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.
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