Speed of Subprime Bust Surprising Lenders

The subprime mortgage meltdown has been a shock to industry insiders, but now they say it's hitting harder and faster than expected - even to those who predicted the crisis in the first place.  Many would-be homebuyers are now finding they can no longer qualify for a mortgae due to stricter standards.

Speaking recently at a Mortgage Bankers Assoication Market Conference, David Lowman, a panelist and chief executive of JPMorgan Chase & Co.'s global mortgage business said, "Anything that smacks of no-income and no-documentation is history…Anything above 85 percent to 90 percent loan-to-value, anything non-owner occupied, anything ludicrous as to value - like someone stepping up from a $1,000 a month payment to a $6,000 a month - is history."

Investors who buy and sell bonds backed by the mortgage payments of ordinary homeowners have seen bad loans rise and have told lenders and brokers they will no longer buy whole classes of securitized mortgages, which can quickly pull the plug on a prospective home buyer.

All the fudging, the lax underwriting, the push for loans that went on during the housing boom were facilitated by the rapid rise of home prices. Outsized increases in home equity in many U.S. housing markets covered a multitude of sins and encouraged lenders to extend loans to poor risk borrowers.  That day has come and gone, but according to several analysts at the MBA, despite their surprise at the speed and depth of the subprime meltdown, many expect a quicker recovery than all the gloom and doom that is being broadcast everywhere.

The group cites a strong economy, low unemployment, and favorable demographic growth for their optimistic stance, that recovery will soon come.

Relocation - Housing Markets are Causing Hesitation

Relocation experts say common reasons job candidates hesitate to uproot often has to do with people's reluctance to leave their comfort zones, their families and their friends.

A relocation survey on mobility trends found that family issues were still the dominating reason employees turned down a job that would require relocation — 65% of those surveyed believed that to be a top concern.  Sixty-one percent named cost-of-living and housing concerns as a top issue, while 22% said that selling the home, specifically, was a top concern.

For many employers, the addition of these housing-market hurdles for job seekers is coming at a bad time. 

If you do find yourself facing a relocation decision, consider these tips:

• An employee considering a move for a job should be clear on the details of the company's relocation policy before accepting the job.  Any concerns should be directed to the human-resources professional.  Don't be afraid to ask for what you want.
• Know the tax implications involved.  The majority of a relocation package can be considered taxable income; "if a company chooses to cover the tax liability for that benefit, you come out much further ahead."
• Flexible relocation policies might allow an employee to substitute one expense for another, customizing the package to suit the individual's needs.  If, for example, you don't need temporary housing, you might be able to substitute those dollars for the expense associated with storing household goods.  Candidates might negotiate a lump-sum package if they'd rather hold on to the home until the local real-estate market improves.
• If you're selling a house to relocate, realize it's unlikely you'll "make a killing" in many of the current markets.  To ensure a quicker sale, make the cosmetic changes that are necessary before listing the home and price it correctly from the start.

Are you facing a possible job relocation?  If so, we'd love to hear your comments about how the real estate market may or may not affect your decision to relocate.

Housing Weighs on Growth Forecast

Troubles in the U.S. housing market will weigh on economic growth this year even more than earlier estimated.   According to a forecast of economists released recently, real gross domestic product, the government's broadest measure of economic output, is expected to advance 2.3 percent in 2007.  That is down from an earlier estimate in February for 2.8 percent growth.

However, growth in 2008 is expected to pick up to 3.1 percent after the housing market bottoms out.

The survey of 48 economists taken between April 19 and May 8, found that housing market troubles, particularly those in the risky subprime mortgage lending market, will drag out through this year.  Almost half of those surveyed expect the bottom in housing will not be reached until the fourth quarter.

All of this bad news about housing and how bad the real estate market is right now equates to there being no better time than now to find the best value for your money when shopping for a home.  Savvy investors have always known to "buy when the market is down".. that's when the best return on the investment is usually realized.  To find out whether now is the best time for you to own a home, give us a call.  There is no obligation for us to talk with you about your options.

Housing Starts Up, Permits Down

U.S. home construction unexpectedly rose in April but permits for future building sank to the lowest pace in nearly a decade according to a government report, pointing to extended troubles in the housing market.

The Commerce Department said housing starts hit a seasonally adjusted annual pace of 1.528 million units, a 2.5 percent increase from the prior month.  However, building permits, which signal future construction plans, dropped in April by 8.9 percent to a pace of 1.429 million units.

Even though housing starts increased in April to the highest pace since December 2006, they were down 16 percent from a year ago and, in a sign the troubled housing market may not be turning the corner as quickly as hoped, building permits were off 28.1 percent from a year ago.

All of this news about how bad the housing market is can actually make it a GREAT time to think about buying a home.  Builders are making more deals than ever to move homes, and it could be the best time in many years to get a great deal on a house.

Contact us to schedule a time to help you decide if now is the right time for you to think about buying real estate.

FHA Loans - Help for First-Time Buyers

If you have little or no money for a down payment, iffy credit and too many bills, an FHA loan could be what you need to buy a house.

The Federal Housing Administration, a part of the Department of Housing and Urban Development, was created 70 years ago to help first-time buyers, especially low-to-moderate income families and minorities, get the financing they need. 

You can apply for an FHA-backed loan from most banks and mortgage companies.

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