The KCM Blog - The COST of a Home: Last Year, This Year & Next Year

The COST of a Home: Last Year, This Year & Next Year Posted: 26 Aug 2013 04:00 AM PDT   The cost of a home is determined mainly by two components: price and mortgage rate. Today, we want to show how the monthly cost of purchasing a median priced home has changed over the last twelve months and how it might change over the next twelve months. For the first two examples, we will be using the National Association of Realtors’ (NAR) Existing Home Sales Report to establish median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate. We also assumed a 20% down payment in all examples. LAST YEAR The median priced home in the country was selling for $187,800. The 30-year fixed mortgage rate was at 3.5%. Here is what it would cost to buy a home last year: TODAY The median priced home in the country is selling for $213,500. The 30-year fixed mortgage rate is at 4.5%. Here is what it would cost a purchaser to buy a home today: The monthly cost increased by: $190.78! NEXT YEAR Projecting into the future in real estate can be rather tricky. To establish future pricing, we depended on the over 100 housing experts surveyed for the Home Price Expectation Survey who called for an approximate appreciation rate of 5% over the next twelve months. For the interest rate, we took the average of the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae. Here is what these experts project will be the approximate cost of a home a year from now: The monthly cost will increase by about: $97.32! Bottom Line From a financial perspective, why wait if you are thinking about buying?

 

Past Bankruptcy, Short Sale or Foreclosure? Time to Buy?

New guideline released by HUD may result in you being able to buy a house again sooner ranter than later. I am including a introduction below. If you think this might help you, contact me for a good lender to consult with.

HUD recently announced that people who lost their home through a foreclosure, short sale or bankruptcy, may be eligible to finance a home again in as little as 12 months. This is a reduction from the previously required minimum of 36 months from the date of the “most recent event.”

Released August 15, HUD provided guidelines under “Back to Work – Extenuating Circumstances” meant to ease the path for home ownership for many.

Boomerang  homebuyers, as they are now known, will need to document that the reason they were unable to make their payments was due to a specific Economic Event.  This impact of this event must have resulted in a decline in income of 20% or more for at least six months.

Some boomerang homebuyers who experienced a bankruptcy and simultaneous foreclosure have discovered that the two events may not be recorded at the same time. In cases where the property did not transfer back to the lender at the time of the bankruptcy, the period for the 36 month minimum waiting period as was required by HUD, did not start until the title transferred back to the lender.  In some states, the time for transfer could be months or even years after the discharge of the bankruptcy.

Extenuating Circumstances

Extenuating circumstances for the purpose of these guidelines are as follows. The borrower(s) must have experienced a decline in income of 20% or more for a period of at least six months. This could have been due to a job loss or a loss of income tied to earnings like commissions or other customary bonus or incentive income.

Demonstrated Cure

With any situation of extenuating circumstances, a boomerang homebuyer must be able to document that the event was isolated in nature and not likely to reoccur again in the future. The borrower must also be able to document that they have regained economic stability through timely payments for a minimum of 12 months.

The timely payment history will include rental/mortgage payments, installment payments, and/or revolving payments for the 12 months preceding the mortgage application. There also should not be any new collection accounts.

In addition to re-establishing acceptable credit, the borrower(s) will be required to complete Housing Counseling.

Eligibility Requirements for Documenting Loss of Income

In the event of a loss in employment, the lender will need to document the event by a written Verification of Employment evidencing the termination date, public information documenting the closure of the business if applicable and/or documentation of unemployment income.

The lender will also need to substantiate the loss of income through the verification of tax returns, W-2s and tax transcripts.

Important Definitions

HUD announced several key terms that must be reviewed in accordance with this program.

Economic Event: an occurrence beyond the borrowers control that resulted in a Loss of Employment, Loss of Income or a combination of both which resulted in a loss of Household Income of 20% or more for a period of six or more months.

Onset of Economic Event: the month of the start of or loss of income

Recovery from an Economic Event: the re-establishment of acceptable or satisfactory credit. Satisfactory Credit equates to no derogatory credit for any mortgaged or leased property in the 12 months preceding the mortgage application. This also includes any installment or revolving debt for the same period.

Borrower: “Borrower” includes all parties including primary and/or co-borrower as listed on the loan application.

Borrower Household Income: the income of all parties on the application or Household Members as listed from the previous Economic Event and derogatory credit.

Housing Counseling: Counseling from a HUD-approved housing counseling agency related to home ownership and meets acceptable requirements.

Other Requirements and Information

HUD establishes a base line for lenders to underwrite and approve mortgage applications. Some lenders may choose to require baseline standards that exceed the minimum guidelines listed here with regards to time from short sale, foreclosure or bankruptcy.

Lenders may also choose to enact additional overlays with requirements to evaluation acceptable credit regarding payment history, collection accounts and/or judgments.

In the event a prior defaulted mortgage was endorsed by FHA, the lender will need to request a waiver which may require additional time for processing. For anyone this pertains to, they would be wise to alert the new lender to this as soon as possible in the loan process.

Boomerang homebuyers whose prior hardship was economically driven should be excited by this announcement from HUD. For many, it is now recognized the worst is behind them and the time to buy a new home is here.

 

Home Prices

What would you do to get that house?

Here are the results of a survey of what buyer would be willing to do to get a particular house they wanted. I find some of the findings rather surprising. For example, I rarely see a buyer paying seller's closing costs.

What do you think?

Where are Home Values Headed?

Where values are headed, is a question I am often asked and where there is a lot of differing opinions. I am reprinting an article from KCM blog that discusses this questions. It appears that even the "experts" are all over the board on this one!

Locally, are values are up higher than the national average, take a look at yesterday's post if you missed it!

Buying or Selling a Home? Where Are Values Headed? Posted: 12 Aug 2013 04:00 AM PDT   Today, many real estate conversations center around housing prices and where they may be headed. Some believe rapidly rising prices have created a new ‘housing bubble’. Others believe that the sudden rise in interest rates will impact purchasing power to such a degree that it will force prices downward. There is no lack of opinions and there is absolutely no consensus. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then averages the projections of all 100+ experts into a single number. The results of their latest survey The latest survey was released last week. Here are the results: Home values will appreciate by 6.7% in 2013. The average annual appreciation will be 4.7% over the next 5 years The cumulative appreciation will be 23.7% by 2017. Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 13% by 2017. Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

 

Ada County July Real Estate Market Report

July Home Sales Surge in July…Median Price too. by marclebowitz by Marc Lebowitz, RCE, CAE Executive Director, Ada County association of REALTORS Single family home sales in July 2013 were 883 in Ada County, an increase of 39% compared to July 2012. Three months in a row above 800!?!  We sure haven’t seen that in a while.  Actually you have to go back to July-August-September 2006! Year-to-Date sales in 2013 are 4,662; up 17% over YTD 2012 sales of 3,979.  Remember that old formula that for every two homes sold, that one job is created?  Based on that, we’re looking at 2,300 new jobs so far this year. Dollar volume for July was up 62% to $211 Mil. For 2013 YTD we are just over $1billion in sales. Days on Market averaged 44 in July; one day less than last month.  For the first six months we averaged 53 days-on-market. New homes sold in July totaled 165, an increase of 27% compared to new homes sold in July of 2012.  Sales of existing homes were up 42% in July.  Check out the Bloomberg report on how “Repeat Buyers Drive Home Sales”. According to the story, resales account for 54% of national home sales. In Ada County the percentage is much higher; close to 79% of sales thus far are resales. Historically, July sales decrease by 7% from June.  July 2013 sales increased by 9% compared to June 2013. This more than erases the dip in June compared to May. Of our total sales in July… 11% were distressed; down 1% from July 2013. In June 2012, 24% of our sales were distressed.  In July 2013 45% of distressed properties were REOs (43 total sales) and 55% were short sales (54 total sales). In July 2012 we were experiencing significant improvement in the health or our “solds”; 29% of total compared to 53% in 2011.  We have now seen that distressed component reduced by almost half again. Pending sales at the end of July were 1,232; down 9% from June . Of Pending sales in distress (12% of total pendings), short sales outnumbered REO’s nearly 2 to 1. At the end of July, we had 5% more sales pending than at the end of July 2012. July median home price was $207,000; up 20% from July 2012. Two months over $200,000?  First time since 2008. We continue to outpace our national recovery; according to NAR’s most recent report; national median price is $208,000. New Homes median price for July was $266,490; up 26% from July 2012. For Existing homes the increase is 21%. The number of houses available for sale at the end of July increased 5% from June 2013 to 2,369.  This is 9% more than last year at this time. Since January we have increased the number of single family homes for sale by 42%.  This is what is allowing us to grow our YTD sales increase. July’s increase in active listings was driven by the addition of a mix of new (+16%) and existing homes (+11%) to the market. Of the total active listings, 12% are distressed, down 2% from June. With an inventory increasing and the percentage of distressed inventory decreasing; median home price will continue to strengthen well into the third quarter. Of our Distressed Inventory 73% is Short Sales (207 homes) and 27% is REO (76 homes). Available inventory increased at all price points except $1Mil+; which decreased by 1 home. The price range adding the most homes to the market…$200,000 to $250,000 with an increase of 81 homes. In Ada County we now have 2.8 months of inventory on hand; an increase of 7%. The price category in shortest supply is <$120,00 where we have 1.9 months. All price points up to $500,000 have a <4 month’s supply. Based on June sold data, our most desirable price point is $120,000 to $160,000 which was 23% of total sales. The next largest price point sold is $160,000 to $200,000 at 20% of all sales. Coming in a strong third is $200,000 to $250,000 which was 15%. The category most improved is $400,000 to $500,000 which was up 55% from June to July (45 sales in July compared to29 in June). The pace of this recovery is increasing, not leveling off as many forecast it would. Much of that thinking was driven by scarce inventory.  Now that inventory is growing again, there’s nothing on the horizon that predicts any slowing at all for the balance of 2013.

 

Super Convenient Home in Southeast Boise

This 1920's vintage home has been renovated and will soon have new carpet. Featuring 4 bedrooms, 2 baths, and unique hideaway loft, this home is just minutes from downtown and the freeway, you can be any where.

Priced at only $149,900, this 1504 square foot home is a great fit. It also has had an incredible rental history for $1095 a month.

For your viewing give me a call, or shoot me an email today! 602-0055 OR roger@lowesflatfee.com.