Finally some good news on the mortgage front. Today, FHA announced an increase in lending limits for both traditional loans as well as Reverse Mortgages.
Pima County limits were raised from $271,050 back up to $316,250. Maricopa was raised to $346,250. HUD's website gives limits for all other counties in AZ. https://entp.hud.gov/idapp/html/hicost1.cfm
Use of FHA loans has increased dramatically over the past 6 months due to low downpayment requirements (3.5%) and less stringent FICO score requirements. This increase in lending limits opens up a broader range of properties available for buyers in Pima County.
Wednesday, February 25, 2009
Fannie Mae and Freddie Mac - April Fools
It's a bit hard to believe, but in the midst of one of the worst housing crises to hit our generation, Fannie Mae and Freddie Mac have decided to make it even more difficult for home buyers to get financing come April 1. And some of the major lenders are already tacking on the significantly higher fees.
Under Fannie & Freddie’s new guidelines, even buyers who thought that their FICO score would get them a favorable interest rate will be charged more unless they can come up with a downpayment of more than 30% of the purchase price. A buyer with a FICO score of 699, even with a 25% down payment, will get now get hit with a 1.5% delivery fee. A buyer with a FICO score between 700 and 720 will have to pay a 3/4% delivery fee. Even someone with a 739 FICO score, always considered “A” credit, will get hit with a 1/4% delivery fee. To put this in perspective, if you're paying a 1% delivery fee on a $500,000 mortgage, that equates to bringing $5,000 more to the table at close of escrow.
Buyers of condominiums who can't come up with a 25% down payment will have a 3/4% add-on penalty regardless of how good their credit is simply because it is not a detached single family residence.
It looks like the only way you can avoid these penalties is to get an FHA loan, which may or may not result in a higher interest rate. Federal Housing Administration mortgages allow down payments as low as 3.5%, and credit scores are not as critical as those required by Fannie Mae and Freddie Mac. More on some positive changes in FHa loans in my next post.
Under Fannie & Freddie’s new guidelines, even buyers who thought that their FICO score would get them a favorable interest rate will be charged more unless they can come up with a downpayment of more than 30% of the purchase price. A buyer with a FICO score of 699, even with a 25% down payment, will get now get hit with a 1.5% delivery fee. A buyer with a FICO score between 700 and 720 will have to pay a 3/4% delivery fee. Even someone with a 739 FICO score, always considered “A” credit, will get hit with a 1/4% delivery fee. To put this in perspective, if you're paying a 1% delivery fee on a $500,000 mortgage, that equates to bringing $5,000 more to the table at close of escrow.
Buyers of condominiums who can't come up with a 25% down payment will have a 3/4% add-on penalty regardless of how good their credit is simply because it is not a detached single family residence.
It looks like the only way you can avoid these penalties is to get an FHA loan, which may or may not result in a higher interest rate. Federal Housing Administration mortgages allow down payments as low as 3.5%, and credit scores are not as critical as those required by Fannie Mae and Freddie Mac. More on some positive changes in FHa loans in my next post.
Monday, February 23, 2009
Tucson Market -More Localized Than Ever
While we had no big surprises in the overall Tucson Housing Market based on statistics just released by the Tucson Association of Realtors, we do have some interesting results from analyzing the local market data by zip code.
We traditionally have a slowdown during the December holidays that creates a dip in the number of homes that close in January. When activity picks up again after the holidays, we typically see an increase in pending sales in January. That’s just what’s happened in January with 504 units sold and 1287 units pending, an increase of 53.76% from December, 2008 but a decrease of 12.79% from one year ago. The average sales price went up by almost $10,000 to $208,133 from last month while the median sales price dipped about $5,000 to $163,250. Foreclosures and Short Sales represent almost 25% of all January sales.
At the end of January, the number of Active Listings was down 12.79% from last January. This is good news because it will eventually help stabilize our market by reducing the months of inventory, currently at 13 months for the overall market. Months of inventory is the number used by analysts to measure the health of the market and is determined by dividing the number of January closings (588) by the total number of Active Listings in January (7,694). The increase in pending sales in January should reduce this even further by the end of February.
The real telling numbers for Tucson could be found in breaking down the overall market stats for each individual zip code. In the higher price zip codes, supply continues to grow while demand is staying the same. Inventory is almost up to a 3 year supply, sales are nominal and average sales prices continue to decline. In the zip codes with more moderately priced homes, the ratios are almost at a “neutral” level, meaning that there’s just about the right number of homes for sale to meet the demand to buy so it’s neither a buyer’s market or a seller’s market.
Within the Northwest area zip code 85741, there’s only a 4.7 month supply of homes. This zip code includes neighborhoods such as Hartman Vistas, Countryside and most of the Mountain View High School District. Homes in this zip code typically sell for $150,000 to $200,000. Within zip code 85718 in the Catalina Foothills, there is a 33 month supply of homes. One year ago, the average home sale price in this area was $745,000. Now it’s $535,000.
Most are concluding that the market for affordable homes in Tucson is on the rebound. The luxury market continues to suffer with a 63 month inventory of homes over $1,000,000. And the worst of all is the condo market. While inventories are finally coming down, condos still aren’t selling. There were 467 condos for sale, with only 12 being sold in January. The primary reason for this is financing. Local lenders say there just isn’t any since most condo developments don’t qualify for the most popular loan out there today, FHA.
We traditionally have a slowdown during the December holidays that creates a dip in the number of homes that close in January. When activity picks up again after the holidays, we typically see an increase in pending sales in January. That’s just what’s happened in January with 504 units sold and 1287 units pending, an increase of 53.76% from December, 2008 but a decrease of 12.79% from one year ago. The average sales price went up by almost $10,000 to $208,133 from last month while the median sales price dipped about $5,000 to $163,250. Foreclosures and Short Sales represent almost 25% of all January sales.
At the end of January, the number of Active Listings was down 12.79% from last January. This is good news because it will eventually help stabilize our market by reducing the months of inventory, currently at 13 months for the overall market. Months of inventory is the number used by analysts to measure the health of the market and is determined by dividing the number of January closings (588) by the total number of Active Listings in January (7,694). The increase in pending sales in January should reduce this even further by the end of February.
The real telling numbers for Tucson could be found in breaking down the overall market stats for each individual zip code. In the higher price zip codes, supply continues to grow while demand is staying the same. Inventory is almost up to a 3 year supply, sales are nominal and average sales prices continue to decline. In the zip codes with more moderately priced homes, the ratios are almost at a “neutral” level, meaning that there’s just about the right number of homes for sale to meet the demand to buy so it’s neither a buyer’s market or a seller’s market.
Within the Northwest area zip code 85741, there’s only a 4.7 month supply of homes. This zip code includes neighborhoods such as Hartman Vistas, Countryside and most of the Mountain View High School District. Homes in this zip code typically sell for $150,000 to $200,000. Within zip code 85718 in the Catalina Foothills, there is a 33 month supply of homes. One year ago, the average home sale price in this area was $745,000. Now it’s $535,000.
Most are concluding that the market for affordable homes in Tucson is on the rebound. The luxury market continues to suffer with a 63 month inventory of homes over $1,000,000. And the worst of all is the condo market. While inventories are finally coming down, condos still aren’t selling. There were 467 condos for sale, with only 12 being sold in January. The primary reason for this is financing. Local lenders say there just isn’t any since most condo developments don’t qualify for the most popular loan out there today, FHA.
Tuesday, January 20, 2009
Foreclosures Dominate Tucson Market
The leading story in the residential real state market as we head into 2009 has foreclosures in its headline. Pima County experienced a 65% increase in the number of foreclosures for 2008 over 2007. It’s important to put this in perspective since this is a relatively mild increase compared with the 171% increase in Maricopa County foreclosures in 2008. In Pima County, 1.2% of households are in foreclosure compared to 4% of Maricopa County households.
Foreclosures have impacted both the new home market as well as the resale market in Southern Arizona. The fourth quarter of 2008 will be the lowest on record since 1990 for the number of new home construction permits issued in Southern Arizona. There were 248 new construction closings in November, so far the fewest of any month in 2007 or 2008. The median sales price for new construction was down from $210,000 in October to $201,035 in November.
In the resale market, the Median Sales Price dropped to $167,900 in December, down from November’s $178,000 and the February, 2006 high of $279,900. December’s drop is 20.05% from December 2007 and 16.04% from November 2008. These significantly lower prices undoubtedly reflect the large number of foreclosed homes on the market.
Average days on market decreased for the fourth month in a row in December, down to 75 days. Active Listings decreased 4.61% from November and were down 12.41% from December of 007. Total number of Active Listings of 7,627 is down from November’s number of 7,996 and represents 10.5 months of inventory, down from 12.5 months in November. This reduction in inventory is a bit of good news for Sellers since inventory is seen as an indicator of housing demand. When inventory levels go down, many experts believe this is an early indicator that the housing market is primed to improve.
The Tucson Association of Realtors report that Home Units Sold increased 22.05% from November to December and Home Sales Volume increased 13.08%. December’s Home Sales Units of 775 topped the previous year’s figure of 753. However, pending contracts decreased 9.60% from 677 in November to only 612 in December.
So, is it a good time to buy? Interest rates continue at historically low levels, deals abound and the decrease in inventory support a possible bottom of the housing market. If you have stable employment, a good FICO score, enough cash for a substantial downpayment, and take your time finding the right home at the right price, many feel that it’s the right time to buy.
Is it a good time to sell? Homes in “model home” condition, priced right and located in desirable neighborhoods continue to sell quickly. Take the time to get your home in tip top shape, be realistic with your asking price and sell your existing home before you buy a new one so you don’t experience the pressure of two mortgages.
Foreclosures have impacted both the new home market as well as the resale market in Southern Arizona. The fourth quarter of 2008 will be the lowest on record since 1990 for the number of new home construction permits issued in Southern Arizona. There were 248 new construction closings in November, so far the fewest of any month in 2007 or 2008. The median sales price for new construction was down from $210,000 in October to $201,035 in November.
In the resale market, the Median Sales Price dropped to $167,900 in December, down from November’s $178,000 and the February, 2006 high of $279,900. December’s drop is 20.05% from December 2007 and 16.04% from November 2008. These significantly lower prices undoubtedly reflect the large number of foreclosed homes on the market.
Average days on market decreased for the fourth month in a row in December, down to 75 days. Active Listings decreased 4.61% from November and were down 12.41% from December of 007. Total number of Active Listings of 7,627 is down from November’s number of 7,996 and represents 10.5 months of inventory, down from 12.5 months in November. This reduction in inventory is a bit of good news for Sellers since inventory is seen as an indicator of housing demand. When inventory levels go down, many experts believe this is an early indicator that the housing market is primed to improve.
The Tucson Association of Realtors report that Home Units Sold increased 22.05% from November to December and Home Sales Volume increased 13.08%. December’s Home Sales Units of 775 topped the previous year’s figure of 753. However, pending contracts decreased 9.60% from 677 in November to only 612 in December.
So, is it a good time to buy? Interest rates continue at historically low levels, deals abound and the decrease in inventory support a possible bottom of the housing market. If you have stable employment, a good FICO score, enough cash for a substantial downpayment, and take your time finding the right home at the right price, many feel that it’s the right time to buy.
Is it a good time to sell? Homes in “model home” condition, priced right and located in desirable neighborhoods continue to sell quickly. Take the time to get your home in tip top shape, be realistic with your asking price and sell your existing home before you buy a new one so you don’t experience the pressure of two mortgages.
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