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Is the tide turning for the housing market? Some think so.

by Michael Marsden

For the first time since last July sales of existing homes rose 2.9%. It could be the first sign that we've hit bottom and things are beginning to turn. Especially if you're a home seller. Prices of homes are simply too low for some to ignore! Sales were still down in the west by 1.1%, but the midwest was up 2.5% and the south up 2.1%. What carried the overall national number was the northeast with double-digit gains of 11.3%. This is the best time to buy if you're a buyer when things are at or near the bottom. Pierre Ellis, Senior Economist for Decision Economics said "the housing market seems to be giving the first indications that [the economy] is stabilizing at least in terms of home purchases. A Today show report stated other economist caution that sales of existing homes across the nation are still down 23.9% when compared to last year. Some say the the free-fall may be over.

Sellers who price their homes right will be the beneficiaries of the early signs of the housing recovery and buyers won't miss the boat if they step up from the side-lines and buy the home they've been considering.

MY OPINION ON THE LOCAL MARKET AND LENDING CRISIS

So what's going on in the much of the CT Real Estate Market? Well, as most are aware, the lending industry has been turned upside which has created a tumultuous stock market, put more pressure on housing prices, and in a market that has never been better for a one to buy a home, more difficult than ever to obtain a mortgage. I know the latter first hand as my first two sales that closed this year was challenged by lenders.

Both of my buyers had excellent credit, ample down payments, and the home they were buying appraised as expected. So why the trouble? There has been so much wrong doing by predatory lenders, middle men who unscrupulously packaged the loans for sale on the secondary market, they then became AAA rated by Standard and Poor (the fox guarding the hen house) and sold as investments to places like Bear Stearns and other investment banks who are now all in big trouble. Off course all the folks who made money on these loans are not only getting off scott free, the CEO's of the lenders at fault, like the moron who was running Countrywide was rewarded with millions in a parting bonus. Go figure.

Those lenders still standing and making mortgages are afraid of their own shadow and thus are getting at times 2 appraisals, and they're looking very hard at every aspect of the package. My sales did close, it was just very difficult for Fenwick Mortgage who was handling these for the buyers, and added stress to my buyer's life that they didn't need. Then again...who needs stress today?

Condo buyers should note at some lenders are add as much as a 1.5 points to the prevailing residential rate mortgages. Some lender's condo questionnaire are more comprehensive and if there is one answer they don't like the loan is denied! We found that New Alliance is the bank to do business with as of late if your buying a condo.

Rates are continuing to improve for conforming loans while jumbos are costing 1.5 points for most products. Seller's offering mortgage buy down programs can really create a win-win deal for buyers of their homes. Middlesex County's new conforming loan limit is now $470K. So if your home is listed north of $564K, consider a buy down option. Fenwick Mortgage is quite adept at creating a profile that can be used as a marketing feature for your home.

THE NUMBERS

While 2007 finished strong and ahead of 2006, 2008 is showing the signs of the credit crunch. New lending rules and a dearth of stated income and stated asset products has created an even smaller buyer pool. New listings have decreased 2% when compared to last year which is a trend that is welcomed. The number of closings are down 30%. Sales volume fell $30M or 12.5% over 2007. These figures are for residential home sales for both January and February. Deeper discounts from asking prices were noted where at least 9 towns in our service area gave more than a 10% discount. When I look at that a bit closer, many were asking too high a price for the market. What that does is increase selling time, carrying costs, and creates a stigma for the property. That is reflected in the market area absorption rate which jumped from 11 months to now 14 months. The absorption rate is the number of months it would take to sell all existing inventory at the current sales rate if no additional inventory was added. You could also look at this number as the length of time it could take to sell your home. This year so far the average days on the market are standing at about 5 to 6 months, so don't be surprised if agents start asking for 9 or 12 month listing contracts. The numbers show that the average list price per square foot rose when it should have fallen and stands at $252.33, slightly higher than las year. The average selling price per square foot is at $214.09! That's a 15% spread! This is proof that sellers are asking on average 15% more than what the market value is this year.

NEVER A BETTER TIME TO BUY

If you're a buyer, especially with nothing to sell, its the best time in recent memory to step up and make a purchase. Even though there are many "underwater" or "upside down" mortgaged properties, banks are negotiated what we call "short sale" purchases. This means that they are allowing the seller to sell below what they owe rather than to foreclose on the property. There are many bank owned properties out there as well. A lived in short sale property is a safer buy for most because it follows the normal protocols of a sale. Properties can be inspected and you know its a functioning residence. Empty bank owned properties can be plagued with many hidden defects. Those who couldn't pay mortgages could not obviously do the maintenance needed to keep the home up. So in some cases the discount that you get can be less than the repairs and improvements needed to make the home habitable.

ADVICE TO SELLERS

Seller's need to know that there is always a buyer for your home. There is a smaller pool of buyers out there but they exist. To sell your home you need to do more to prepare your home for sale, price it right, and be marketed where you're noticed over the other competing properties. People are still getting married, divorced, having babies, becoming empty nesters, coming to the area, and leaving the area. What we can do for you is offer you professional photography, data to help you price your home right, create the very best print and digital marketing websites, put you in a national listing service to make your property greatest exposure, give you the service of 3 full time agents instead of 1 (and for the price of 1), and promise you that we'll be present to show your home to prospective buyers instead of putting your home on automatic by putting a lock box on your home.

No one can guarantee when and for home much your home will sell for, but we can guarantee to give you the best possible chance to do so. If you're in a situation where your "underwater" with your mortgage, call us or visit: http://www.CTShortSaleInfo.com and we'll help you get out from under with dignity and without foreclosure. We are experts and professionals available from 8am to 8pm everyday of the week.

I recently put a condo under agreement for a wonderful young client who was getting divorced and needed to close on a condo in less than 30 days. Supply was not the problem, especially in Branford in the low $200Ks price point. In fact I found 40 possible units that fit my clients criteria. After our first time out, she found a condo she loved. It wasn't the condition of the unit but more the layout and life flow it offered her. The community was one of the oldest and save for the new granite and maple kitchen the place was rough.

All the windows needed replacing, the paint job was horribly executed and not neutral, the floors were hastily refinished and floor moldings were missing, and due to the age of design the carport was quite a distant away. My buyer was finance ready, nothing to sell, and a quick close. I should add that my client's second choice was unit 15 years younger with none of the issues the unit she like better with a garage under, another bathroom, and central air. It was move on in and live. I thought her second choice was a far better unit, but that's not for me to decide.

We put in a fair offer given the condition and the unit being so overpriced and got a ridiculous counter offer. It turned out that the seller's mother was her agent and got the "my bricks and mortar are worth more" disease and thought she could get her daughter's lofty price because she put a kitchen in. Due to the age of the unit they had to put in a new furnace and thought they should be paid back for that. Well...not great advice to daughter, because she lost the buyer by being simply foolish.

No worry for my client as there was many more to buy. We put in an offer in on another unit and quickly came to an agreement with the seller. Now for the new condo financing jig I had to navigate.

My client quickly moved through all the contingencies and when I asked for the bank's condo questionnaire to be filled out the selling agent became uncooperative. The reason was that the questionnaire was lengthy and it needed a board member with a modicum of intelligence to fill it out. The selling agent made the whole thing a 911 event and was constantly out of control calling the lender, the board members, and myself several times of day and even at night. She kept telling us she never had to do this in her long career and couldn't get it through her thick head that the lending rules for many lenders have changed. She nearly derailed the whole deal. Condo questionnaires are routine and I have never sold a condo without having to have a lender's questionnaire filled out, what rock was this agent living under the last 22 years?

Well all was on schedule to close except that the association had a personal injury case that was open and had to answer YES to their question asking if any litigation of this type was open. The lender denied the loan based on that item alone. The selling agent went back to Homeland Security Threat level Red while I attempted to calm her down saying we'd find another lender.

Long story short, we did find another lender and that lender did not have as lengthy a questionnaire and in fact did not ask this question that killed the loan before. The cautious lender of course had better rates than the replacement lender. The mortgage broker told me that lenders are not only scrutinizing condo communities more, they're actually beginning to "hit" the rate by .25 to as much as a full point over single family home rates. This will surely put more downward price pressure on the oversupply of condos inventory in that the rate increase makes for a smaller pool of qualified buyers.

So the moral of the story is that if you're selling a condo and someone brings you a buyer in this market, give them the red carpet treatment. You may not see another for months if you pass them buy and you may end up with less than what the buyer offered in the end. Its clear from where I sit that unregulated lending is a major reason for the decline in housing values and in turn the sub-prime mess. Free market regulation has failed. Short term personal gains from predatory lenders who sold to unscrupulous wall street investment brokers who sold to investors who now hold the majority of upside down mortgages that were triple A rated have caused unprecedented foreclosures, the glut of inventory in the many parts of the country. This oversupply of inventory causes values to plummet and when you add to that a small pool of qualified buyers, it doesn't look good for values to rise in many areas of the country for some time to come. New England has faired well compared to the speculative markets say in Florida, the Carolinas, Arizona, and Nevada, but its not what it used to be here in our neck of the woods.

H.R. 5140 Update: HUD Releases New Loan Limits!

by Michael Marsden

H.R. 5140 Update: HUD Releases New Loan Limits!

The Department of Housing and Urban Development (HUD) has just released the new limits for loans backed by Fannie Mae and Freddie Mac, as well as FHA loans!

You can view the specific loan limits for your county by visiting the HUD website and select Sort By: County, use the pull-down to select Connecticut, and for non-FHA loans select Limit Type: Fannie/Freddie. Lastly click send.

Many who find out what these new limits are will try to refi their jumbos but may find that the bar is set very high. Loans that were once the low hanging fruit all were accustomed to picking simply aren't there. Go find yourself a bucket truck my friends as you'll need a strong credit score, an ample LTV (Loan to Value Ratio) and be able to back up claims of income and assets. To learn more and to see if you qualify for a mortgage, call Carl Bulgini at Fenwick Mortgage at 860-388-LOAN (5626) or visit CT Loan Source.

Solar Nation reports on the Renewable Energy Bill

by Michael Marsden

Entered by Mick Marsden:

One of my passions is for the use of renewable energy in everyday life from home to transportation to manufacturing and the like. I am passionate about Green Building as well. Please visit My Easy Green Home. I can't help but plug this site.

I was delighted to find the solar-nation.org site and organization. I encourage you to visit, sign-up and be a voice for finding ways to move away from fossil fuels, the corruption that goes hand-in-hand with it, making the middle-east, Russia, and Venezuela richer, all the while watching our planet grow hotter. Greed is a necessary component of capitalism, however, I am for capitalism with a conscience. Its complicated I guess.

Here's the news from the Solar Nation as they reported on it. For more please visit Solar Nation. Its also one of my links under the Green and Energy category here on the my team website.



Thousands of solar citizens have sent messages to their U.S. representatives to urge support for the House bill that would create tax credits for renewable energy.

Here’s what happened:

Late on February 27th., the U.S. House of Representatives passed the Renewable Energy and Energy Conservation Tax of 2008 (H.R. 5351). The final vote was 236 - 182 with 11 members of the House not voting, and was largely split along party lines.

In a joint statement, Speaker Pelosi, House Majority Leader Hoyer and sponsor of the bill Rangel said: “The bill extends and expands tax incentives for renewable electricity, energy and fuel, as well as for hybrid cars, and energy efficient homes, buildings, and appliances. It does not add to our deficit, but rather repeals $18 billion in tax subsidies for Big Oil companies. By strengthening our renewable energy sector, the bill will help create the next generation of good-paying, green collar jobs and bring down energy prices in the long term.”

The Bush Administration has already issued a letter indicating that the president will veto a bill that rolls back tax breaks for the oil and gas industry, so all eyes are now on the Senate, to see whether the Finance Committee can find less objectionable sources of revenue.

…but funding will be an issue for the Senate

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