Atlanta Real Estate Blog

Experts see a mixed bag for 2010, which we will detail in this post, however, one thing is unmistakably clear…if you have a reasonably secure job, and ever wanted to buy your first home, or you are a current homeowner who wants to change homes or buy a  move up home, you better get off the fence and go for it soon!  Now is the time to buy!

Some of the strongest incentives ever to purchase a home exist right now: down payment assistance programs like the Georgia Dream Homeownership Program (I can refer a lender trained and experienced with this program – if you use the wrong lender, trust me, it won’t happen), our current historically low interest rates,  a good selection of bargain properties in almost all areas and price ranges, an $8000 tax credit for first time buyers, plus a $6500 tax credit to existing homeowners who are move-up buyers are all awesome. Its still a strong buyers market and these incentives have heated up the market over the last few months, but… the tax credits are set to expire, and the lending rates are expected to move upward after March 2010.

Significant Trends to Expect in 2010:

More Buyers Entering the Market – Home Buyer Tax Credits End April 30, 2010

In 2009, the federal government’s $8,000 tax credit for first-time homebuyers was a huge topic in the real estate world. The National Association of Realtors, estimates 350,000 homes nationwide were sold to first-time buyers who probably wouldn’t have bought a home if not for the credit. The group also reports that about 47 percent of all home sales in 2009 will be to first-time homebuyers, up from 41 percent in 2008.

Hoping to spur the housing market’s recovery, the federal government extended the tax credit — which was set to expire on Nov. 30 — and gave buyers until April 30, 2010, to secure a purchase contract. The credit was also expanded to include existing homeowners, plus buyers with higher incomes. If the original tax credit brought more first-time buyers into the market, the expanded credit should motivate current homeowners to trade up.

Lending Standards Still Tight

According to the Federal Reserve, fewer banks tightened their lending standards in the third quarter of 2009. However, that doesn’t mean lending standards have gotten looser, either. In 2010, banks will continue to keep the subprime mortgage debacle in mind and require extensive documentation and stellar credit from borrowers looking for the best rates. If you plan on applying for a loan in 2010, take steps to get your finances in order as soon as possible and boost your credit score. FHA is still a very good option if your score is at least 580 – you can still get a loan with only 3.5% down payment.

Rising Mortgage Rates

In 2009, the Federal Reserve bought up a massive amount of mortgage-backed securities, keeping mortgage rates at historic lows for much of the year. However, the Fed is scheduled to end those efforts in March 2010, meaning mortgage rates could jump as much as a full percentage point next year. If you’re considering buying a home, now is the time to take advantage of historically low interest rates. If you’re a current homeowner thinking about refinancing, act now.

Stabilizing Home Values — Prices Expected to Rise in Some Places

According to the Standard & Poors/Case-Shiller Home Price Index released in November 2009, U.S. home prices have improved for two quarters in a row. The national index rose 3.1 percent from the second quarter to the third quarter of 2009. Likewise, the National Association of Realtors recently reported that median home prices have risen for two consecutive quarters. NAR’s chief economist, Lawrence Yun, also predicted that home prices will grow 4 percent in 2010. Some local US markets have farther to go than others to acheive stability, but Atlanta has by various respected indexes shown favorable results compared to many metro areas around the country and local market trackers have shown price increase in some areas – its safe to expect Atlanta Home Prices will follow the overall national trend and rise some more in 2010.

Feel free to contact Robert Whitfield at 678-585-9691 for more information on Metro Atlanta and North Georgia Real Estate and Housing Markets.

Hud has announced a “temporary waiver” of what is known as thier 90 Day No Flipping Rule. This waiver will allow quick resale of foreclosure and other properties owned less than 90 days by the seller, help excess inventory move off the market, and, keep buyers with FHA insured loans from being **shut out of certain great homebuying opportunities – for example those in which an owner has acquired a home from a deceased family member (estate sale) or an investor who bought an investment property and did a nice rehab and where both simply want to resell the property. In such cases, without the New Hud Waiver, a buyer could not buy either home with an FHA loan if the seller had not owned the property for at least 90 days. FHA buyers lost out because these deals were only available to cash buyers or buyers with conventional loans.

**This actually happened to a first time home buyer client of mine not long ago – we put an offer on a great well rehabbed home that I had evaluated and found to be in great structural and mechanical condition. We got our offer accepted on what we thought was a standard resale property only to find out later that the owner was an investor who had acquired the property as a foreclosure only a few weeks prior. This meant my client would have to resubmit her offer some 75+ days later (offers from FHA borrowers cant be accepted by a seller until they have owned the property for at least 90 days) and store furniture for around 1oo – 120 days and move into a temporary apartment while taking the risk of something not closing over that long period of time. This also meant she would risk loosing out on the other great opportunities we had found if this deal did not go through – she (wisely) decided to let that home go and I crafted a legal termination notice to the sellers agent. Not long after, I found her a better property in a completly different and better area – in her case it was meant to be. In many other cases, however, FHA buyers have simply lost out on great deals because of what I have always considered to be a poorly conceived federal “NO FLIPPING” rule that only hurts honest sellers, investors, and buyers.**

Details of the HUD 90 Day Rule and the New Waiver set to take place starting February 1, 2010 and expected to last about 1 year:

Prior to this waiver going into effect, and with certain exceptions, FHA has for some time prohibited insuring a mortgage on a home owned by the seller for less than 90 days. HUD has approved a waiver to this policy in order to give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” said HUD Secretary Shaun Donovan.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

This waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Feel free to contact Robert Whitfield at 678-585-9691 for more information on HUD and FHA regulations impacting buyers as well as information about buying REO, Foreclosure, and other properties.

On January 20, FHA announced some policiy changes to strengthen its capitol reserves and better position FHA to manage its risks while continuing to support the housing market recovery. Overall, it looks like the new changes are a good balance between the need to make necessary financial reforms and the need to keep FHA Loans available to a large segment of homebuying consumers. The evidence is that FHA has retained the 3.5% minimum downpayment – althought now you must have a certain minimum credit score.

These are the changes FHA has announced:

• The upfront mortgage insurance premium (UFMIP) will increase to 2.25 percent up from 1.75 percent. Contrary to reports, FHA will continue to allow the financing of the UFMIP into the loan.
• Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment. The minimum down payment will remain at 3.5 percent for all other borrowers.
• FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent). Over time, increasing the annual premium may allow FHA to reduce the upfront premium.
• Seller concessions (such as seller paid closing costs) will be reduced to 3 percent from 6 percent.

FHA will make the following lender enforcement changes:

• FHA will implement credit watch terminations at lender underwriting.
• Public reporting of lender performance through scorecard system will be implemented.
• FHA will implement, through notice and comment, indemnification against lenders.  Indemnification will be expanded beyond fraud and misrepresentation.
• FHA will seek legislative authority to enforce indemnifications against direct endorsed (DE) lenders.
• FHA will seek legislative authority to sanction lenders nationwide based on performance of a local branch.

Bottom line, FHA will remain one of the best sources for home loans if your cash for downpayments is low, (or you prefer to keep more of your cash) and if your credit scores are not all that stellar but at least 580.

Feel free to contact Robert Whitfield at 678-585-9691 for more information or a referral to trusted lenders.