SUMMARY OF THE CENTRAL VIRGINIA AREA HOUSING MARKET ANALYSIS
2nd Quarter 2010 courtesy of Richmond Association of Realtors
National and Local Economic Overview
The national economy slowed in the second quarter of 2010 as many indicators decelerated from their growth rates in the last half of 2009 and the first quarter of this year. One of the reasons for the slowdown in the economic recovery was a growing concern about the financial stability of Western Europe. This concern caused some negative volatility in the financial markets in the U.S., but those concerns seem to be subsiding as the EU central banks have acted and as many have realized how small the troubled countries’ economies are relative to all of Western Europe.
Another reason for the slowing is a following of historical trends—after a recession the economy bounces sharply and then grows more slowly. It is likely that economic measures over the past few months are indicating a slow patch and continued adjustment will be seen before a steadier and sustainable climb will be realized. The Richmond economy is clearly in a better position in 2010 than in 2009, and is almost back to realizing job growth again, which will be a very positive sign for the housing market.
Home sales nationally reflect what most analysts had predicted—a decline coincident with the ending of the tax credits. With a gradually improving economy and jobs picture, the housing market will recover as it begins to stand on its own feet again but it will likely take the rest of this year for the bumpiness to smooth out.
Central Virginia Area Housing Market
After several quarters of upticks in sales activity, pending sales, and active listings, coupled with price declines, the pattern has changed slightly in the second quarter of 2010. Home sales activity is up significantly in the second quarter of 2010. Prices are still down, though the declines are more modest than they have been in recent quarters. Both the number of pending sales and the number of active listings are lower in the second quarter of 2010 than they were a year earlier.
Nevertheless, when 2010 Year to Date numbers are compared with the first six months of 2009, the number of sold units in 2010 (5,254) is 18% better than 2009, while the number of pendings (6,588) is 1.7% higher.
Home Sales
Sales activity has been on the rise since the third quarter of 2009, but the number of home sales accelerated significantly in the second quarter of 2010. In the Central Virginia region, there were 3,696 homes sold in the second quarter of 2010. (See figure 3.) The number of sales is up 22 percent over the number of sales in the second quarter of 2009.
The dramatic acceleration in home sales can be attributed largely to the Federal homebuyer tax credits, which were available to home buyers who had a signed contract by the end of April and closed by the end of June. (Recent legislation extended the deadline for closing though no additional homebuyers who had a signed contract after April 30 a eligible for the credit.) Many homebuyers purchased a home in the spring, rather than waiting unit the summer, in order to take advantage of the credit. As a result, a drop off in sales will likely be seen in the third quarter of this year.
There were 3,151 sales in the Richmond Metro Area in the second quarter of 2010, which was up 23 percent over the second quarter of 2009. The biggest jump in sales was in Henrico County, where the number of sales increased by 28 percent. In the Tri Cities Area, there were 258 sales in the second quarter of 2010, up 16 percent over the second quarter of 2009.
Looking over the first half of 2010 provides a similar picture. There were a total of 5,684 sales
year-to-date (YTD) in the Central Virginia region compared with 4,887 sales in the first half of
2009, reflecting an increase of 16.3%.
Pending Sales
Pending sales numbers give an indication of future sales activity. After being up for several quarters in a row, the number of pending sales in the Central Virginia region was down in the second quarter of 2010 compared with the second quarter of 2009. This decline probably represents quicker movement from pending to closed for homebuyers looking to take advantage of the homebuyer tax credit. This drop also provides further evidence that sales in the third quarter of 2010 will likely be somewhat lower.
In the Central Virginia region, there were 3,579 pending sales in the second quarter of 2010, down eight percent from the second quarter of 2009. There were 3,037 pending sales in the Richmond Metro Area and 266 pending sales in the Tri Cities Area and both numbers were down seven percent from a year earlier.
Outlook for 2010
The end of the second quarter of 2010 marks the end of the Federal homebuyer tax credit programs and the beginning of a regional housing market that will need to stand on its own two feet. The supply of housing for sale has started to moderate, with the number of active listings in June 2010 about the same as the number of June 2009. Demand will dip in the summer, as a result of homebuyers having pushed up purchases to the spring, but will return later in the year as the region’s economy improves. A somewhat smaller inventory and an increase demand should help spur the region’s housing market in late 2010 and into early 2011.
Monday, July 26, 2010
Some good news in the local Richmond housing market
Henrico leads way as region home sales surge
Credit: TIMES-DISPATCH
Henrico County led the Richmond metro area in the boost in home sales.
By Carol Hazard TIMES-DISPATCH STAFF WRITERPublished: July 23, 2010
The housing market in the Richmond area has turned upward, with sales outpacing the nation and state, according to reports released yesterday.
The number of new and previously owned houses sold in Richmond and in Chesterfield, Hanover and Henrico counties jumped 23 percent in the second quarter from the same period a year ago -- more than three times the state rate, according to a report by the Richmond Association of Realtors.
Henrico saw the sharpest rise, up 28 percent from a year ago.
Yet the median price -- with half the houses selling for more and half for less -- fell 4 percent during the quarter in the Richmond area to $199,630.
Federal tax credits for first-time and move-up buyers spurred sales, Karen Tilson Smith, president of the Richmond Association of Realtors, said during a media call.
But foreclosures and short sales pushed prices down, she said. "We still need to see consumer confidence where homeowners are willing to move up."
Statewide, sales of new and previously owned houses rose 6.4 percent in the second quarter from a year ago, according to a report by the Virginia Association of Realtors. The median price statewide was $235,000, up 2.2 percent.
It took on average 85 days to sell a house in Virginia, down 16.5 percent from a year ago, according the Virginia housing trends report.
Realtor Vinh Nguyen from Falls Church said the inventory in Northern Virginia was moving quickly. But Percy Montague IV, a Realtor from Charlottesville, characterized the market there as fragile during the media call. Carol F. Jones from Abingdon near Bristol said only about 30 percent of people applying for home mortgage loans were approved.
Nationally, sales of previously owned houses in June rose 9.8 percent to a seasonally adjusted annual rate of 5.37 million units from the same month a year ago, but sales fell 5.1 percent from the previous month, the National Association of Realtors said yesterday.
Lawrence Yun, chief economist for the national association, said federal tax credits provided a spring surge. "Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels," he said.
The national median price was $183,700, up 1 percent from a year ago. Distressed homes accounted for 32 percent of sales in June.
Meanwhile, mortgage rates fell yesterday to a new record low for the fourth time in five weeks.
The average rate on a 30-year loan was 4.56 percent, down from 4.57 last week, according to Freddie Mac. The rate on a 15-year loan was 4.03 percent, down from 4.06 last week and the lowest in records dating to 1991.
The housing market will remain bumpy, but the trend here and elsewhere is positive overall, said John McClain, a senior fellow at George Mason University's Center for Regional Analysis.
"There is a slow and building momentum of growth," he said. "People aren't going to feel as good as we would like for the next few months, but the basic economic indicators are pretty good."
Credit: TIMES-DISPATCH
Henrico County led the Richmond metro area in the boost in home sales.
By Carol Hazard TIMES-DISPATCH STAFF WRITERPublished: July 23, 2010
The housing market in the Richmond area has turned upward, with sales outpacing the nation and state, according to reports released yesterday.
The number of new and previously owned houses sold in Richmond and in Chesterfield, Hanover and Henrico counties jumped 23 percent in the second quarter from the same period a year ago -- more than three times the state rate, according to a report by the Richmond Association of Realtors.
Henrico saw the sharpest rise, up 28 percent from a year ago.
Yet the median price -- with half the houses selling for more and half for less -- fell 4 percent during the quarter in the Richmond area to $199,630.
Federal tax credits for first-time and move-up buyers spurred sales, Karen Tilson Smith, president of the Richmond Association of Realtors, said during a media call.
But foreclosures and short sales pushed prices down, she said. "We still need to see consumer confidence where homeowners are willing to move up."
Statewide, sales of new and previously owned houses rose 6.4 percent in the second quarter from a year ago, according to a report by the Virginia Association of Realtors. The median price statewide was $235,000, up 2.2 percent.
It took on average 85 days to sell a house in Virginia, down 16.5 percent from a year ago, according the Virginia housing trends report.
Realtor Vinh Nguyen from Falls Church said the inventory in Northern Virginia was moving quickly. But Percy Montague IV, a Realtor from Charlottesville, characterized the market there as fragile during the media call. Carol F. Jones from Abingdon near Bristol said only about 30 percent of people applying for home mortgage loans were approved.
Nationally, sales of previously owned houses in June rose 9.8 percent to a seasonally adjusted annual rate of 5.37 million units from the same month a year ago, but sales fell 5.1 percent from the previous month, the National Association of Realtors said yesterday.
Lawrence Yun, chief economist for the national association, said federal tax credits provided a spring surge. "Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels," he said.
The national median price was $183,700, up 1 percent from a year ago. Distressed homes accounted for 32 percent of sales in June.
Meanwhile, mortgage rates fell yesterday to a new record low for the fourth time in five weeks.
The average rate on a 30-year loan was 4.56 percent, down from 4.57 last week, according to Freddie Mac. The rate on a 15-year loan was 4.03 percent, down from 4.06 last week and the lowest in records dating to 1991.
The housing market will remain bumpy, but the trend here and elsewhere is positive overall, said John McClain, a senior fellow at George Mason University's Center for Regional Analysis.
"There is a slow and building momentum of growth," he said. "People aren't going to feel as good as we would like for the next few months, but the basic economic indicators are pretty good."
Saturday, July 24, 2010
Trends in the real estate markets - Urban vs. Suburban
This is a re-post of an interesting article I found on the net:
Disturbia in Suburbia – A Permanent Decline in Residential Property Values?
August 22, 2008 by Mr. ToughMoneyLove
Residential Real Estate is in Decline (But is it Temporary?)
It is no secret that residential property values in numerous urban and suburban centers have substantially declined in recent months. The accepted cause of such declines has been the collapse of the credit markets, overextended and under-employed homeowners, and the resulting loan defaults and foreclosures. The optimistic real estate pundits confidently predict that once all of the bad loans are flushed through the system and written off the books of the large lenders, things will return to normal. That makes sense.
In the Suburbs It’s Worse than We Thought
But some experts think that more is happening. These real estate and economic experts are bringing some hard truth to the surface: That suburban property values will not return to their glorious levels of old and are destined for a permanent decline. Mr. ToughLoveMoney, being a suburban homeowner himself, is very interested in this prediction because he expects to downsize in the not too distant future. Home equity is part of his financial and retirement plans as it no doubt is for many others.
Traffic + Commuter Frustration + Increasing Gas Prices = Trouble in Real Estate Land
A substantial percentage and perhaps a majority of the workers in many urban areas get up early in the morning, get in their cars, and drive 30 minutes, 60 minutes, or even longer to their jobs in or near the urban core. At the end of the day, they reverse the process. They live in the suburbs which is supposed to provide a relaxing escape from the stress of working life. But the stress trend is going in the opposite direction.
According to one study, commuting stress (measured by heart rate and blood pressure) can often exceed that of fighter pilots going into battle or riot policemen. (I’m not making this up – read it yourself.)
Another study from UC Irivine had this conclusion:
Researchers found that driving alone under stressful conditions can actually cause or contribute to high blood pressure or stroke. According to this study, a long commute (more than 18 miles one way) may increase the likelihood that you will have a heart attack. It’s not only the stress involved that can increase your heart rate and blood pressure, but also the exposure of commuters to high levels of air pollution, which appears to be a risk factor for heart disease.
The worst areas for commuting (according to Forbes) are:
1. Riverside, Calif.
2. Atlanta, Ga.;
3. Los Angeles, Calif.;
4. Houston, Texas; and
5. Washington, D.C.
Urban Residential Real Estate is Actually Doing Better
And now we add increasing commuting costs to the equation, brought on by the huge increases in gas prices. The data coming in shows a negative trend in suburban real estate values from these increases.
A 2008 research study by CEOs for Cities, a nonprofit group of mayors, business executives and foundation leaders, revealed that increasing gas prices were lowering suburban property values, particularly in neighborhoods located far enough from urban centers to require a lengthy commute. Conversely, the study found that values of homes in neighborhoods near urban centers were increasing.
The study examined residential real estate values in Pittsburgh, Los Angeles, Tampa, Portland and Chicago, which have metropolitan areas that have experienced differing levels of new residential development. The study found that nationally the decline in value of residential property 12 miles from a central business core were 2 to 4 percent greater compared to values in neighborhoods two miles away. This is not what we suburban dwellers are used to hearing.
In Pittsburgh, real estate values of neighborhoods close to the city core rose 2 percent over the past year while home values in the farther out suburbs declined 5 percent.
Obviously, this disturbiing data for suburban home owners is caused by more than the weak credit markets. People are figuring out that between commuting stress and commuting costs, living in McMansions in far flung suburban areas just ain’t what it used to be. People want to be closer to where the jobs are. And now homeowners in those areas are being hit by this reality: The appreciation in the value of their homes that they anticipated when they bought may not happen. They may actually depreciate, slowly but surely.
Some Financial Planning Recommendations
So what does this mean for our overall financial and retirement planning? Here is the tough love picture:
If you live in the suburbs and are counting on cashing out your home equity to fuel your retirement plan, do not have unrealistic expectations as to appreciation. Consider the risks of possible depreciation.
If you live in or near a central business core and are considering heading to the suburbs, think again. Holding on to your property may provide a return on your investment that far exceeds what you will experience by moving outside the city. At the least, look for a suburban area that has a strong job center in close proximity.
Re-visit your investment portfolio. If you own a REIT, a REIT mutual fund, or stock in one of the major suburban home builders like Pulte, consider the affects that these property value trends will have on the performance of those holdings. It may be time to make some adjustments.
Let me apologize to my suburban readers for bringing such disturbing news but I’m all about hard truth. (But you knew that already, didn’t you?)
Now I must leave to commute to work. (Breath deeply ….relax…..)
Disturbia in Suburbia – A Permanent Decline in Residential Property Values?
August 22, 2008 by Mr. ToughMoneyLove
Residential Real Estate is in Decline (But is it Temporary?)
It is no secret that residential property values in numerous urban and suburban centers have substantially declined in recent months. The accepted cause of such declines has been the collapse of the credit markets, overextended and under-employed homeowners, and the resulting loan defaults and foreclosures. The optimistic real estate pundits confidently predict that once all of the bad loans are flushed through the system and written off the books of the large lenders, things will return to normal. That makes sense.
In the Suburbs It’s Worse than We Thought
But some experts think that more is happening. These real estate and economic experts are bringing some hard truth to the surface: That suburban property values will not return to their glorious levels of old and are destined for a permanent decline. Mr. ToughLoveMoney, being a suburban homeowner himself, is very interested in this prediction because he expects to downsize in the not too distant future. Home equity is part of his financial and retirement plans as it no doubt is for many others.
Traffic + Commuter Frustration + Increasing Gas Prices = Trouble in Real Estate Land
A substantial percentage and perhaps a majority of the workers in many urban areas get up early in the morning, get in their cars, and drive 30 minutes, 60 minutes, or even longer to their jobs in or near the urban core. At the end of the day, they reverse the process. They live in the suburbs which is supposed to provide a relaxing escape from the stress of working life. But the stress trend is going in the opposite direction.
According to one study, commuting stress (measured by heart rate and blood pressure) can often exceed that of fighter pilots going into battle or riot policemen. (I’m not making this up – read it yourself.)
Another study from UC Irivine had this conclusion:
Researchers found that driving alone under stressful conditions can actually cause or contribute to high blood pressure or stroke. According to this study, a long commute (more than 18 miles one way) may increase the likelihood that you will have a heart attack. It’s not only the stress involved that can increase your heart rate and blood pressure, but also the exposure of commuters to high levels of air pollution, which appears to be a risk factor for heart disease.
The worst areas for commuting (according to Forbes) are:
1. Riverside, Calif.
2. Atlanta, Ga.;
3. Los Angeles, Calif.;
4. Houston, Texas; and
5. Washington, D.C.
Urban Residential Real Estate is Actually Doing Better
And now we add increasing commuting costs to the equation, brought on by the huge increases in gas prices. The data coming in shows a negative trend in suburban real estate values from these increases.
A 2008 research study by CEOs for Cities, a nonprofit group of mayors, business executives and foundation leaders, revealed that increasing gas prices were lowering suburban property values, particularly in neighborhoods located far enough from urban centers to require a lengthy commute. Conversely, the study found that values of homes in neighborhoods near urban centers were increasing.
The study examined residential real estate values in Pittsburgh, Los Angeles, Tampa, Portland and Chicago, which have metropolitan areas that have experienced differing levels of new residential development. The study found that nationally the decline in value of residential property 12 miles from a central business core were 2 to 4 percent greater compared to values in neighborhoods two miles away. This is not what we suburban dwellers are used to hearing.
In Pittsburgh, real estate values of neighborhoods close to the city core rose 2 percent over the past year while home values in the farther out suburbs declined 5 percent.
Obviously, this disturbiing data for suburban home owners is caused by more than the weak credit markets. People are figuring out that between commuting stress and commuting costs, living in McMansions in far flung suburban areas just ain’t what it used to be. People want to be closer to where the jobs are. And now homeowners in those areas are being hit by this reality: The appreciation in the value of their homes that they anticipated when they bought may not happen. They may actually depreciate, slowly but surely.
Some Financial Planning Recommendations
So what does this mean for our overall financial and retirement planning? Here is the tough love picture:
If you live in the suburbs and are counting on cashing out your home equity to fuel your retirement plan, do not have unrealistic expectations as to appreciation. Consider the risks of possible depreciation.
If you live in or near a central business core and are considering heading to the suburbs, think again. Holding on to your property may provide a return on your investment that far exceeds what you will experience by moving outside the city. At the least, look for a suburban area that has a strong job center in close proximity.
Re-visit your investment portfolio. If you own a REIT, a REIT mutual fund, or stock in one of the major suburban home builders like Pulte, consider the affects that these property value trends will have on the performance of those holdings. It may be time to make some adjustments.
Let me apologize to my suburban readers for bringing such disturbing news but I’m all about hard truth. (But you knew that already, didn’t you?)
Now I must leave to commute to work. (Breath deeply ….relax…..)
Saturday, June 26, 2010
How's the Virginia Real Estate Market going so far this year
This is a reprint of information sent out to the Realtor membership of the Virginia Association of Realtors to pass on to interested parties regarding the status of the Virginia real estate market.
Six Facts about Virginia’s real estate market:
Virginia Neighborhoods are in Better Shape. Statewide year-over-year foreclosures are down 2.4% from last year, and that means more stable prices for homes on the market today.
Market Activity is Up. Year over year, more homes were sold in six of Virginia’s seven regions in the first quarter of 2010. Buyers are seeing the current market as a great opportunity, and sellers (with the right price and representation), are benefiting from low interest rates and a recovering economy.
Virginia Home Values Jumped. The median price of a Virginia home was up 8.9% over the same quarter last year. This means last year’s home buyers have $19,500 more in equity.
More Virginians are at Work. Virginia continues to outperform the nation, with the 14th lowest unemployment rate: 7.4% (the lowest in the Mid-Atlantic). People with jobs can pay the mortgage, which keeps homes out of foreclosure, which helps protect the value of all homes.
We’re Still Building. In quarter one of 2010 construction jumped 23% over the same quarter of 2009. Smart Virginians are taking advantage of competitive pricing and low interest rates and making the dream of home ownership a reality.
Sellers Face a New Reality. Home values have changed. The start of 2010 marked the first time Virginia median home prices dropped year-over-year prior to 2005, reflecting the reality we all know. Homes aren’t selling for what they once were. Also, the federal tax credit expiration means sellers can’t expect peak-market pricing or timing. Today’s prices need to be realistic and listen to their Realtor’s advise: price it right, stage it well, and most importantly, be patient.
Six Facts about Virginia’s real estate market:
Virginia Neighborhoods are in Better Shape. Statewide year-over-year foreclosures are down 2.4% from last year, and that means more stable prices for homes on the market today.
Market Activity is Up. Year over year, more homes were sold in six of Virginia’s seven regions in the first quarter of 2010. Buyers are seeing the current market as a great opportunity, and sellers (with the right price and representation), are benefiting from low interest rates and a recovering economy.
Virginia Home Values Jumped. The median price of a Virginia home was up 8.9% over the same quarter last year. This means last year’s home buyers have $19,500 more in equity.
More Virginians are at Work. Virginia continues to outperform the nation, with the 14th lowest unemployment rate: 7.4% (the lowest in the Mid-Atlantic). People with jobs can pay the mortgage, which keeps homes out of foreclosure, which helps protect the value of all homes.
We’re Still Building. In quarter one of 2010 construction jumped 23% over the same quarter of 2009. Smart Virginians are taking advantage of competitive pricing and low interest rates and making the dream of home ownership a reality.
Sellers Face a New Reality. Home values have changed. The start of 2010 marked the first time Virginia median home prices dropped year-over-year prior to 2005, reflecting the reality we all know. Homes aren’t selling for what they once were. Also, the federal tax credit expiration means sellers can’t expect peak-market pricing or timing. Today’s prices need to be realistic and listen to their Realtor’s advise: price it right, stage it well, and most importantly, be patient.
Tuesday, May 25, 2010
Nesting Blog: pie factory loft
click on this link to see blog post regarding new loft available to rent in Manchester: Nesting Blog: pie factory loft
Wednesday, May 19, 2010
FHA loans are back!
FHA loans are back in a big way
Posted by Kerry Riley on Tuesday, May 18, 2010
Since the death of 100% financing loans, FHA loans are back again and in increasing numbers as the the most attractive financing available.
FHA or Federal Home Administration loans have been around since 1937 as a way to promote home ownership through a loan guarantee program administered by the U. S. Department of Housing and Urban Development.
Basically, the federal government guarantees repayment of loans made by private lenders to qualifying individuals. The government acts as insurer on loans made under the program so the lenders have less risk and can allow just a 3 1/2 % down payment for a home mortgage.
This is the best deal around for anyone buying a home with little money to put down and struggling to get into that first home, or move up buyers strapped for cash but can afford the monthly payment and have decent credit. The FHA loan program is eligible for home purchases up to $ 535,900 in the Richmond area.
Who’s eligible?
Those persons with a credit score of at least 600 or higher with a qualifying income to debt ratio of 29/41%. What does that mean? The total loan payment for the house including taxes and insurance can’t exceed 29% of your monthly gross income, and this total housing payment plus your loan payments (credit card, student loans, auto loan..etc) can’t exceed 41% of your monthly gross income.
What about credit and other qualifying?
Generally speaking your credit score should be at least a 600 or better and your credit report should show a good pattern of borrowing and repaying loans. If you have no established credit, FHA allows for alternative means of proving credit worthiness with things like utility bills and the like.
Bankruptcy Chapter 13 is okay subject to certain conditions, and a Chapter 7 liquidation is okay, if you are two years past the discharge date. Even a foreclosure is okay if you are three years past the settlement date. Note that in these cases you need to have reestablished credit and kept up a good credit history after these events.
Even late payments and collections can be okay if a good pattern of credit is evidenced by your credit report and letters of explanations of the circumstances surrounding bad credit (medical bills, illness, loss of job..etc). The exceptions are federal debts such as taxes and student loans. These must be in good standing.
What about loan fees and closing costs?
The borrower using an FHA loan can negotiate with the home seller to get a 3% contribution towards their closing cost. These are the costs associated with getting a new loan and paying for recordation, attorney’s fees, etc. A 3% seller contribution should be sufficient to cover these costs.
A good strategy for negotiation in buying is to press the seller to pay the closing costs with a reasonable offer on their home. As long as the asking price is fair, as evidenced by a Realtors market analysis and an appraisal, it may be better to get a concession for the closing costs, then, the 3 1/2% down-payment would be all they need to close.
This strategy is only good in a market where sellers are willing to pay a concession for closing costs. Now is a good time for buyers to negotiate as inventory levels are still high and sellers are more competitive. This will not always be the case.
So, if you are renting or want to move up, set your monthly goal to save enough to cover 3 1/2% of your dream home’s value. For example: if you could save around $ 8,000, and negotiate to have the seller pay the closing costs, you could get a home in the $220,000 to $ 230,000 range, and have a payment around $ 1,200 to $ 1,400 per month.
If you are already paying rent in that range, then what are you waiting for. FHA also allows for gift funds to cover the down-payment. Be extra nice to that rich uncle at the next family picnic.
Interested? Check out the government’s webpage at HUD.org and follow the links for FHA loans for all the details, and check with your local lender and Realtor.
Posted by Kerry Riley on Tuesday, May 18, 2010
Since the death of 100% financing loans, FHA loans are back again and in increasing numbers as the the most attractive financing available.
FHA or Federal Home Administration loans have been around since 1937 as a way to promote home ownership through a loan guarantee program administered by the U. S. Department of Housing and Urban Development.
Basically, the federal government guarantees repayment of loans made by private lenders to qualifying individuals. The government acts as insurer on loans made under the program so the lenders have less risk and can allow just a 3 1/2 % down payment for a home mortgage.
This is the best deal around for anyone buying a home with little money to put down and struggling to get into that first home, or move up buyers strapped for cash but can afford the monthly payment and have decent credit. The FHA loan program is eligible for home purchases up to $ 535,900 in the Richmond area.
Who’s eligible?
Those persons with a credit score of at least 600 or higher with a qualifying income to debt ratio of 29/41%. What does that mean? The total loan payment for the house including taxes and insurance can’t exceed 29% of your monthly gross income, and this total housing payment plus your loan payments (credit card, student loans, auto loan..etc) can’t exceed 41% of your monthly gross income.
What about credit and other qualifying?
Generally speaking your credit score should be at least a 600 or better and your credit report should show a good pattern of borrowing and repaying loans. If you have no established credit, FHA allows for alternative means of proving credit worthiness with things like utility bills and the like.
Bankruptcy Chapter 13 is okay subject to certain conditions, and a Chapter 7 liquidation is okay, if you are two years past the discharge date. Even a foreclosure is okay if you are three years past the settlement date. Note that in these cases you need to have reestablished credit and kept up a good credit history after these events.
Even late payments and collections can be okay if a good pattern of credit is evidenced by your credit report and letters of explanations of the circumstances surrounding bad credit (medical bills, illness, loss of job..etc). The exceptions are federal debts such as taxes and student loans. These must be in good standing.
What about loan fees and closing costs?
The borrower using an FHA loan can negotiate with the home seller to get a 3% contribution towards their closing cost. These are the costs associated with getting a new loan and paying for recordation, attorney’s fees, etc. A 3% seller contribution should be sufficient to cover these costs.
A good strategy for negotiation in buying is to press the seller to pay the closing costs with a reasonable offer on their home. As long as the asking price is fair, as evidenced by a Realtors market analysis and an appraisal, it may be better to get a concession for the closing costs, then, the 3 1/2% down-payment would be all they need to close.
This strategy is only good in a market where sellers are willing to pay a concession for closing costs. Now is a good time for buyers to negotiate as inventory levels are still high and sellers are more competitive. This will not always be the case.
So, if you are renting or want to move up, set your monthly goal to save enough to cover 3 1/2% of your dream home’s value. For example: if you could save around $ 8,000, and negotiate to have the seller pay the closing costs, you could get a home in the $220,000 to $ 230,000 range, and have a payment around $ 1,200 to $ 1,400 per month.
If you are already paying rent in that range, then what are you waiting for. FHA also allows for gift funds to cover the down-payment. Be extra nice to that rich uncle at the next family picnic.
Interested? Check out the government’s webpage at HUD.org and follow the links for FHA loans for all the details, and check with your local lender and Realtor.
Monday, May 10, 2010
"White flight" out of cities is more like "Bright flight" back in.
I found this article while surfing the web which talks about a new trend of people coming back to the cities and a reversal of demographics between Urban and suburban areas in America.
I have definitely seen evidence of this in the City of Richmond. We have seen net gains in the population in the City reversing a twenty year trend of shrinking population size.
We Realtors keep a finger on the pulse of housing trends and real estate market changes. Certainly in the City of Richmond we have seen lots of gentrification of older, run-down neighborhoods and home buyers "discovering" city living.
Incidentally, I had a recent sale where a young couple bought in the city after looking and saying that they only wanted the West End suburbs. In the end they said that the outer suburbs did not "feel right" and moved to the city.
Here is a re-post from the Huffington post which cites the Brookings Institution report:
WASHINGTON - White flight? In a reversal, America's suburbs are now more likely to be home to minorities, the poor and a rapidly growing older population as many younger, educated whites move to cities for jobs and shorter commutes.
An analysis of 2000-2008 census data by the Brookings Institution highlights the demographic "tipping points" seen in the past decade and the looming problems in the 100 largest metropolitan areas, which represent two-thirds of the U.S. population.
The findings could offer an important road map as political parties, including the tea party movement, seek to win support in suburban battlegrounds in the fall elections and beyond. In 2008, Barack Obama carried a substantial share of the suburbs, partly with the help of minorities and immigrants.
The analysis being released Sunday provides the freshest detail on the nation's growing race and age divide, which is now feeding tensions in Arizona over its new immigration law.
Ten states, led by Arizona, surpass the nation in a "cultural generation gap" in which the senior populations are disproportionately white and children are mostly minority.
This gap is pronounced in suburbs of fast-growing areas in the Southwest, including those in Florida, California, Nevada, and Texas.
"A new metro map is emerging in the U.S. that challenges conventional thinking about where we live and work," said Alan Berube, research director with the Metropolitan Policy Program at Brookings, a nonpartisan think-tank based in Washington. "The old concepts of suburbia, Sun Belt and Rust Belt are outdated and at odds with effective governance."
Story continues below
Suburbs still tilt white. But, for the first time, a majority of all racial and ethnic groups in large metro areas live outside the city. Suburban Asians and Hispanics already had topped 50 percent in 2000, and blacks joined them by 2008, rising from 43 percent in those eight years.
Suburbs are home to the vast majority of baby boomers age 55 to 64, a fast-growing group that will strain social services after the first wave of boomers turns 65 next year.
Analysts attribute the racial shift to suburbs in many cases to substantial shares of minorities leaving cities, such as blacks from New Orleans in the aftermath of Hurricane Katrina in 2005. Whites, too, are driving the trend by returning or staying put in larger cities.
Washington, D.C., and Atlanta posted the largest increases in white share since 2000, each up 5 percentage points to 44 percent and 36 percent, respectively. Other white gains were seen in New York, San Francisco, Boston and cities in another seven of the nation's 100 largest metro areas.
"A new image of urban America is in the making," said William H. Frey, a demographer at Brookings who co-wrote the report. "What used to be white flight to the suburbs is turning into 'bright flight' to cities that have become magnets for aspiring young adults who see access to knowledge-based jobs, public transportation and a new city ambiance as an attraction."
"This will not be the future for all cities, but this pattern in front runners like Atlanta, Portland, Ore., Raleigh, N.C., and Austin, Texas, shows that the old urban stereotypes no longer apply," he said.
The suburbs now have the largest poor population in the country. According to the analysis, between 1999 and 2008, the suburban poor grew by 25 percent; five times the growth rate of the poor in cities. During that same time period, the median household income in the U.S. declined by $2,241.
Of the top 100 metro areas, 42 experienced a drop in the size of their middle class, according to the Brookings analysis. Of those 42 cities, 10 saw the middle class decline by at least 5 percentage points.
The size of the middle class (households earning between 80 and 150 percent of median income) dropped almost 30 percent between 1999 and 2008.
The findings are part of Brookings' broad demographic portrait of America since 2000, when the country experienced the attacks of Sept. 11, 2001, a historic boom in housing prices and the worst economic downturn since the Great Depression.
Calling 2010 the "decade of reckoning," the report urges policymakers to shed outdated notions of America's cities and suburbs and work quickly to address the coming problems caused by the dramatic shifts in population.
Among its recommendations: affordable housing and social services for older people in the suburbs; better transit systems to link cities and suburbs; and a new federal Office of New Americans to serve the education and citizenship needs of the rapidly growing immigrant community.
Other findings:
_About 83 percent of the U.S. population growth since 2000 was minority, part of a trend that will see minorities become the majority by midcentury. Across all large metro areas, the majority of the child population is now nonwhite.
_ City residents are more likely to live in "deep" poverty, while a higher share of suburban residents have incomes just below the poverty line.
_For the first time in several decades, the population is growing at a faster rate than households, due to delays in marriage, divorce and births as well as longer life spans. People living alone and nonmarried couple families are among the fastest-growing in suburbs.
I have definitely seen evidence of this in the City of Richmond. We have seen net gains in the population in the City reversing a twenty year trend of shrinking population size.
We Realtors keep a finger on the pulse of housing trends and real estate market changes. Certainly in the City of Richmond we have seen lots of gentrification of older, run-down neighborhoods and home buyers "discovering" city living.
Incidentally, I had a recent sale where a young couple bought in the city after looking and saying that they only wanted the West End suburbs. In the end they said that the outer suburbs did not "feel right" and moved to the city.
Here is a re-post from the Huffington post which cites the Brookings Institution report:
WASHINGTON - White flight? In a reversal, America's suburbs are now more likely to be home to minorities, the poor and a rapidly growing older population as many younger, educated whites move to cities for jobs and shorter commutes.
An analysis of 2000-2008 census data by the Brookings Institution highlights the demographic "tipping points" seen in the past decade and the looming problems in the 100 largest metropolitan areas, which represent two-thirds of the U.S. population.
The findings could offer an important road map as political parties, including the tea party movement, seek to win support in suburban battlegrounds in the fall elections and beyond. In 2008, Barack Obama carried a substantial share of the suburbs, partly with the help of minorities and immigrants.
The analysis being released Sunday provides the freshest detail on the nation's growing race and age divide, which is now feeding tensions in Arizona over its new immigration law.
Ten states, led by Arizona, surpass the nation in a "cultural generation gap" in which the senior populations are disproportionately white and children are mostly minority.
This gap is pronounced in suburbs of fast-growing areas in the Southwest, including those in Florida, California, Nevada, and Texas.
"A new metro map is emerging in the U.S. that challenges conventional thinking about where we live and work," said Alan Berube, research director with the Metropolitan Policy Program at Brookings, a nonpartisan think-tank based in Washington. "The old concepts of suburbia, Sun Belt and Rust Belt are outdated and at odds with effective governance."
Story continues below
Suburbs still tilt white. But, for the first time, a majority of all racial and ethnic groups in large metro areas live outside the city. Suburban Asians and Hispanics already had topped 50 percent in 2000, and blacks joined them by 2008, rising from 43 percent in those eight years.
Suburbs are home to the vast majority of baby boomers age 55 to 64, a fast-growing group that will strain social services after the first wave of boomers turns 65 next year.
Analysts attribute the racial shift to suburbs in many cases to substantial shares of minorities leaving cities, such as blacks from New Orleans in the aftermath of Hurricane Katrina in 2005. Whites, too, are driving the trend by returning or staying put in larger cities.
Washington, D.C., and Atlanta posted the largest increases in white share since 2000, each up 5 percentage points to 44 percent and 36 percent, respectively. Other white gains were seen in New York, San Francisco, Boston and cities in another seven of the nation's 100 largest metro areas.
"A new image of urban America is in the making," said William H. Frey, a demographer at Brookings who co-wrote the report. "What used to be white flight to the suburbs is turning into 'bright flight' to cities that have become magnets for aspiring young adults who see access to knowledge-based jobs, public transportation and a new city ambiance as an attraction."
"This will not be the future for all cities, but this pattern in front runners like Atlanta, Portland, Ore., Raleigh, N.C., and Austin, Texas, shows that the old urban stereotypes no longer apply," he said.
The suburbs now have the largest poor population in the country. According to the analysis, between 1999 and 2008, the suburban poor grew by 25 percent; five times the growth rate of the poor in cities. During that same time period, the median household income in the U.S. declined by $2,241.
Of the top 100 metro areas, 42 experienced a drop in the size of their middle class, according to the Brookings analysis. Of those 42 cities, 10 saw the middle class decline by at least 5 percentage points.
The size of the middle class (households earning between 80 and 150 percent of median income) dropped almost 30 percent between 1999 and 2008.
The findings are part of Brookings' broad demographic portrait of America since 2000, when the country experienced the attacks of Sept. 11, 2001, a historic boom in housing prices and the worst economic downturn since the Great Depression.
Calling 2010 the "decade of reckoning," the report urges policymakers to shed outdated notions of America's cities and suburbs and work quickly to address the coming problems caused by the dramatic shifts in population.
Among its recommendations: affordable housing and social services for older people in the suburbs; better transit systems to link cities and suburbs; and a new federal Office of New Americans to serve the education and citizenship needs of the rapidly growing immigrant community.
Other findings:
_About 83 percent of the U.S. population growth since 2000 was minority, part of a trend that will see minorities become the majority by midcentury. Across all large metro areas, the majority of the child population is now nonwhite.
_ City residents are more likely to live in "deep" poverty, while a higher share of suburban residents have incomes just below the poverty line.
_For the first time in several decades, the population is growing at a faster rate than households, due to delays in marriage, divorce and births as well as longer life spans. People living alone and nonmarried couple families are among the fastest-growing in suburbs.
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