Housing Affordability Push for Veterans
The NATIONAL ASSOCIATION OF REALTORS® testified Thursday in Congress that the Veterans Home Loan Guaranty Program should continue to be a valuable asset in helping the nation’s veterans achieve homeownership in a way that is safe, fair, and affordable.
“The VA Home Loan Guarantee Program is designed to provide favorable loan terms for veterans who are unable to qualify for a conventional loan,” said Tony Agurs, a member of the NAR Board of Directors and REALTOR® from California who is a 21-year U.S. Marine Corps veteran.
NAR cited a 2004 study that found 82 percent of first-time homebuyers through the VA program could not qualify for a conventional loan. The report also found that 61 percent of those borrowers could not meet the downpayment or debt-to-income ratios required to qualify for an FHA loan.
“It is our duty as a country to make sure that our retired and active duty veterans and their families are given every opportunity to own and keep their home if they have the basic means and desire,” said Agurs.
The VA Home Loan Guaranty Program offers protections for borrowers if they encounter financial difficulties by offering a variety of supplemental loan servicing programs to help military families avoid foreclosure.
“This is especially important today while we are in an active war and given some of the challenges in today’s housing market. In 2007, the VA successfully intervened and saved nearly 8,500 veterans’ homes, also saving the government $181.3 million in avoided claims. These are big and important numbers and are more than just statistics,” Agurs said.
NAR urged the House Subcommittee on Veterans Affairs to reform the Veterans Home Loan Guaranty Program so it can better serve many more veterans. NAR asked the subcommittee to make various program enhancements to give military families the opportunity to become home owners.
These enhancements include:
Increasing the VA loan limits in high cost areas to 150 percent of conforming loan limits;
Easing the refinancing requirements and restrictions for veterans, especially those that have fallen victim to risky subprime loans;
Offering permanent authorization for the guarantee of adjustable-rate mortgages and hybrid ARMs.
“NAR has a long history of strongly supporting housing opportunities for our nation’s veterans and active duty personnel. It is our hope that this subcommittee will support our recommendations for enhancing and improving the VA Home Loan Guaranty Program,” Agurs said.
— REALTOR® magazine online
Rates Rise for Third Week in Row
Freddie Mac reports a jump in the 30-year fixed mortgage rate to a more than three-month high of 6.24 percent during the week ended Feb. 28. The previous week rates stood at 6.04 percent. The jump marked the third consecutive weekly increase.
Interest on 15-year fixed-rate mortgages climbed to 5.72 percent from 5.64 percent over the same period. Meanwhile, the five-year adjustable mortgage rate edged up to 5.43 percent from 5.37 percent. The one-year ARM shot up to 5.11 percent from 4.98 percent.
Source: San Diego Union-Tribune (02/29/08)
Weekend freeway closures in Phoenix area (Feb. 29-March 3)
Several improvement projects will require closures or lane restrictions along sections of Phoenix area freeways this weekend (Feb. 29 – March 3). The Arizona Department of Transportation (ADOT) recommends drivers use alternate routes or give themselves extra travel time while the following restrictions are in place:
Westbound I-10 ramps to northbound and southbound I-17 (at the Stack Interchange) will be closed from 9 p.m. Saturday, March 1 to 5 a.m. Sunday, March 2 for maintenance work. Drivers should prepare for detours on local streets, including 19th Avenue, McDowell Road and Van Buren Street.
Loop 202 (Red Mountain Freeway) will be narrowed to one westbound lane and two eastbound lanes at Mesa Drive from 11 p.m. Friday, Feb. 29 to 5 a.m. Monday, March 3 for pavement repair. Drivers should be prepared to slow down and merge safely when approaching the work zone.
Eastbound Loop 101 (Agua Fria Freeway) will be narrowed to two lanes between 59th Avenue and 43rd Avenue from 9 p.m. Friday, Feb. 29 until 5 a.m. Monday, March 3 for median improvement work. Drivers should be prepared to slow down and merge safely when approaching the work zone.
I-17 will be narrowed to one lane in each direction between Happy Valley Road and Dixileta Drive from 9 p.m. Friday, Feb. 29 to 7 a.m. Saturday, March 1 for bridge construction. Drivers should be prepared to slow down and merge safely when approaching the work zone.
In addition, a new interchange on Interstate 17 at Dixileta Drive in the North Valley is scheduled to open to traffic on Saturday, March 1, altering the operation of the current frontage roads. The frontage roads between Happy Valley Road and Dixileta Drive will be permanently converted to one-way. The frontage road on the east side of I-17 will be changed to one-way northbound and the frontage road on the west side will become one-way southbound.
For a complete listing of freeway and highway closures or restrictions across Arizona, visit ADOT’s Travel Information site at www.az511.com or call 5-1-1.
The Arizona Department of Transportation is coordinating freeway improvements throughout the Valley. These projects - which include new freeways, additional lanes and interchanges, rubberized asphalt, new landscaping and more - are included in the 20-year Regional Transportation Plan for Maricopa County. More than $15 billion in comprehensive, diverse transportation improvements are funded in the plan through a voter-approved sales tax that became effective in January 2006. More information on ADOT’s freeway portion of the Regional Transportation Plan is available at www.azdot.gov/ValleyFreeways.
Interest Only Loans
I was just at the bank and have to say I’m concerned. I’m concerned about the continual sales pitch for Interest only loans. You would think with all the fallout in the banking industry from loans that hove gone bad they would want their borrowers to pay down the balance a bit.
For the borrower, my question is WHEN do you think you are going to pay the home off?
Why do you think you can really afford a home that requires you to have an interest only loan to qualify in the first place?
How much home can you qualify for with a traditional Principal, Interest, Tax and Insurance payment? HOA?
OK, off my soapbox…
Under-$200,000 market gives home sales a push
Affordability lures first-time buyers, investors
Kerry Fehr-Snyder
The Arizona Republic
Feb. 29, 2008 12:00 AM
The real-estate slump has an upside for first-time home buyers looking to spend $200,000 or less.
As median-home prices continue dropping, the supply of homes for sale in the much-coveted low-end market is swelling.
Consider Marshall and Wendy Kauffman,who recently picked up the keys to their first home: a 1,150-square-foot three-bedroom, two-bath house in a nice Gilbert neighborhood. They paid $185,000.
The Kauffmans, who are both 29 and have three children, are among home buyers fighting over a growing inventory of homes in the Valley’s sub-$200,000 market. The subprime debacle, foreclosures and “short sales” in which a buyer offers less than what is owed the bank, continue to drive Valley real-estate prices down. That, in turn, makes more homes than ever affordable for first-time home buyers and investors.
But those who want to get the deals face:
• Competition from investors.
• Bidding wars on “short-sale” homes with multiple offers.
• Waiting games for lenders to respond to “short-sale” offers.
“We saw a house that we liked, but it needed a lot of work,” Wendy Kauffman said. “It had eight offers on it. It was a short sale, and there was a bidding war on it.”
The Kauffmans found their dream home relatively quickly by limiting how far out they were willing to look. They also disregarded short-sale and foreclosure homes, said Audrey Hickman, the Kauffman’s real-estate agent at WestUSA Realty.
Wendy Kauffman described their house hunt as “a wonderful experience.”
“But the key was having people on your side, from Audrey to our mortgage broker,” she said.
The other key was not having to sell another home first. The couple have been renting a 1,460-square-foot, three-bedroom, two-bath home in Ahwatukee.
Homes that sold for less than $200,000 grew to 34 percent of the market in January, up from 16 percent of the market in January 2007, according to Jay Butler, director of Realty Studies at the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus.
Butler’s data doesn’t break down where the less-expensive homes are selling or how many of the buyers are investors.
Real-estate agents and brokers said they see a growing number of homes listed for sale for $200,000.
“I’m working with a handful of buyers under $200,000, and I’m not having trouble finding them properties,” said April Starr, a broker for All Starr Property in Phoenix. “It’s the lenders who are making these people jump through hoops and then jump through them again.”
Of the 46,148 single-family homes listed for sale in Maricopa County as of Thursday, about one-quarter of them are priced at $200,000 or less, Starr said.
Linda Booker, a real-estate agent with Realty Executives’ Arrowhead branch, said the under-$200,000 market is a sweet spot for first-time buyers and investors.
“There’s a decline in property values, and it’s what’s affordable for people to purchase,” she said.
Several real-estate agents said many of the buyers in this market are investors.
Also, Dave Green of Century 21 Arizona Foothills said many of the homes listed for $200,000 or less tend to be in far-flung areas of the Valley, such as Queen Creek or Maricopa. Those closer to metro Phoenix often rise above the $200,000 mark.
Bradley Crutchfield, an assistant technician at the Gila River Indian Casino and a part-time ASU student, said he paid $243,900 for his first house, a foreclosure near Clemente Ranch in Chandler.
“It was in the (price) range of what I was looking for, but it was my top end and I was only willing to pay that if I could be closer,” Crutchfield, 23, said. “I’ve been looking for about two years now when the market was really high, and I had the urge to buy. Then the market went down, and I seriously wanted to buy.”
Crutchfield and his real-estate agent, Sonia Carver of Keller Williams Realty East Valley, said they also found themselves competing with investors.
“The sub-$200,000 market is superhot,” Carver said.
Shawn and Charlene McNeely, who live in Mesa, jumped into the low-end market to generate retirement income. They have bought three homes, ranging in price from $200,000 to $220,000, with the help of real-estate agent Marie Nowicki of Re/Max Elite in the past six months. Two of the homes are in Gilbert, and one is in Chandler.
One of the Gilbert homes was owned by a 65-year-old woman whose 95-year-old mother has Alzheimer’s disease and lives with her. The women were about to lose their home because they couldn’t keep up with their mortgage payments, which ballooned to $3,000 a month on an adjustable-rate loan.
The McNeelys said they now rent the home back to the women for $1,200 a month.
“She was very happy because for months, she was in fear of losing her home and being displaced,” Shawn McNeely said. “Unfortunately, somebody’s misfortune becomes somebody else’s opportunity.”
Home Sales Still Strong in Key Areas
The housing slowdown isn’t being felt in some of the most desirable areas of the country.
For instance, in Ross, Calif., about 18 miles north of San Francisco, real estate practitioner Tracy McLaughlin says, “It’s supply constrained.”
Other metropolitan areas that continued to post gains in home prices nearly every month are Seattle, Portland, Ore., and Charlotte, N.C. In Charlotte, home price growth has averaged a steady 7 percent over the last five years.
In San Francisco, prices have declined slightly, but demand remains strong.
“The market is very strong,” says Richard Weil of Hill & Co. in San Francisco. “We don’t have any inventory. It comes down to that.”
Weil says houses in the $3 million to $5 million range are taking a little longer to sell. But those shopping for homes priced at $6 million or more are largely unaffected by the market downturn.
Source: Reuters News, Jim Christie (03/18/20) and San Francisco Business Times, Mark Calvey (02/28/08)
Phoenix Area Inventory
More of the same this past week. Slight rise in inventory overall. Going too be hitting the spring selling season soon. Here’s the latest chart:
Bernanke Prepared to Cut Key Rates Again
Federal reserve Chair Ben Bernanke told the House Financial Service Committee during an appearance on Wednesday that the Fed is prepared to lower key interest rates again to bolster economic growth.
The Fed “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,” he said.
Bernanke was asked when he thought the housing market might stabilize. It’s possible, he said, that by “later this year it will stop being such a big drag directly” on the economy. But home prices probably will decline into next year, he added.
“It is very difficult to know, and we’ve been wrong before,” Bernanke said.
Source: The Associated Press, Jeannine Aversa (02/27/08)
Trip to Boston
photo credit: AndWat
Took a trip to Boston this past weekend. Great to see family. Not so great to shovel the 10″ of snow that fell. Actually had a good time shoveling. I became the godfather to baby Ashley. might be the cutest baby ever. 
Wish I hadn’t scheduled my return flight so soon. Maybe a return trip in the summer…
How New FHA, GSE Loan Limits Impact You
Last week, President Bush signed into law a $152 billion economic stimulus bill that includes temporary increases in loan limits for the government sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac — and the Federal Housing Administration until Dec. 31. But what does this mean for you and your clients?
The NATIONAL ASSOCIATION OF REALTORS® launched a new resource Web page, What Economic Stimulus Means for REALTORS®, devoted to educating you about the new loan limits, which loans are eligible, and the implementation of these temporary limit increases.
NAR has developed estimates of the FHA and GSE single-family loan limits by state and county so that you can get a sense of how the loan limits will rise in your markets.
“The importance of immediately implementing the new limits cannot be overstated,” said NAR President Richard Gaylord last week in a public statement. (Listen and watch Gaylord’s video podcast on the topic at REALTOR.org). “Mortgage markets throughout the country need liquidity. Our research indicates that the increased FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their homes.”
The FHA limit will increase to as much as $729,750 in high cost areas (to 125 percent of local median home prices). The GSE limit will jump to $729,750 for loans; currently Fannie Mae and Freddie Mac loans are capped at $417,000.
Eligible loans from FHA include mortgages that were issued for credit approval on or before Dec. 31, 2008. GSE loans that are eligible include loans that originated after July 1, 2007 to Dec. 31, 2008.
The U.S. Department of Housing and Urban Development is required to publish the new mortgage limits by March 14; the limits will be effective for FHA immediately upon publication.
Visit REALTOR.org for more on the FHA and GSE changes so that you can educate yourself and, in turn, your clients about their options. “This will be a major stimulus for the housing industry and for people who want to own a home,” Gaylord said.
— REALTOR® Magazine Online
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