs or improvements done, but will also let you purchase a home and get the cost of the improvements all in one loan! And you can do virtually ANYTHING to the home accept put in a built in swimming pool in the backyard or a hot tub. You can even tear the home down to the foundation, build on it and start all over. And best of all with FHA 30 year fixed rates below 5.00% it is the only ASSUMABLE MORTGAGE PRODUCT IN THE INDUSTRY. Get a LOW interest rate loan and fix the property up – and sell it down the way – the buyer can assume the mortgage. Think about how marketable that will be as the rates start climbing again when you are selling a below 5.00% property!

Let’s say you want to buy a home at these ridiculously low prices. If you are purchasing a home that needs major or minor repairs, it can be a difficult proposition because most banks won't lend the buyer the money to purchase the home until all the repairs have been completed. Also, you can't repair a home that you don't own. Thus, FHA created the 203K loan program to alleviate these problems by facilitating the lending of the funds needed to buy the home before it is repaired. You actually close on the home and over the course of up to 6 months you can draw repair money from the loan to have the necessary work done.

What can program mean to you?

• More money to work with. The amount you can borrow is based on the expected increased value of your home, after improvements are made.
• Less Strain on Your Budget. You can pay for your renovation gradually and affordably, over the loan term of your mortgage and if you are buying you only put 3.5% down.
• Less to Pay at Tax Time. Unlike other credit options, the interest you pay on funds used for a renovation is tax deductible since it is mortgage interest.
• Less Hassle. You'll have one loan to apply for, one set of fees, one closing to attend, and one monthly payment to make.
• Lower Payment. If you own a home you can use the 203K on your existing home. In many cases if you are refinancing with today’s lower interest rate, with your improvements your payment might actually go down or stay the same even with borrowing more money.

Want to hear more? Smart Property is partnered up with a lender that wrote the State of Illinois course for 203K and covers 7 states! Call Sohail Salahuddin at 312-437-7799 or send your email questions to Sohail@smartpropertyusa.com. Sohail and his lender are experts in 203K and want to help you take advantage of this unprecdented time in history to buy.

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REAL ESTATE AFFORDIBILITY NEAR RECORD LOW!

The share of homes that families making the national median income could afford to buy remained above 70 percent for the sixth quarter in a row, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).  Nationally, the HOI was at 72.3 percent in the second quarter, unchanged from the same time period last year and close to the index's record-high 72.5 percent, set in first-quarter 2009.  The HOI tracks the share of homes sold in a particular area that would have been affordable to a family earning the local median income. The index assumes a family can afford to spend 28 percent of its gross monthly income on housing, according to NAHB's website.

Annual median family income estimates by metropolitan area come from the Department of Housing and Urban Development.  The median home price nationwide was $179,000 in the second quarter of this year, up from $177,000 in 2009's second quarter. The weighted interest rate was slightly higher, 5.11 percent, in the second quarter compared with 5.03 at the same time in 2009. The national median income was $64,400. The index covered 225 metro areas. NAHB attributed the continuing high level of affordability to favorable interest rates and low home prices. 

"Homeownership is within reach of more households than it has been for almost a generation," said Bob Jones, the building association's chairman, in a statement.

"Interest rates continue to hover at historic low levels, the economy is beginning to rebound, and with house prices starting to stabilize, conditions are beginning to draw homebuyers back into the market, which is a positive step on the path to recovery."

Three Rust Belt states featured prominently among the top 10 most affordable metro areas: Ohio, Michigan and Indiana. Syracuse, N.Y., was the most affordable metro area in the country, where households with the area's median family income of $64,300 could afford a whopping 97.2 percent of homes sold.

That metro area pushed Indianapolis-Carmel, Ind., which had held the top spot for nearly five years, to the 14th most affordable metro area. Syracuse had a median sales price of $88,000 in the second quarter, compared with $179,000 nationwide, according to the NAHB.

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Don't Believe Everything You Read

There are a slew of emails floating around out there that seem to be meant to scare people into believing that the new health care bill will greatly increase taxes for those selling their homes. In the event you have not yet been on the receiving end of such emails, it reads like this:

“Under the new health care bill - Did you know that all Real Estate transactions are subject toa 3.8% "Sales Tax"? You can thank Nancy, Harry & Barack (and your local Congressman) for this one. If you sell your $400,000 home, this will be a $15,200 tax. Higher taxes on real estate investments. The 3.8% Medicare surtax would hit average, middle-class investors in real estate. A middle-class taxpayer who happens to sell real estate for a gain in a particular year would be liable for this new tax, regardless of how low her income might be in other, more typical years.”

Despite what the email says, it’s simply not true. According to the National Association of Realtors, the new law does not at all impact average home sellers, just a handful of those in the very top income bracket.

FactCheck.org, a non-partisan website breaks it down a little further: “The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.”

According to the National Association of Realtors, half of all existing homes sold for $170,700 or less in March of this year. Obviously, none of those sales could possibly generate a $250,000 profit and so none would be subject to the tax.  Bottom line, for the vast majority of people, a typical home sale would not incur any tax and the 3.8 percent tax will not apply.

If you need further reassurance of who would have to pay the tax, here’s another summary from FactCheck.org:

• A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
• An "empty nester" couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy.

There you have it. Next time such an email lands in your inbox, before pushing that forward button and passing along misinformation, take a minute to look into what it says. You might just find it more valuable to click delete instead.

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