Should you buy a home in 2012?

Should you buy a home in 2012?

This video provided by cnnmoney.com offers great insight to wither you should buy a home in 2012. The housing market is being said to stabilize this year with a slight increase in home values. The is good news for the economy and for buyers and sellers alike.

Turning foreclosures into rentals

NEW YORK (CNNMoney) — Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.

The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FMCC, Fortune 500) to investors in bulk. The properties would then be converted into rentals.

The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.

In addition to getting the properties off the government’s books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.

The agency is not releasing details on how the rental program would work, instead saying it is “proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012.”

Administration officials said they are continuing to work with the agency to develop the program.

Until now, most foreclosed homes have been sold individually because investors have demanded bigger discounts to buy large numbers of properties.

But federal officials are warily eyeing the expected surge in foreclosures as banks ramp up their action against delinquent homeowners. The process had been stalled since late 2010 when banks’ shoddy paperwork practices came to light.

There are close to 2 million homes in the late stages of delinquency, according to Lender Processing Services. Since foreclosed properties often sell below market value, they can wreak havoc on home prices.

Converting these homes to rentals can both help the neighborhood and minimize losses to Fannie, Freddie and the FHA, which hold about 250,000 properties, Bernanke told lawmakers last week.

He urged lawmakers to ramp up their efforts to fix the housing market, placing particular emphasis on the problem of vacant homes on the market.

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” he said.

Bernanke’s comments launched a full-court press by Federal Reserve officials last week to raise awareness of the continuing problems plaguing the housing market.

His proposals were quickly followed by Fed Governors Sarah Bloom Raskin, who spoke on ramping up enforcement of mortgage servicers, and Elizabeth Duke, who said Fannie Mae and Freddie Mac could do more to help heal the housing market.

Meanwhile, New York Fed President William Dudley gave a speech that touched on a wide range of housing policies — including principal reduction and mortgage refinancing — that he believes will boost the economy.

The Fed has already tried to boost real estate sales by pushing mortgage rates down to record lows through massive bond-buying programs.

But the renewed push for housing help indicates that the Fed, which has basically run out of monetary policy ammunition to revive the real estate market, is urging the federal government to ramp up its efforts.

“The Federal Reserve is signaling in even stronger terms the need for the government to do more to help housing,” said Jaret Seiberg, a policy analyst with the Washington Research Group.

 

Foreclosures fall to lowest level since 2007

 

NEW YORK (CNNMoney) — Foreclosure filings and repossessions fell to their lowest level since 2007 last year.

Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That’s a significant improvement from the peaks reached in 2010 — when 1.05 million homes were repossessed — and the lowest levels seen since 2007.

More than 4 million homes have been lost to foreclosure over the past five years.

While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the “robo-signing” scandal that broke in late 2010.

During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac.

However, Moore said there were “strong signs” during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011′s level but remain below the peak hit in 2010.

Low rates offer some help for homeowners

Early in 2011, many forecasters were predicting a wave of foreclosures due to resetting adjustable-rate mortgages, but low mortgage rates helped many borrowers refinance into more affordable loans, said Moore.

The government helped as well, through efforts like the Home Affordable Refinance Program (HARP), which made refinancing easier for borrowers who owe more on their mortgage than their homes are worth. Government foreclosure prevention programs, including HARP and the Home Affordable Modification Program (HAMP), have started about 5.5 million mortgage modifications since April 2009, according to the U.S. Department of Housing and Urban Development.

“Programs like HAMP and HARP have definitely made a dent in the foreclosure problem,” said Moore “However, they are certainly not living up to their billing of preventing several million foreclosures. In addition, many [HAMP] homeowners fall back into foreclosure later on.”

Of course, there were still plenty of factors working against homeowners in 2011, including the continued erosion in home prices. Falling prices rob homeowners of home equity, which they can tap if they need emergency cash.

Foreclosure hot spots

Hot spots for foreclosures remain mostly in “bubble states,” where speculative investors helped drive up home prices beyond their fundamental values during the mid-2000s housing boom. Nevada, where one out of every 16 households received some kind of default notice during the year, was the worst hit of all, a distinction it has held for the fifth consecutive year. Arizona had the second highest foreclosure rate and California came in third. Florida, which had been running neck-and-neck with the other “Sand States” in past years, fell to seventh, behind Georgia, Utah and Michigan.

Among metro areas, Las Vegas suffered from the highest foreclosure rate in 2011. California put seven cities in the top 10, led by Stockton in the second slot. Other cities in the top 10 included Phoenix, which finished sixth, and Reno, Nev. was eighth.

Owning vs Renting

News from Homesmart CEO, Chuck Lemire.

The monthly cost of owning a home is more affordable now than in the past 15 years, and is less expensive than renting in numerous cities, according to The Wall Street Journal’s third-quarter survey. Apartment rent is expected to rise while mortgages have become more affordable. This is a great opportunity to consider buying a home.  The big win:  taking a similar monthly payment but putting towards owning a home.

Other cities where owning is now cheaper than renting include Detroit, Minneapolis, Orlando, Las Vegas, Miami, St.  Louis, and Chicago.
In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home – including taxes and insurance – to be lower than the average rent levels in 12 of the metro areas. Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.

Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4%, are the lowest in six decades. Visible inventory was down sharply in several markets, including by almost half in Miami and 40% in Phoenix.

“I care about you, you can trust me and I am committed to excellence.”- Chuck Lemire CEO HomeSmart International

Foreign buyers scooping up U.S. homes

Foreigners seem to have more confidence in the U.S. real estate market than Americans do. Foreigners spent $82 billion buying up U.S. homes in the 12 months.

A new Senate bill would grant a U.S. visa to international investors who agree to spend at least $500,000 on residential real estate here. There are some requirements the eligible foreigner would need to meet for this new “homeowner” visa but it would be a vote of confidence and could improve the housing market nationwide. To read more…

Here is a good video from CNN Money for those that are on the fence about buying in today’s real estate market. It gives a brief insight to the market as a whole and will hopefully guide you in the right direction in your real estate goals.

Tips on cashing in on the housing slump

NEW GOVERNMENT REFINANCE PROGRAM

When the government released the Homeowner Affordability Refinance Program (HARP) product two years ago, they envisioned helping 4 million homeowners get into a better mortgage. As of August, only 894,000 people were able to utilize the HARP product to get into a better mortgage.

The basics of the current HARP product allow homeowners in a FANNIE MAE or FREDDIE MAC loan to refinance their current loan at up to 125% Loan to value (though most lenders only do 105% LTV). The original loan had to be taken out before March of 2009. This product was meant to help homeowners with little or no equity refinance their current loan with at a lower rate with no mortgage insurance.

President Obama is scheduled to release revisions to the HARP program this week. The new program is said to uncap the max loan to value of 125%. The new HARP loan will allow more under water homeowners to refinance their current loan at a lower rate with no mortgage insurance.

Many consumers owe much more than 125% of their home’s value. The updated HARP product is meant to help the homeowner’s that the first HARP product could not.

To check if your current loan is backed by FANNIE MAE or FREDDIE MAC, click on the following links below:

FANNIE MAE check: http://www.fanniemae.com/loanlookup/
FREDDIE MAC check: https://ww3.freddiemac.com/corporate/

Home prices rise for 5th straight month

 

Home prices are up for 20 major cities but are still below where they used to be according to S&P’s Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Phoenix was included in the research so it is somewhat good news to hear that home prices have risen. Typically the spring and summer housing demands are seasonally strong. With the holidays around the corner and as long as the economy remains weak, foreclosures continue to happen and lending standards tightened, there probably wont be much movement. Here’s a look at Arizona’s seasonal trend in the last 12 months based on the Median Sold List & Sale Price pulled from the Arizona Regional Multiple Listing Service.

Proverty Rates Rise

Considering the struggling economy, this doesn’t surprise me. But what does is the fact that income levels have changed very little. With an 11% increase in the median income over the last 30 years, consumer prices have increased 155% since 1980!! No wonder 15 million people are in need.

Cashing in on Rental Properties

This is an interesting article if you are thinking about investing in a rental property and will help you decide if you can benefit from it.  The rental market is booming mainly due to 4 million former homeowners who are now renters. There are some things you need to think about, like is this a good time to buy, how to find a good deal and knowing what you’re up against. Its definitely  a good long-term strategy especially when compared to investing in the volatile stock market.

 

 

 

Ten Tax Tips for Home Sellers in Arizona

Ten Tax Tips Arizona Sellers need to know! 

Last week the IRS released the ”Ten Tax Tips for Individuals Selling Their Home,” (IRS Summertime Tax Tip 2011-15). One of the most important items Sellers are most concerned about is Capital Gains. If you are thinking of selling your home, this is a good starting place BUT definitely talk with your CPA or Tax preparer for legal advice on your specific situation.