Admittedly, it has been a long time since we have made a blog entry. Perhaps a goal of one entry per day was ambitious so we are back with the notion that we will post at least once a week as long as there is something interesting in the world of real estate, mortgages and/or appraising to talk about! We also invite you to post on our blog, and use it as a sounding board for discussions of real estate, the mortgage industry and property appraisals in the Dallas and greater north Texas area.
One of the biggest changes in appraising for lenders since our last post is that the HVCC is no more, ended with the passage of Dodd-Frank. Still, the effects remain, and lenders who are sending loans to Fannie Mae or Freddie Mac, or who write FHA loans, are still required to order through a third party or "firewall." The new rules are helpful to borrowers, in that they allow for greater portability of your appraisal. For more about the changes, read this post. For more on Dodd-Frank, visit the website here. (Note: blog links will open in the same window, please use your "back" button to return to the blog).
Relatively good news was reported by Steve Brown in the DMN late last week, indicating that the Dallas/Fort Worth area is on of the few markets expected to see at least modest gains in home values during this last half of 2011. If you are a DMN online member, you can read the article here; otherwise, send us an email and we'll send you the pdf version.
In our neighborhood, houses are selling like proverbial hotcakes. Prices in far north Dallas are showing some increase in many neighborhoods and "for sale" signs are not staying up for long. Sale to list ratios for the most part are above 95%. How are things in your neighborhood? Please share any information that you have on how many new listings you're seeing as you drive around and whether things seem to be selling quickly for near list or languishing. In our next post, we'll share some information on the outlook for certain Dallas neighborhoods.
An article posted on the DMN website today reports that, according to the S&P/Case-Shiller home price index, prices in Dallas/Fort Worth were down just 1.6% in July from a year ago. The decline has clearly slowed since earlier in the year when values were down more than 5% over a 12-month period, and indicates to some experts that prices in North Texas have bottomed out.
Much of the good news in the housing market over the past several months is likely due to the first-time homebuyer tax credit which will expire at the end of next month. Although there has been some talk of extending the credit there has been no move yet to do so, and it's possible that the credit will be allowed to expire. If so, and in the absence of any other major changes in factors affecting the market (jobless rate, etc.), it shouldn't take long to gauge just how many buyers were motivated to move at least in part by the credit.
Judging by the current level of mortgage applications, it seems that the credit might have spurred quite a few otherwise reticent buyers. Reports that rates for 30-year fixed loans fell last week to 4.94%, the first time they've dropped below 5% since last May, were not met with corresponding reports of new loan applications. In fact, applications for purchase loans were down over 6% from the week before (refi apps were down less than 1%). Tighter lending standards could be partly responsible for the drop, but it's also possible that borrowers are stepping back now that the deadline is looming and in some cases it might not be possible to close a newly generated loan application before December 1.
At Blue Star Appraisals Inc. we work with several lenders, mortgage brokers and realtors that can help walk you through the loan process. If you are thinking about buying but want to know if you will be able to close in time to get the credit, or if you need more information about what is involved in applying for a loan, please contact us today for a referral.
While locally the news has been relatively good regarding home values (holding better than the national average) and sales (flattening out to increasing), new worries are surfacing regarding the number of bank-owned foreclosures that will hit the market sometime in the next year.
As banks have worked with owners to try and forestall foreclosures, the number of houses that have actually reverted to the banks has been kept down. However, it is becoming clear that many homeowners are in such deep distress that their homes will not be saved, and as they work their way through the system the banks are going to start foreclosing. We've talked before about the fact that many homes posted each month for foreclosure are actually not sold, because the owners and lenders are trying to come to terms. As those modifications fall through, the number of foreclosed properties hitting the market will rise, and values will drop.
There is no real agreement as to how long it will take for this "shadow inventory" to hit the market, some experts believe it will start as early as the last quarter of 2009. If you're a prospective seller, as tenuous as the market is, you might be better off trying to sell now - especially if you are in an area that is at risk for a large number of value-affecting foreclosures. On the other hand, if you're a buyer who isn't in a hurry - the tax credit incentive notwithstanding - a glut of freshly marketed foreclosures could drive values down by as much as 6%, give or take.
Whether you are buying or selling, please contact us at Blue Star Appraisals Inc. if you need a referral to a realtor, mortgage broker or direct lender to help you through the process of what is likely to be the largest and most significant financial transaction that you will make.
An article posted today at Mortgage News Daily reports that mortgage applications rose over 12% last week, leading the overall number of apps to be up 14% over this time last year. The continuing fall in interest rates, coupled with the tax credit incentive, seem to be the leading factors in the increase. The article further reports that, according to zillow.com, Texas lenders were offering the lowest rates at an average of 4.96% [before origination points].
The increase in applications makes it likely that the time it takes to close a loan will continue to average over 30 days, in some cases as much as 45-60 days. If you are hoping to make a purchase in time to qualify for the first-time homebuyer tax credit which expires on December 1, you will probably want to have your application in by early to mid-October.
Two good points we heard yesterday about the credit to keep in mind: 1) if you are married, neither spouse can have owned a home in the past 3 years in order to qualify for the tax credit, and 2) the credit is not automatic and must be claimed on your tax return; if you are claiming the credit for 2008 you will likely need to file an amended return to get the credit. Check out this link to irs.gov for various scenarios regarding the credit that can help you determine if you are eligible.
We have heard a lot of conjecture over the past few weeks regarding the likelihood of the credit being extended. Conventional wisdom seems to be that an extension will be offered, but it's not a sure thing yet. If you need assistance in finding a realtor or lender who can give you more information about the credit or help walk you through the process, please contact us at Blue Star Appraisals Inc. for a referral to one of our trusted clients.
Congratulations to Keller Williams and Coldwell Banker for ranking highest in customer satisfaction in a new survey released last week by J.D. Power and Associates. Based on our own experiences working with agents at both companies, we're not surprised.
A note about working with realtors: there was a time, oh so many years ago (okay, maybe just 2 years ago), when the market was so hot and sales so plentiful that "For Sale By Owner" became a real alternative to working with a professional realtor. We won't say that there aren't always some advantages to working with a realtor, but if you were living in a hot neighborhood and had access to information about comparable sales in your area, you probably could do very well going FSBO and saving the commission. Today sales are down, values are all over the place, buyers are fewer and farther between, and the best way to sell your home at the highest value the market will bear is probably a well-qualified realtor (not to mention a pre-listing appraisal).
If you are thinking of buying or selling and want to consult with a realtor but don't know who to call, contact us at Blue Star Appraisals. We can refer you to realtors that we work with at Keller Williams, Coldwell Banker and other agencies (we also work with a couple of highly experienced independents) who can answer your questions and help you get started.
The DMN posted one of those great headlines online today, "Dallas-Fort Worth home foreclosure filings jump 34%" (shouldn't even sensationalized headlines be capitalized?), the kind that says one thing even though the article really means another.
The upshot is that filings posted for homes to be foreclosed next month did rise, but in large part due to the way foreclosure postings are carried over as borrowers and lenders try to work out new terms. Further, according to the article, less than half the homes posted for sale each month are actually foreclosed. The article ends with the fact that "the number of homes actually being foreclosed on this year was down 17% during the first six months" of 2009 from the same period a year earlier. Maybe they buried the lead...
Freddie Mac posted their weekly interest rate survey yesterday, showing 30 and 15 year rates down for the third consecutive week. At 4.47%, the 15-year fixed rate is at its' lowest since 1991. The 30-year fixed rate averaged 5.04%, the lowest since before last May when rates averaged under 5.
These rates don't include points and even the average 5.04% is probably available only to buyers with excellent credit and 20% down, but coupled with the tax credit and the decline in values in the Dallas-Fort Worth area (averaging only -2% according to Bankrate.com, but much lower in many area neighborhoods), this is a great time to buy. It's also a great time for investors (though they don't receive the first-time buyer tax credit), whether you hold on to a property and lease it or rehab and resell it (sales of rehabbed foreclosures are doing well in many parts of DFW).
If you need help finding a realtor, mortgage broker or lender please contact us at Blue Star Appraisals Inc. for a referral!
An article posted on the New York Times website (with a Dallas byline) addresses the looming question regarding the $8,000 tax credit for first-time homebuyers that is set to expire on December 1 - should the credit be extended and even possibly expanded? There are some who argue that the tax credit is responsible in large part for stimulating the housing market over the past year, a view shared by the National Association of Realtors who estimate that the credit is directly responsible for 350,000 2009 sales.
Others are less convinced that the program merits extension, saying among other things the credit went to people who would have bought homes anyway and that the government is just giving away money it doesn't have. But there is no denying that the program has made a difference in the decision of some buyers and that those who have been able to take advantage of the program have done their part to stimulate the economy.
One point made in the article that was recently articulated to us by a Dallas area real estate attorney is that while first-time buyers have buoyed the market, there are relatively few "move-up" buyers, those who would typically be ready to buy a second or third home but cannot sell their current house or are unsure about their employment/economic future. A new Senate Bill offers a $15,000 credit to a buyer that stays in a home for at least 2 years.
What is your opinion? Is the tax credit a good idea that should be extended for an additional period of time? Should the credit be raised for those who stay in a house 2 years (which may or may not be enough to get the move-up buyers moving even if they can sell their current homes)? Have you taken advantage, or tried to, of the current credit? We'd love to hear from you.
In the meantime, if you are still hoping to buy in time to receive the credit (in case it is not extended) and need help from a mortgage professional, please contact us at Blue Star Appraisals Inc. for a referral. Please contact us as well if you are considering an appraisal for any reason, including property tax protest, PMI removal, pre-listing, pre-renovation, or to assess a potential investment property.
Haven't taken a blog look at interest rates lately so it seems like a good time for a quick update. The news is good, especially if you're on track to take advantage of the first-time homebuyer tax credit as well (and remember, in this case, "first-time" means that you have not purchased or owned a home in the past 3 years).
For one overview of the current national average for rates check out this page at Mortgage News Daily. MND shows that today's average for a 30-year fixed is 5.07% with 0.7 points, not quite as low as we saw last spring, but definitely lower than the later summer averages. At the same time, Bankrate.com shows the average today at 5.23%, and other sites are indicating rates under 5% (with at least 1 point). The upshot - it's still volatile out there, and rates are still at historic lows.
A separate article at MND posted today says rates have ticked higher, ending with this analysis:
Reports from fellow mortgage professionals indicate that mortgage rates did worsen overnight. The par 30 year conventional rate mortgage is in the 4.875% to 5.125% range for well qualified consumers. In order to secure a par interest rate you must have a FICO score of 740 or higher, a loan to value at 80% or less and pay all closing costs including one point loan origination/discount/broker fee. If you are looking to secure a 15 year fixed rate mortgage, you should expect a par rate in the 4.375% to 4.625% range. To qualify for the 15 year par rate you must have a FICO score of 620 or higher, a loan to value at 80% or less and pay all closing costs including one point.
There is a lot of great information online where you can research current rates. If you need help determining how much you qualify for and at what rate, contact us at Blue Star Appraisals Inc. for a referral to one of our trusted broker or lender clients who can help guide you through the process.
As time runs out on the $8,000 tax credit for first-time homebuyers (your loan must close before December 1 to be eligible and, with closings taking 45 days and longer, there is no time like the present if you are still hoping to take advantage of this incentive), a new study finds that the Dallas/Fort Worth area will be among the ten highest performing housing markets for 2009.
The study, conducted by Local Market Monitor and reported in the Dallas Morning News last Wednesday, looked at the combined impact in cities with less than average declines in employment, home values that are staying relatively stable, and did not have the same kind of housing boom that other areas saw (like California, Florida, Nevada and Arizona, which will not fare well in 2009).
It is unclear of course how long it will take for home values to begin to rise again, and even less clear that they will ever reach the levels they were at pre-bust. In some cases, similar to a stock market correction, home values have reverted to probably where they should have been, which indicates that they will remain stable for a long time to come. Additionally, however, there are still a number of short sales and foreclosures in the area that offer great investment opportunities for buyers who are prepared to hold on to them for at least a couple to few years (or who are willing to sell sooner for a lesser profit).
If you are interested in taking advantage of the tax credit before the time expires and need help getting started, contact us at Blue Star Appraisals Inc. for a referral to one of our trusted realtor and/or broker clients who can help guide you through the process. Now is also a good time to contact us if you are interested in a home appraisal for protesting your property tax assessment, PMI removal, determining market value before you list or remodel, or for any other reason!
Attended a networking meeting yesterday with an interesting presentation from a State Farm agent (dandantheinsuranceman.com) that I've been very impressed with. He really seems to be all about the client, both from the way he presents his products as well as feedback from people who have either used him or worked with him. Dan is quick to say that State Farm does not always have the cheapest rates, but he is happy to talk with anyone about what he can offer through State Farm with no pressure and understanding if you choose to go elsewhere.
The presentation was on Long-Term Care insurance. This is a relatively new type of coverage (maybe 10 or so years old) that is intended to pay for long- term care (LTC) should you become disabled or incapacitated due to accident, old age or any other chronic (or even temporary) condition. Some important points were: 1) 42% of people receiving LTC are between the ages of 18-64; 2) LTC includes not only care in a residential facility but also in-home care and assistance; 3) all LTC policies are not created equal and due diligence is essential; 4) a LTC policy can keep you and your family from going bankrupt to pay for long-term care and offer you choice and dignity in the type of care you receive; and 5) the younger (and healthier) you are when you purchase a LTC policy the less your premiums are likely to be, and premium increases are figured at the age you were when you purchased your policy as opposed to your age at the time of any increase - and apparently increases can be fairly frequent regardless of who you buy from.
Long-Term Care Policy premiums are not inexpensive. For a good policy with adequate benefits and inflation protection you could well pay $100 per month. For a couple, make it $200. Add this to what you are paying in life insurance, auto insurance, homeowner or renter insurance, and health and disability insurance if you are self-employed, and you could be paying - conservatively for a family of 4 - $2000 per month in insurance premiums, give or take.
And this is what led to the connection between Long-Term Care insurance and your mortgage. Especially with many first-time buyers scrambling to close on a house before December 1 in order to receive the $8000 tax credit, it is important to consider all of your costs when you think about how much mortgage you can afford. You should not take on more mortgage (including PMI if necessary, annual property tax escrow or payments, homeowners insurance and maintenance) than you can afford while still paying for the coverages you need to keep you and your family safe, healthy and out of bankruptcy should the unexpected occur.
When you think about your mortgage payment, add in PMI, 1/12 or your annual property taxes, 1/12 of your home insurance, and 1/12 of annual maintenance costs (including larger repairs and minor upkeep like lawn, landscaping, cleaning) to come up with what you will need monthly to own the home. Then, if you find the number is too high, think hard before you sacrifice Long-Term Care Insurance or Life Insurance or other important coverage in order to fit your home costs into your budget. If you can't find other ways to cut the budget without eliminating insurance coverages, you might want to consider buying less house. As we've said often, just because the calculator says you can afford a certain price doesn't mean you should!
Dan's information certainly made us think long and hard about how we're making our own financial compromises and the danger of "robbing Peter to pay Paul." We are among those who have thought that we have plenty of time to think about Long-Term Care, but after hearing the facts we are now exploring our LTC insurance options.
For more information about LTC Insurance, click here or contact Dan by clicking on his web-link above. For information about the current market value of a property you are considering buying or selling, or for a referral to one of our trusted brokers or lenders, please contact us at Blue Star Appraisals Inc.!