Will Distressed Sales Slow Tax Credit Deals?

By Robert Freedman, senior editor, REALTOR® Magazine

Congress helped keep home sales on solid ground when it extended and expanded the home buyer tax credit late last year. Given the federal budget deficit, you also have to say it acted reasonably by limiting the tax credit to just six months. (Deals in process by the end of April have until the end of June to close.)

The question markets now face, though, is whether short sales are going to limit the effectiveness of the credit.

When you consider that short sales comprise a significant share of markets today and can take months to close, you have to wonder if these transactions are going to pose a problem as the tax credit deadline nears.

One real estate professional I talked to in California says her market consists almost entirely of distressed sales. Many of these are REOs, which can sell fast, especially when the deal involves investors looking for bargains.

But short sales, despite signs of progress, remain another matter. According to practitioners and others I’ve spoken to, lenders are improving their short-sale processing and more improvements could be in the works as federal guidelines take effect in early April. (More about that.) But the transactions still take a long time. It’s not unusual for buyers, hoping to take advantage of the tax credit, to feel stymied by the uncertainties and delays of short-sale purchases.

To help you explore solutions for the issues at the root of delays, we brought together a real etate professional and a nationally recognized short-sale consultant, Scott Thompson of ServiceLink and Mortgage Resolution Services, for a free webinar on March 25. They won’t have all the answers, of course, but between the two of them they’ve seen enough deals to know of the main sticking points and they’ll have ideas on how to work through them.

The webinar is on Thursday, March 25, at 3 p.m., Eastern Time. To register, click here, and scroll down to the bottom of the page.

For Home Sales, It’s About Jobs, Not Fed MBS Purchases

By Robert Freedman, Senior Editor, REALTOR® Magazine

Watch our videos for economic research updates further down the post.

In the midst of the mortgage meltdown it was hard to keep track of everything the federal government was doing to keep the credit freeze from sinking the economy. There was the massive bank rescue, with the idea that an equity infusion from taxpayers would shore up banks so they could start financing mortgages again; there was the temporary increase in loan limits in high-cost areas for loans backed by Fannie Mae, Freddie Mac, and FHA; and there was the first-time home buyer tax credit, now expanded to include move-up buyers.

But one federal effort that never received quite the same attention as the others, probably because it doesn’t lend itself to a term that rolls off the tongue like “tax credit” or “bank bailout,” is the Federal Reserve’s massive intervention in the mortgage-backed securities market. Read more

Inman: “An Economy and a Country to Invest in”

By Katie Tarbox, Senior Editor, REALTOR® Magazine

The opening session of Inman Real Estate Connect 2010 in New York was markedly more optimistic than just a year ago where practitioners gathered at the Marriott Marquis for the three-day conference. While still cautious, Brad Inman, the founder of Inman News, said he was encouraged by the fact that the stock market has been so bullish since March of last year in his kickoff speech.

However, he also warns that some hesitation is in order, and recommended watching the following closely: Read more

Top 10 Real Estate Developments of the ’00s: #1

By Brian Summerfield, Online Editor, REALTOR® Magazine

More than 10 days and 3,000 words later, we’ve finally reached the top-ranked real estate development of the decade. The “winner” is … Read more

Top 10 Real Estate Developments of the ’00s: #6

By Brian Summerfield, Online Editor, REALTOR® Magazine

Five down, five to go! In this installment of our top real estate developments of the decade, we examine an infamous issue for practitioners: Read more

Things to Be Thankful for

By Brian Summerfield, Online Editor, REALTOR® Magazine

In the past couple of years, it hasn’t always been easy to find bright spots in real estate. Falling prices, declining sales volume, increases distressed properties, tightening credit, unemployment—all of these things have afflicted, and some still afflict, our industry since the downturn began sometime during late 2007 or early 2008 (depending on where you live). And though many experts are starting to call an official recovery in housing, too many things are still too bleak for many of us to agree.

Thus, it may be harder than in years past to figure out what we can be grateful for in our business. For your consideration, though, here are a few things to be thankful for: Read more

A Quiet NAR Success on Its Calls for Action

By Robert Freedman, Senior Editor, REALTOR® Magazine

There are many reasons for the success of NAR’s most recent Call for Action, to which more than 18 percent of NAR members—a record— responded.

First and foremost is the compelling subject of the CFA: getting the home buyer tax credit extended and expanded. As NAR Chief Ecionomist Lawrence Yun has been saying for weeks, residential home prices are stabilizing and are on the cusp of heading up—the all-important precursor to restored confidence in homeownership. We’re relying on that improved confidence to boost sales, tighten inventories, and restore healthy credit markets.

Given that, letting the credit expire on Nov. 30 could have stopped sales momentum dead in its tracks.

It was also huge that Congress added the $6,500 credit for repeat buyers, because throughout 2009 much of the sales weight has been carried by first-time buyers. For market stability, repeat buyers needed to get off the fence and Congress saw that. Read more

Stevens Strongly Defends FHA’s Financials

By Brian Summerfield, Online Editor, REALTOR® Magazine

In an address to hundreds of REALTORS® at the 2009 NAR Conference & Expo Saturday afternoon, FHA Commissioner David Stevens offered a fervent defense of the organization’s financials. He specifically addressed the negative press surrounding the FHA’s recent audit, which showed part of its capital reserves below congressionally mandated levels.

Stevens distinguished the FHA’s capital reserves for unexpected losses from its regular reserve fund, which remains above 2 percent. Together, the two funds equal almost 4 percent in reserves. “We’ve come through the 100-year flood,” he said. “Despite the crisis, FHA is still standing with $31 billion in capital, $3.5 billion more than it had a year ago.” Read more

Things Are Looking Up: 2010 Economic Forecast

A large crowd of REALTORS®, many with coffee cups in hand, snapping photos with iPhones and Blackberries, packed a ball room this morning to hear NAR Chief Economist Lawrence Yun discuss housing market trends and the economic outlook.

Yun kicked off his presentation by telling the capacity crowd that things are looking up with the recent extension and expansion of the home buyer tax credit and home prices beginning to stabilize. While the U.S. economy still faces some significant challenges, including high unemployment, Yun says there are a number of reasons for REALTORS® to feel optimistic about 2010: “The momentum is building. . .”

According to Yun, the tax credit has already delivered a significant boost to the economy, bringing 350,000 to 400,000 buyers to the housing market so far. The extended and expanded home buyer tax credit will help to release pent-up demand, bringing more buyers–including move-up buyers–into the market and increasing market velocity. Yun estimates that in 2010, thanks to the credit and home price stabilization, home sales should increase by 15%–an estimate that he was careful to explain is extremely conservative. Home values, which Yun stressed are key to durable economic recovery, will begin to become positive in 2010.

To check out NAR’s Economic Forecast or the slide show presentation, visit NAR Research’s home page.

Jumbo Freeze Might be Thawing

By Robert Freedman, senior editor, REALTOR® Magazine
It’s still early but there are signs the availability of jumbo financing might be improving—although underwriting standards probably won’t ease any time soon. That means the days of creditworthy borrowers having a tough time getting financing for an amount over the conforming loan limit might be ending but they’ll still have to come up with a significant down payment and be prepared to show lots of documentation, like three years worth of tax returns instead of the customary two.

NAR Chief Economist Lawrence Yun says lenders are slowly getting back into the game because the climate of dread is lifting: Wall Street analysts and business executives have recalibrated their performance scenarios to reflect the greatly improved conditions among lower-priced homes (thanks to the home buyer tax credit and steeply discounted pricing). That in turn is creating a virtuous cycle as the improved scenarios help relax concerns over the economy, pushing up equities, which in turn creates the wealth that further increases confidence.
Read more

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