Archive for April, 2011
Looking to expand your career beyond buying and selling property? An obvious choice: Become an instructor. And the first step is VAR’s Instructor Training Institute — a three-day course where you’ll learn to create instructional presentations (and no, we don’t mean just PowerPoint).
In fact, the ITI is a pre-requisite to joining the Virginia Realtor Institute faculty.
Think of it this way: Why not have the potential to teach as an option? Whether it’s the potential extra income, a break from your current Realtor work, or something you always wanted to do, it’s worth having this course under your belt.
May 18-20, 2011
8:30 a.m. – 5:30 p.m. each day
VAR Headquarters, Glen Allen
Tuition, including all materials and videotape of presentations: $275.
NAR reports "three key victories for commercial practitioners" in the past weeks:
- Regulators delayed a decision to expand lease accounting rules that could have limited financing options for commercial lessees and lessors.
- The SBA expanded its commercial refinance program, a win for struggling businesses.
- Congress repealed an accounting rule that would have been burdensome for small landlords and agents who work with them.
After six months of declining residential home sales, Virginia’s housing market may finally be poised for a recovery. Click here to view the First Quarter 2011 Virginia Quarterly Home Sales Report, or read on for a summary of the latest news.
As seen above, first quarter 2011 home sales (16,547) showed a marginal improvement over first quarter 2010 (16,499). The coming quarter will be a challenge to keep pace with the many closings in second quarter 2010 that were related to the federal home buyer tax credit.
This graph showing the annualized trend of residential sales with one entire year’s worth of home sales represented with each data point. The federal home buyer tax credits available in late 2009 and the first half of 2010 likely led to the overall growth in the market during that time. This annualized rate of sales is finally stable again.
The median price of homes selling in the first quarter was $210,000 which is a rather drastic decline from $249,900 in 2010 Q3, and $260,000 in 2008-Q2. Pricing trends over the past two years have been relatively tightly correlated with the federal home buyer tax credits. Hopefully this year the median price will start to level off as we work our way through REO listings and other low priced listings.
Click here (or on the image below) to download the full market report.
March pending home sales are almost always greater than February’s — that’s the normal market cycle. The questions are: 1) How much greater than Feb’s, and 2) How much greater than last March’s?
Good news today.
Pending home sales were down from last year, which was expected; in 2010 the home-buyers tax credit was in effect, so numbers were artificially up. So no news there.
They were up from February. Good news there. They were expected to be up about 1.5% but instead jumped 5.1%. That’s really good news.
And the really, really good news? As The Atlantic put it, "The South Drove the Pending Home Sales Jump in March."
According to the regional breakdown, the South played a major role in the month’s jump. In that region, pending sales were the highest they’ve been since before the home buyer credit expired in April 2010.
‘Round these parts they jumped 10.3% over February, in fact.
Looking through some old magazines. Foresight isn’t 20/20.
We do have characteristics of [housing-price] bubbles in certain areas but not, as best I can judge, nationwide. I don’t expect that we will run into anything resembling a collapsing bubble. –Fed chairman Alan Greenspan, February 2005
I think prices are going to moderate, but I don’t believe there is a bubble. I think there are some locally stressed conditions. Housing as a whole does not bubble like stocks do.
–Economist John Tuccillo, March 2005
The story is that when you look at the economy as a whole — jobs, unemployment, housing — there is not a price bubble currently across the country … For the housing market as a whole, there is no bubble. –Michael S. Miller, chairman of DePaul University’s Department of Economics, March 2005
If you don’t know about QRMs — or don’t know enough — you need to. They’re going to be a central part of the mortgage market.
QRM: Qualifying residential mortgage. In other words, a mortgage that meets certain requirements. If it meets them, the U.S. government (through Fannie Mae and Freddie Mac) will be happy to buy that mortgage from the originator. If a mortgage is not a QRM (that is, if it doesn’t meet those requirements), then the originator will be required to hold onto 5% of the loan. That way, they won’t be able to pawn off risky loans onto taxpayers.
But what are the requirements to qualify? Answer: That hasn’t been decided yet. Regulators are still working it out.
The proposal that’s getting a lot of attention — and causing a lot of concern — would require (among other, less controversial things) a borrower make a 20% down payment in order for a loan to acquire QRM status.
Stop here. Keep in mind two things: 1) The “20% down” is just a proposal; and 2) Banks would still be able to lend money to anyone they chose, no matter what the down payment; they just wouldn’t be able to sell the loan to Fannie and Freddie unless they held onto 5% of it.
The idea is that Fannie and Freddie’s role in the secondary mortgage market would decrease in favor of private industry precisely because of such strict requirements. But it would also require that lenders who take a risk to assume the risk — and not pass it on to the goverment.
But it’s one thing to protect the taxpayers against risky bets by lenders. It’s another to make the QRM requirements so strict that loans become too hard to get or too expensive to afford. And that’s a big reason NAR is concerned about exactly what federal regulators will come up with.
To get the word out about the issue, NAR created a website explaining it all. Check it out.
(PS: Fun fact: “QRM” is the international ham amateur radio code for “Are you experiencing interference?”)
Raising the federal debt ceiling has always been a distasteful but necessary thing. As Linda Goold, NAR’s director for tax policy, explained of Congress, “They hold their noses, make speeches… and pass it."
But this year things could be different. First, there are a number of first-time representatives who may not realize the implications of not passing a bill. Second, for the first time, Republican lawmakers are trying to attach other, controversial legislation to the debt-ceiling vote — such as cuts to Social Security, Medicare, and Medicaid, as well as abortion restrictions and environmental laws. As Goold explained, that turns what has always been quick (if distasteful) vote into yet another full-blown battle.
The implications for real estate are significant. Attacks on the mortgage interest deduction could intensify. The future of Fannie and Freddie would remain in doubt if the government shut down. And the effect on the economy would be disastrous, because it could mean the country would default on its debt.
What would happen? Goold herself explains in a six-minute video from NAR. Check it out so you’ll know what’s at stake.
Save the date: On Monday, May 9 (3:00 PM), NAR president Ron Phillips and president-elect Moe Veissi will host an hour-long webinar with three Bank of America Home Loans executives on the state of home finance, credit standards, and short sales.
The U.S. existing-home sales figures came out (Virginia-specific numbers will be coming shortly). They show a drop in March – sales were down 6.3% from March 2010.
Added to that was the small jump in month-to-month numbers; March 2011 sales were up 3.7% over February, compared to an 8.4% increase in 2010.
All of which goes to our point and our plea to Congress: Don’t mess with the mortgage interest deduction. The market clearly has not yet recovered, and making — or even talking about — changes to the MID will only weaken home sales, and could stall the housing recovery.
Because, despite that March drop, there is good news in the numbers: While sales lagged the 2010 figures, they were only down 6.3% — but in 2010 the homebuyer tax credit was in effect, artificially inflating sales.
Perspective: When the tax credit expired, sales dropped 25.5% (from July 2009 to July 2010). How about previous Marches? When the housing bubble had its biggest ‘pop,’ sales dropped 19.3% from March 2007 to March 2008.
So while this year’s drop of 6.3% may not seem like good news, put in the context of the big bust three years ago — and taking into account last year’s tax credit — you see it’s not so bad after all. Over time, slowly but surely, the market is recovering.
And that’s why the idea of removing or threatening the MID incentive gets us riled up. Americans are recovering from their skittishness about real estate. Lenders, hopefully, will begin to loosen their purse strings again. The ball is beginning to roll. Let’s make sure it continues.
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Some more info: Here’s a handy seven-year chart of existing-home sales from Calculated Risk. It uses NAR’s numbers, not seasonally adjusted.
Note that 2011 numbers (dark orange) lag 2010′s, but also that they’re recovering steadily since the expiration of the homebuyer tax credit. You can see when that happened — look at the big drop in 2010 sales (light orange) from June to July.
When I moved to Richmond, it took a lonnnng time to sell my house in Roanoke, so I was paying a mortgage and rent. Tough. I wish Adzookie had been around then.
File it under “What, are you kidding me?”:
The company has a sweet deal (if you qualify): Let it paint your house as a giant ad, and you get your mortgage paid for. Ugly? Maybe so, but it beats foreclosure. Besides, if you live there you don’t see the paint from the inside. And if you don’t, well….