St George, Utah Safest City to Live In US

Being in a safe community is one of the most important factors that buyers consider when purchasing a home, condo or any other type of real estate. So where are America's most secure places to live? The Farmers Insurance Group of Companies has released its third annual ranking of top 20 'Most Secure U.S. Places to Live'.

Bert Sperling, a database expert with http://bestplaces.net, compiled the Farmers rankings based on data from 379 U.S. municipalities. Factors such as crime statistics, unemployment rates and risks of environmental hazards, terrorism threats, natural disasters and extreme weather conditions, were taken into consideration.

The communities were divided into three groups - large metropolitan areas (above 500,000 residents), mid-size cities (between 150,000 and 500,000 residents), and small towns (fewer than 150,000 residents).

According to the survey, the most secure community to live in the U.S. among large metropolitan areas are the adjacent communities of Boise City and Nampa (both in Idaho), which topped all large metro areas. Located among the foothills of the Rocky Mountains, the area has one of the lowest unemployment rates and enjoys a wonderful climate.

Among the Mid-size cities, those with a population between 150,000 and 500,000, the safest community to live is Las Cruces, New Mexico. Las Cruces was the first among mid-size cities in low unemployment rate and favorable climate categories.

St. George in Utah topped all small cities with populations of 150,000 or fewer in the survey. The city has 110,515 residents who enjoy a mild climate, clean air and low annual precipitation. It also has the lowest crime rates of all the 379 communities surveyed. St. George stands first in employment rate among the 138 small towns in the Farmers study.

For more information visit www.numberonecity.com

How Much Home Can You Afford?

When people decide to buy a home, the monthly payment is a crucial factor. That’s why one of the most important questions that potential buyers consider is: How much home can I afford?
Affordability is a combination of home price, interest rate, and down payment. And with rates at historic lows, homebuyers have the opportunity to get more for their money….but if rates go up even a little bit they could miss out.
Here’s a simple formula that drives that point home. In simple terms, every 1 percent increase in home loan rates decreases the buying power of an individual by 10 percent in home price. This means that if you qualify for a home priced at $200,000 today and home loan rates increase 1 percent, the amount you could qualify for would be reduced to approximately $180,000 to maintain the same payment.
If you could benefit from moving to a new home, don’t let this time pass you by. By making a move now before home prices or rates increase, homebuyers can get more for their money and still get the payment they’re comfortable with. And, for those people who are thinking about refinancing, today’s situation provides you with the opportunity to reduce your house payment.

A Bargaining Asset….Most people make the mistake of initiating their quest for a new residence by searching for homes they like. However, the correct place to start is to determine how much you can afford—and that means meeting with a loan officer to get pre-approved for a loan. When you work with your loan officer to get pre-approved, the lender will review your income and assets and the terms of the loan to determine the actual loan amount you will most likely qualify for. This instantly lets you know what your actual budget is.
When you begin home shopping, knowing what you can afford from the outset sets the scope of your home-buying strategy and will help you and your real estate agent better focus your efforts to find the best home for your money.
In a real estate market such as this one, your pre-approval letter becomes an incredibly powerful bargaining tool. While it is generally accepted that the current real estate market is a buyer’s market, home sellers are still being cautious about accepting offers, because so many buyers’ funding can best be described as “tenuous.” The last thing they want is an offer from a seller that doesn’t truly have the necessary funding.
With a pre-approval letter, the seller can have complete confidence that the offer you make will be one they can rely on. That kind of peace of mind can often result in a very happy transaction for buyer and seller alike.
Information courtesy of Jeanne Fenwick-Wall/WJ Bradley Mortgage Capital Corp.

Local Foreclosure News

Although the region has experienced thousands of foreclosures among all property types, it is believed that the region is poised to experience a sustained flood of distressed properties hitting the market until about 2013, according to Allan Carter of SUTC Developer Services. He further states that banks halted a number of foreclosures in recent months amid growing fears that saturating the market with additional distressed properties would result in further price drops.
Washington County’s foreclosure rate was 4.15 percent in July, surpassing the national average of 3.13 percent and the Utah rate of 2.22 percent for the month, according to the most recent data available from CoreLogic, a California-based real estate research group.
While thousands of distressed properties are set to hit the market, Carter said investors and individual buyers would likely absorb the additional inventory, as bargain pricing drives demand for bank-owned properties in Southern Utah. “There are enough people that are aware of the home sales going on,” he said. “I don’t think you’re going to see prices go down in St. George even with the influx of additional properties.”
Scott Kerbs/Spectrum

FORECLOSURE SUSPENSION

Bank of America is halting foreclosure proceedings in all 50 states after revelations that paperwork wasn't being closely examined.
The nation's largest bank will stop foreclosures beginning Saturday, October 9th, a week after announcing it would suspend action in 23 states. The bank said it won't end the moratorium until a review of its practices is complete.
Congressional leaders have called for a suspension of all foreclosures following the discovery of problems with "robo-signers," middle managers who sign affidavits allowing banks to repossess homes that are in default without fully reviewing the documents.
Several managers have admitted in depositions that they signed off on thousands of foreclosures without looking at much more than the date on the forms.
The Charlotte, N.C.-based lender is the first to stop proceedings in all 50 states. J.P. Morgan Chase and Ally Financials GMAC Home Mortgage division have put foreclosures on hold in about half of the country.
Senate Majority Leader Harry Reid (D-Nev.) and House Oversight Chairman Edolphus Towns (D-N.Y.), along with other lawmakers including Speaker Nancy Pelosi (D-Calif.), have called for a halt of activity in their states and nationwide.
Attorney General Eric Holder said earlier this week that the mortgage division of the Financial Fraud Task Force is investigating the problems.
By Vicki Needham/On The Money—The Hill

Is It Better To Buy Or Rent?

Until recently, the perennial real estate question of whether to rent or buy was dead. During the boom years, the question was largely irrelevant as people refused to pay ever increasing prices for already expensive real estate. But now that national home prices have slid substantially and potential buyers are being more cautious, the debate has been reinvigorated.
Unlike home prices, rents tend to rise or fall just a few percentage points each year. Economists generally hold that anything below 15 times the annual rent is a buyer-friendly city.
Individual circumstances matter—people in higher tax brackets, for example, may get more bang for their purchase buck because they are able to deduct more interest costs and property taxes. And, once people purchase, their home-buying costs tend to be fairly stable. Fixed-rate loans don’t go up (although taxes and maintenance costs can.) Rents usually do.
Buyers often feel more invested in their communities, more likely to put down roots, make friends and join local organizations. Home ownership often brings them pride and joy. CNN

NATIONAL HOUSING SURVEYS

Fannie Mae released its latest National Housing Survey and found that consumers have a mixed outlook on housing. The majority of consumers surveyed (67 percent) continue to believe that housing is a safe investment.
Nearly half (47 percent) think that home prices will hold steady over the next year while nearly one-third (31 percent) think prices will rise.
70 percent think this is a good time to buy a house, compared with 64 percent in a similar survey that Fannie Mae conducted last January.
These findings indicate the return of a more balanced and realistic approach to housing. This approach may weigh on the housing recovery in the near-term, but over time, it should help to build a stronger and healthier market focused on sustainable homeownership. fanniemae.com

General Elections on November 2nd

General Elections are on November 2nd. Voting will be for Governor, Lieutenant Governor, U.S Senate, House of Representatives, Judicial Retention, and State School Board.

Things Happening in Our Area

1.Huntsman World Senior Games Starts October 4th runs till October 16th
2.What Women Want Expo October 22nd and 23rd
3.Sons of Utah Pioneers October 21st-23rd .
4.General Elections November 2nd.
5.Thriller will play at Tuacahn on October 22nd through October 30th

The average interest rate for a 30-year loan was 5 percent over the last 12 months. The average over the last 10 years was 6.13 percent. The highest rate since January 1964 was 18.45 percent in October 1981. The lowest rate since January 1964 was 4.71 last December. That is some history lesson. No matter how you slice it, today’s home prices and mortgage rates represent an HISTORIC OPPORTUNITY that cannot be ignored. Whether you are seeking to purchase a home or refinance, now is your chance. Information courtesy of Jeanne Wall/WJ Bradley Mortgage Capital Corp.

REHAB A HOME WITH HUD’S 203(k) PROGRAM

Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage.
The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established.
The Section 203(k) program is HUD’s primary program for the rehabilitation and repair of single family properties (to be eligible, the property must be a one to four family dwelling that has been completed for at least one year). Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.
Many lenders have successfully used the Section 203(k) program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine Section 203 (k) with other financial resources, such as HUD’s HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers.
The Section 203(k) program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities. HUD is committed to increasing homeownership opportunities for families in these communities. www.hud.gov

Homeowners Current on payments but Negative Equity get help

The Obama Administration on Tuesday unveiled a new plan to help homeowners who are underwater on their mortgages, according to a story in the Wall Street Journal.
The program targets between 500,000 to 1.5 million negative equity mortgages, where the homeowner owes more than his or her home is worth.
The first initiative of the program is for homeowners who are current on their mortgages but at risk of default because of sinking home values, the Journal said.
Under the program, banks and lenders will write off the home's value to less than the value of the property and then hand off the reduced loan to the government. The program essentially refinances underwater homeowners into loans backed by the Federal Housing Administration.
About 11 million mortgages or 23 percent of U.S. households with a mortgage are in a negative equity position, according to CoreLogic.

Little Valley Area Building Plans for High Density Housing

Bonneville Builders of Salt Lake City has plans to build high-density housing in the Little Valley area. It has been rejected twice by the city. However, Bonneville Builders wants to be heard before the City Council. No date has been set for the meeting, but after speaking with Bonneville Builders they plan on continuing to try and get approval. The area they want to build the high density housing is next to Little Valley Elementary and Sunrise Ridge Intermediate. You might be wondering, "What is high density housing?"
High Density Housing definitions from the web
* An apartment, or flat, is a self-contained housing unit that occupies only part of a building. Such a building may be called an apartment building, especially if it consists of many apartments for rent. Apartments may be owned by an owner/occupier or rented by tenants.
* Over 60 dwellings per hectare and generally five stories or more high, for example apartment buildings.
What is the reasoning for the high density housing? To build more affordable housing.

More questions to consider?
How will this affect our market values?
What type of housing will this be? Apartments? Townhomes? SFD?
What will the price range be?

I am very curious about how this will play out in the future and I will keep you up to date on this process. If you should have any further questions please call me at (435) 313-6708.

The two pictures are of homes in the Salt Lake City area, in the subdivision Daybreak. Bonneville Builders said, the homes would be similar to the homes in this subdivision
If you are interested in Real Estate in St.George, Utah please call me at 435-313-6708 or visit my website at: http://www.paulsellsdixie.com/

FANNIE & FREDDIE

The government’s twin housing behemoths—Fannie Mae and Freddie Mac—cannot simply be cut lose from government support. Like animals kept too long in captivity, Fannie and Freddie will not be able to survive in the wild. This is something that supporters of Fannie and Freddie have right - government support is absolutely necessary for their existence. But that doesn’t mean we should continue the government life-support.
In fact, there is good reason to end government support for the agencies and let them wither away. The truth is that there is nothing that Fannie and Freddie do that private companies couldn’t do better—except provide an illusory subsidy for homebuyers. And there are far better ways to subsidize housing than propping up Fannie and Freddie.
Fannie and Freddie are supposed to make housing more affordable by buying up mortgages and providing guarantees for mortgages that conform to the guidelines developed by bureaucrats. Mortgage lenders are willing to make loans at cheaper rates when part of the risk of default is absorbed by someone else.
That’s it. That’s really the only way that Fannie and Freddie save homebuyers money—by taking on the risks of making mortgages that would otherwise sit with the lenders. The lenders then pass on the savings to homebuyers by providing mortgages at slightly lower rates.
But if Fannie and Freddie are just big insurance companies for mortgage lenders, there’s no reason that this couldn’t be done by private markets. Insurance is a huge business in the United States. And mortgage insurance is, in fact, available from private companies.
The main advantage Fannie and Freddie have is access to cheap capital. Even before they were put into government conservatorship, Fannie and Freddie could borrow money from debt investors at rates far cheaper than private competitors because they enjoyed the implicit guarantee of the United States government. Debt investors assumed—correctly, it turns out—that if these companies got in trouble, the U.S. taxpayer would assure that they could pay off their debts.
Now that they have access to government bailout capital, the advantage is even larger. Last quarter, Fannie owed $1.9 billion in dividends to the Treasury. It couldn’t make the payments, so it requested $1.5 billion from the Treasury to pay back the Treasury. For real. That’s what happened.
Access to cheap, government guaranteed debt and equity means that Fannie and Freddie can provide guarantees to mortgage lenders far cheaper than any private company can. And that’s the source of the subsidy for homebuyers: Fannie and Freddie undercut competition by providing mortgage insurance far cheaper than the market allows for private companies.
Absent the government guarantee and attendant cheap funding, there would be no reason for Fannie and Freddie to exist. They’d no longer be able to undercut private competition. In all likelihood, the leaner, more efficient private competitors would clean their clocks.
Fannie and Freddie would die—or be transformed into ordinary companies with no special role to play in the housing market.
Unfortunately, we do not know how to cut Fannie and Freddie off from the government guarantee. Prior to the crisis, government officials often insisted there was no guarantee of Fannie and Freddie—but no one believed them and the officials turned out to be either mistaken or lying.
Now—after the bailout—the government lacks all credibility on Fannie and Freddie. As long as they exist, Fannie and Freddie will enjoy a competition killing advantage that will undermine any attempt to create a healthy mortgage market not dependent on government subsidies. By John Carney, Senior Editor, CNBC.com
To read more of this article go to .www.cnbc.com

FORECLOSURES EXPECTED TO RISE

St. George—While Washington County real estate experts are citing a temporary decline in foreclosure activity this summer, banks are expected to claim distressed properties with renewed focus in the fall, with 3,000 additional residential foreclosures anticipated during the next 12 months.
Amid widespread economic and financial instability, some lenders have reduced their foreclosure activity in Washington County, said Allan Carter, director of Developer Services for Southern Utah Title.
“The foreclosing lenders are baffled on how to solve the problem,” Carter said, with many residents unable to make their mortgage payments. “They’ve taken a little bit of a reprieve in Washington County.”
County property records support Carter’s theory, with approximately 192 notices of default, the first step in the foreclosure process, recorded in Washington County from July 1 to July 29 among all property types, representing a significant drop from the 293 default notices documented during the same period last year.
From July 1 to July 29, Washington County recorded 118 foreclosures among all property types, essentially remaining flat with last year’s figure of 121.
Although the decline in default notices offers a welcome breather from the inflated level of activity experienced in recent months, Carter said the decline is little more than a temporary respite, expecting lenders to return in full force this fall in an effort to claim their assets.
“We expect that the aggressive nature of foreclosures will pick up steam as we get into the fall and winter,” he said. “Lenders are back off vacation, the unemployment picture isn’t changing significantly and they have to capitalize their banks by getting rid of this inventory.”
Carter said Washington County’s foreclosure rate is likely to reach its peak in 2011, with another 3,000 residential foreclosures anticipated in the next 12 months.
“It will be one of the largest years for foreclosures,” he said of 2011.
Kathy Nielsen, President of the Washington County Board of Realtors, said she also anticipates continued foreclosure activity in the coming months.
Jeremy Larkin, a local Realtor with Keller Williams Realty, said the recent decline in foreclosure activity is an encouraging sign for the market, although he does not expect the region’s continued difficulties with bank-owned properties to subside anytime soon. “I hope that this thing gets under control in the next 12 to 18 months,” he said.
Although activity has temporarily subsided this summer, Washington County is on pace to surpass 2009 foreclosure figures, according to county records.
The county recorded 882 foreclosures among all property types this year, from January 1 to July 29, a noticeable increase from the 716 recorded during the same time frame in 2009.
In only 7 months, Washington County has surpassed the total number of foreclosures recorded in 2008.
This year’s foreclosure total is destined to grow this fall when lenders resume aggressive foreclosure activity with a renewed sense of focus, Carter said.
“We really expect to see foreclosures run unimpeded,” he said.
By Scott Kerbs/The Spectrum

MORE CHANGE IS COMING

They say the only constant is change... And more change is coming, as the sweeping Financial Regulation Bill was passed by the Senate last week and will be signed by President Obama in short order to become law. So what does this change mean... and how will it impact home loan rates? Here's what you need to know.
The Bill calls for a new consumer protection agency and prohibits Banks from taking risky bets. While those things are important, it's also important to realize that this legislation... over 2,000 pages worth... amazingly does nothing to address the core reasons for the financial collapse. Fannie Mae and Freddie Mac are completely left out of this legislation. The credit rating agencies, who may have played the largest role in the financial collapse, also go unmentioned.
In fact, when former Fed Chairman Alan Greenspan was asked about the Financial Regulation Bill, he noted that this was the first time the Fed was not asked to write a regulation of this kind. He also said that there are "unintended consequences" in every page of this bill.
What all this will mean for our economy and home loan rates remains to be seen... which is why now is the perfect time to act, while home loan rates continue to be some of the best they have ever been!
Banks seem to be creating two classes of troubled homeowners. Those who are falling behind in their payments are being allowed to stay in their homes longer because lenders are reluctant to ad to the glut of foreclosed homes on the market. At the same time, lenders are stepping up repossessions to clear out the backlog of bad loans.
On average, it takes about 15 months for a home loan to go from being 30 days late to the property being or foreclosed and sold, according to Lender Possessing Services Inc., which tracks mortgages.
The number of homeowners that received a legal warning that they could lose their homes in the first half of the year climbed 8 percent from the same period last year. But the rate dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.
About 1.7 million homeowners received a foreclosure-related warning, between January and June. That translates to one in 78 U.S. homes.
Nevada posted the highest foreclosure rate in the first half of the year. Arizona, Florida, California and Utah were among the other foreclosure hotbeds.

REAL ESTATE TRENDS & FORECASTS

At a recent luncheon of the St. George Chapter of the Women’s Council of Realtors, Vardell Curtis, Chief Executive Officer of the Washington County Board of Realtors, talked about real estate trends and forecasts. The following are some of the highlights of Vardell’s presentation:
Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions. The forward-looking indicator rose 6 percent to a level of 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than the same month last year. The tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to the surging sales. The housing market has to get back on it’s own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.
“The economy grew at a slower rate than originally reported in the first three months of the year, according to the Bureau of Economic Analysis, which suggest inflation will remain tame in the near term,” stated Frank Nothaft, chief economist for Freddie Mac. He continued by saying, “As a result, mortgage rates held at historic levels this week. In fact, rates on 15-year fixed-rate mortgages set another record low for the third week in a row.”
It remains a very attractive time to refinance a mortgage or buy a new home or foreclosed property, while recognizing that one in four U.S. homeowners is “underwater” on their mortgages...owing more than the home is worth. Mortgage rates could move higher later this year if global investor anxiety declines.
The Utah market is rebounding slowly. While some sectors of Utah’s economy are slowing heading toward the rebound track, real estate is still not there yet. And some local analysts predict it may be a while before it finally finds its way back onto the road to stability. The commercial real estate market may not even begin to recover until next year.
On the residential side, declining home values have pushed housing prices back to much more affordable levels. The lower end of the market (under $300,000) is recovering. We’ve probably seen a bottom or very close to a bottom in that part of the market. The middle part of the market is “a little bumpy” with the higher end “going to remain in a mess for some time to come.” There is just too much high-end real estate in the state….and we just don’t have people with the incomes and fundamentals that can support those higher payments.
Prices on the more expensive unsold inventory are falling more dramatically – on a percentage basis—than any other segment of the housing market. Eventually, the market could see more foreclosures or sort sales as those properties are no longer financially viable for their owners.
According to newly released data from CoreLogic on foreclosures for the St. George area, the rate of foreclosures among outstanding mortgage loans is 4.24 percent for the month of April, an increase of 1.04 percentage points compared to April 2009 when the rate was 3.2 percent. Foreclosure activity in St George is higher than the national foreclosure rate which was 3.20 percent for April 2010, representing a 1.04 percentage point difference.
Perhaps the best news for Washington County is progress in the residential housing market. Sales are booming as the market continues to adjust to more realistic prices. In addition, preliminary data for the first two months of 2010 shows approved home permits almost doubled the number permitted for the same months in 2009. Information courtesy of Vardell Curtis, CEO, WCBR

TAX CREDIT GONE, BUT RECOVERY WILL STAY

Now that the federal Home Buyer’s Tax Credit has expired, many thought home-buying activities would dry up. Unlike last winter, the credit has neither been expanded nor extended, and industry watchers have worried that home prices might see a “double dip” without the stimulative effect of the money.
There’s no denying the program has been successful. But the free lunch has ended and reality is staring us right in the face. Where will the housing market head from here?
I predict a continued slow recovery in prices and activity, and I have three reasons for believing it:
● The overall economy is improving. Slowly but surely, people are feeling a little better about their own financial situation, and that translates directly into spending. The more spending that occurs, the better the economy. The better the economy, the more jobs that are created. The more jobs that are out there, the more houses that sell.
That’s an oversimplification of an extremely complex situation, and we still have a long way to go, but things are definitely better than they were a year ago, and most believe better times are ahead.
Interest rates are still extremely attractive. And I’m not talking about some weird adjustable rate instrument that is tied to an offering of inter-bank rates in London. I’m referring to the all-American 30-year, fixed-rate loan that our parents had on the house in which we grew up.
Most Americans are firmly convinced that a single-family house in a good neighborhood in a growing community is a solid investment, and they are right. And if you can lock in a good price with a low fixed interest rate, you add strength to your financial position by being able to predict your housing expense into the future.
● And what about the loss of the tax credit? I don’t think it will matter.
The housing market is still soft enough to absorb the financial hit. By that I mean a savvy shopper who isn’t afraid to negotiate can expect to buy a house in this market at enough of a discount to offset the lost tax credit.
Sellers are painfully aware that price sells houses, and I expect builders to offer their own version of a “home buyer’s discount” as a way to incentivize the home-buying public. Owners of resale homes will follow suit.
Is that a cheap and crass marketing gimmick designed to fool the public into thinking they are getting a benefit that they truly are not receiving? Yes.
Will it work? Yes.
John Adams is an author, broadcaster and investor. He answers real estate questions on radio station WGKA (920 AM) Iin Atlanta. For more real estate information or to make a comment, visit www.money99.com.

Buy and Bail

FHA and Fannie Mae “Buy and Bail” rules have been in effect for several months and this is old news to many. This information comes as a reminder.
Because values have declined in most areas making it difficult to refinance, many home owners have decided to purchase another home while their credit is still good claiming they will rent their existing home. Once their new home closes, they then allow their existing home to go into foreclosure and a new term has emerged, “Buy and Bail”.
How Does Buy and Bail Work? Buy and Bail involves lying. It typically involves drawing up a phony rental agreement and presenting this false documentation to the lender. That is mortgage fraud. The FBI defines mortgage fraud as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.”
Here are the steps that a home owner would follow:
First, the home owner decides that (for whatever reason), his home no longer suits his purposes.
Since the home owner cannot obtain a new mortgage loan after a short sale or foreclosure, he sets out to find a home to buy before going into default on the existing mortgage.
A purchase offer is written on the new home and the home owner/buyer submits a loan application.
The lender requests a rental agreement to show that a tenant will move into the home owners old home and make rental payments.
Home owner gets a friend to sign a rental agreement, even though the friend has not intention of moving into or renting the home owner’s old home.
The lender approves home owners new mortgage and funds the loan
The home owner never makes a payment on his old home. A Notice of Default is filed and the home goes into foreclosure, subsequently going back to the bank.
The home owner’s credit is ruined, but he doesn’t care because he has already bought a new home and has no intentions of moving for a long time.
As a result of buy and bail practices, Fannie Mae guidelines now require buyers to qualify for mortgages on both homes at loan inception, unless the existing home has plenty of equity. That’s because a home owner with plenty of equity would be foolish to walk away from it.
Fannie Mae’s Guidelines for converting a principal residence to a second home or investment property is as follows:
If a customer is purchasing a new home prior to selling their existing home they must qualify with both payments (PITI, interest, taxes and insurance). If the equity is less than 30% (market value less than amount owed) 6 months reserves are required. If equity position is 30% or greater 2 months reserves are required. Note: Only 75% of the rental income can be used, even then, for qualifying purposes. An executed 12 months lease and proof that a security deposit in the customers’ account is required.
If a customer is renting out their existing residence the borrower must also qualify with both payments. Rental income can only be used if the equity position is equal to or greater than 30%.
If a client’s pending sale for the existing home blows up before the closing of their new purchase, or will not occur prior to the new home closing the rules are a little different but similar to the first explanation. The payments for the existing home are not required for qualifying purposes if reserves can be documented along with a copy of an executed sales contract and confirmation of all financing contingencies are provided.
FHA’s Guidelines now require buyers who are legitimately purchasing a home and converting their existing home to a rental either qualify for both loans or have 25% equity in their present home. Exception—Relocation:s: The home-buyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.
About.com and Activerain.com

Shadow Market

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.
As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.
The rate at which J.P. Morgan Chase seized properties, for example, peaked in the middle of 2008 and fell steadily last year, according to a February investor report. But the bank expects repossessions to increase this year, nearly doubling to 45,000 by the fourth quarter.
"Some of the positive housing data may not be signaling a true turning point, as many servicers are holding back on foreclosures and the related houses are not yet being offered for sale," said Diane Westerback, a managing director at Standard & Poor's. Westerback said it could take 33 months to clear the backlog.
Data released Thursday by RealtyTrac illustrate the dynamic. While banks repossessed fewer homes in February than a month earlier, borrowers continued to fall behind on their payments, adding to the inventory of properties headed toward foreclosure that have yet to be put on the market, said Daren Blomquist, RealtyTrac's spokesman.
"Just looking at the numbers, we would expect there to be a bigger percentage of properties" repossessed by banks by now, he said.
This "shadow market" reflects the increasing lag between defaults and foreclosures. Many lenders are struggling to keep up with the overwhelming number of borrowers who can't make their payments, and they're reluctant to rush repossessed homes onto the market when prices are depressed. The borrowers in trouble now are, for the most part, people who have better credit and safer loans and have become delinquent because they've lost their jobs or are dealing with other economic setbacks, economists said.

More than 75 percent of the borrowers who are now seriously delinquent -- meaning they have missed at least three monthly payments -- have traditional prime loans, according to First American CoreLogic. Most of these borrowers have not made a mortgage payment in six months.
These borrowers are among the most difficult to help. Homeowners with economic troubles such as extended unemployment often cannot make even reduced mortgage payments. And the longer borrowers stay delinquent, the more difficult it is to fashion a mortgage relief plan for them. Some lenders are giving distressed borrowers more time to see whether they can modify the terms of their loans.
Over the past year, the number of foreclosed homes going up for sale has declined. Distressed properties made up just 38 percent of purchases in January, compared with the 49 percent peak in March 2009, according to the National Association of Realtors. That helped the inventory of homes on the market fall to a 7.8-month supply, close to the figure during normal times and down from more than 11 months in July 2008. But as prices continue to stabilize, lenders are likely to take advantage of the situation by putting more of these distressed properties on the market, economists said.
"Banks have remained in foreclosure paralysis, allowing that backlog to get larger and larger. You can't do that indefinitely," said Sandeep Bordia, head of U.S. residential credit strategy at Barclays Capital.
That impact could be muted if enough buyers emerge to snap up properties or efforts to enroll borrowers in mortgage relief programs improve. Some lenders are looking for ways to ease delinquent borrowers out of their homes without a foreclosure. For example, lenders are allowing more short sales, in which the home is sold for less than the outstanding loan balance. Citigroup is testing a program that allows delinquent borrowers to stay in their home for six months free if they leave the property in good condition, making it easier to sell afterward

FORECLOSURE ESTIMATE FALLS

Banks have fewer foreclosed homes to sell than previously believed, but those holdings are likely to grow gradually over the next couple of years, a new study by Barclays Capital says.
The investment bank's latest calculations support the view that the U.S. housing market is stabilizing but that a major recovery isn't imminent and there are still risks of falling prices.
Barclays estimates banks and mortgage investors including Fannie Mae and Freddie Mac owned 480,000 homes at the end of February. Barclays has acquired more data on mortgages and refined its methods for analyzing foreclosure trends. Under the bank's previous methods, the estimate for February would have been more than 600,000.
Barclays expects the inventory generally to rise over the next 20 months, peaking at 536,000 in January 2012, and then decline gradually.
Estimating the inventory of foreclosed homes remains tricky because thousands of banks and others that own the properties disclose those holdings in varying ways, if at all. RealtyTrac Inc., another data provider and one of the few other firms that regularly make such calculations, estimates banks and mortgage investors own 758,000 foreclosed homes.
To get a sense of how many more households will lose their homes to foreclosures or related actions, Barclays tallies what it calls a shadow inventory, consisting of homeowners 90 days or more overdue on mortgage payments or already in the foreclosure process. At the end of February, 4.6 million households were in that category.

Barclays expects 1.6 million "distressed sales" of homes—mainly foreclosures or sales of homes for less than the mortgage balance due—both this year and in 2011, then a slight decline to 1.5 million in 2012. Last year, Barclays estimates, such sales totaled 1.5 million. About 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market.
Barclays expects U.S. home prices on average will fall another 3% to 5% over the next couple of years, adding to a decline of about 30% already recorded since 2006. That forecast assumes a gradual decrease in the unemployment rate, to 8% within the next two years, from 9.7% in March. The home-price picture would worsen if job growth sputters or banks "push homes through the foreclosure pipeline faster than expected," Mr. Tayon says.
Efforts to avert foreclosures by offering many borrowers lower payments have slowed the flow of homes into bank ownership. In some parts of the country—such as the Las Vegas area and Orange County, Calif.—that has left bargain-hunters frustrated by what they see as a shortage of bank-owned properties in attractive neighborhoods.
In the Las Vegas area, foreclosed homes accounted for 56% of sales in March, down from 73% a year earlier, according to MDA DataQuick, a research firm.
By James R. Hagerty, April 28, 2010

FIRST QUARTER HOME SALES

First Quarter Homes Sales indicate strong signs of recovery after posting 41 percent surge in year-over-year sales. Bolstered by an influx of affordable bank-owned properties coupled with attractively low interest rates, Washington County recorded 993 sales in the first quarter, representing an increase of 287 sales from last year’s quarterly figure. With an ample selection of low-priced distressed properties enticing buyers and driving sales upward, affordable pricing is a primary factor in the market’s renewed activity. The recent sales boost likely serves as the first indication of the market’s inevitable resurgence from the depths of the sub-prime lending crisis. From January to March, the average price of a dwelling in Washington County increased by about $11,000 to $173,673. This slight increase is an encouraging indication of recovery. SUTC Developer Services

Two-Thirds of Americans Say Now Is a Good Time to Buy a Home. A nationwide survey recently conducted by Fannie Mae has determined that 65% of today's home owners and renters still believe in the solid value of homeownership and prefer to own their own home if possible. The survey did, however, determine that potential home buyers have become more cautious since the recession in real estate markets and precipitous rise in foreclosures nationwide.
As Fannie Mae Chief Economist Doug Duncan explains it, the downturn in the housing market has led to a "rebalancing" of consumer attitudes toward homeownership, with most Americans adopting a more realistic and long-term view than the investor mentality in which property "flipping" for near-term gain was a major consideration. The survey also determined that 60% believe that purchasing a home today is harder than it was for their parents, and nearly 70% believe it will be even tougher for their children to achieve homeownership. At the same time, two-thirds of respondents said that they believe now is a good time to buy a house — nearly as many as said so back in 2003, prior to the housing boom. And 70% indicated that they think buying a home is one of the safest investments they could make, although this was down from 83% who said as much in 2003. Read more about Fannie Mae's survey on CNN.com. NAHB

Home sales surge

ST. GEORGE - Washington County's residential real
estate sector is showing strong signs of recovery
after posting a 41 percent surge in year-over-year
sales during the first quarter.

Bolstered by an influx of affordable bank owned-
properties coupled with attractively low interest
rates, Washington County recorded 993 sales in the
first quarter, representing an increase of 287 sales
from last year's quarterly figure, according to data
collected by Southern Utah Title Company.

With an ample selection of low-priced distressed
properties enticing buyers and driving sales
upward, Allan Carter, the manager of developer
services for Southern Utah Title Company, said
affordable pricing is a primary factor in the market's
renewed activity.

"It's being driven entirely by distressed properties,"
Carter said. "Everybody likes a good deal."

The recent sales boost likely serves as the first
indication of the market's inevitable resurgence from
the depths of the sub-prime lending crisis, said St.
George real estate agent Jeremy Larkin, of Keller
Williams Realty.

The surge in consumer activity has proven lucrative
for Larkin's business, he said, as the Realtor's sales
have doubled since the first quarter of 2009.

Larkin described the region's housing situation as
"the tale of two markets," with prospective buyers
flocking to distressed properties and other residential units boasting impressive savings
opportunities, but little activity occurring in the o
verpriced and high-end segments of the market.

"It's as though they don't exist," Larkin said of the
overpriced homes in competition with an influx of
foreclosures and other distressed properties.

Carter said it is not uncommon to see several offers
on the same foreclosure property in Washington
County, and with increased demand for housing,
prices are on the rise.

From January to March, the average price of a
dwelling in Washington County increased by about
$11,000 to $173,673. The slight increase is an
encouraging indication of recovery, Carter said.


"Every area that we measure is getting better," he
said. "We're a long way away from finding our way
back, but we are least at a point where we can
measure the improvement."

Renewed optimism in the housing sector is not
exclusive to Washington County, with Iron County
posting a similar 45 percent year-over-year sales
increase in the first quarter, said Chris Dahlin.
president of the Iron County Board of Realtors

Iron County recorded 126 sales in the first quarter,
Dahlin said, with low prices and the federal first-
time homebuyer tax credit likely motivating buyers.
Homes priced less than $200,000 account for a
majority of the region's sales, he added.

"Home prices are continuing to drop," he said.

Foreclosures and short sales remain prevalent in
Iron County, with distressed properties representing
approximately 85 percent of the county's sales in the fourth quarter of 2009.

The county's market is rife with distressed
properties, Dahlin said, and he expects the trend to
continue at its current inflated rate for another three
to six months.

"We still have a crop of foreclosures still coming on
the market," he said. "Which means prices won't be
going up."

Dahlin said he is cautious when predicting price
changes, but he acknowledged the possibility of
continued price drops in the coming months.

The future is largely uncertain for Iron County's real
estate sector, Dahlin said, as a number of factors
could suppress the positive sales trend, including
the looming conclusion of the federal first-time
homebuyer tax credit this month and the possibility
of interest rate hikes.

"There may still be pressure for prices to come
down in the near future, especially in light of losing
the tax credit availability," he said.

BY SCOTT KERBS

Home Affordable Foreclosure Alternatives

A new government program aimed to speed up these notoriously sluggish transactions goes into effect on April 5, increasing your chances of negotiating a distressed-property bargain.
Q: I am looking to buy my first home, and it seems like short-sales are priced much lower than regular sales. Are these prices negotiable, or are they the bottom line that lenders will accept?
A: Many lenders negotiate prices for short-sales, in which the seller is offering the home for less than is owed on the mortgage. But traditionally the only way you could find out was to submit a below-list offer and wait—often for many months—for a response. If the bank made a counter-offer, you knew you were in the ballpark; if they didn't respond at all, you were too low. By then, you may have lost all interest in buying the property.
The good news is, on April 5, this frustrating system will change at least for some buyers and sellers. That's when the federal government will begin to provide financial incentives to lenders to do more short sales. The rules also help standardize the process, so your chances of negotiating a distressed-property bargain will increase.
Under the old practices, when a financially-distressed seller brought a potential buyer who was offering less than the amount owed on the loan, the bank would order an appraisal or broker's price opinion (BPO) and then decide whether the offer was acceptable. Under the new federal rules, banks will order a BPO before the property is listed for sale, and will share information on the minimum net proceeds they're willing to accept with the sellers. If they then bring in a buyer whose offer is equal to or greater than this pre-approved amount, the lender must accept it within 10 days.
Not all sellers are eligible for this program, called Home Affordable Foreclosure Alternatives (HAFA) (for the requirements see Help for America's Homeowner's Supplemental Directive 09-09). But since the process is likely to go so much smoother for those who buy and sell under HAFA, I suggest you wait a bit until the program goes into effect and concentrate on finding these "pre-approved" deals. Of course, when you do find a property you like, you may not be the only person bidding on it. To improve your chances of winning, make sure your offer is "clean," with as few contingencies as possible (though I would never forego a home inspection). Include tax and credit records, and a mortgage pre-approval letter. If you can afford to pay cash, that will put you in an even stronger bargaining position.
Still, in your eagerness to win the property, don't forget that distressed properties often come with added financial burdens. Although under HAFA, the seller is supposed to provide clear title, to protect yourself, your contract must make it clear that you will not be responsible for any of the seller's unpaid property taxes, liens or second trusts. Also, cash-strapped homeowners often stop paying taxes and homeowners' association fees during the time between when the house is listed and the deal is closed. To make sure that you're not on the hook for these expenses, Leonard P. Baron, professor of finance at San Diego State University, recommends that you ask that the bank escrow at least six months worth of taxes and HOA fees, to cover any potential shortfall.
By June Fletcher,/ The Wall Street Journal, March 19, 2010

Washington County Housing Report March, 2010

February, 2010 home sales were strong and up 75% from February, 2009. PUD/Condo sales also climbed 43% year over year. Year to date vacant lot sales more than doubled over last year. West St. George, Washington City and Bloomington Hills enjoyed the largest percentage of year over year sales growth in Washington County. New lot sales were the highest in many months at 25 and resale lots jumped to a several month high at 31. Commercial sales dropped year over year. New building permits nearly doubled in February over January and both January and February building permits outpaced new home sales by a significant margin. Both notices of default and foreclosures dipped in February even though the ratio of foreclosures to notices of default remained high at around 50%. The number of loans remain low at only 428 real property loans in Washington County. A large percentage of sales continue to be cash. The average loan amount has climbed. After months of declining sales, stagnant permitting and growing foreclosures it is refreshing to see home sales up, lot sales up, permits up and foreclosures down.—SUTC Developer Services

Know What The Bank Wants

Ultimately, to negotiate successfully with a lender to modify a loan, a borrower needs to understand how banks see the world. Typically, banks have the following three goals when dealing with loan issues:

Keep the loan in “performing” status.

Continue receiving a “market” rate of interest on the loan.

Have a realistic exit strategy for full repayment of the loan.

The bank will measure any proposal to modify loan terms against these three goals.—utahbusiness.com

The Home Truth

Will residential real estate improve during 2010? At a recent Salt Lake Board of REALTORS annual housing forecast breakfast, many Realtors and industry analysts were feeling enthusiastic and cautiously optimistic regarding the 2010 Utah residential housing market forecast.
There is now “pent-up” demand for tens of thousands of new housing units,” stated Chris Nelson, director of the University of Utah’s Metropolitan Research Center during the event. “Combined with continuing growth in Utah, (that) will lead to a robust housing market starting in the middle of this year, but (actually) taking hold by 2011.”
But his actual message to everyone in the room was this: have patience, perhaps two or three decades of it.
Nelson says that over the next 20 years, as Utah’s population continues to grow faster than any other state, the demand for housing will grow with it. By 2030, Utah could add another 1.5 million residents to its current 2.7 million, and 700,000 new jobs could be created. He also says that along the Wasatch Front, 450,000 units (residential and commercial combined) would be needed. That’s 50 percent more real estate than what’s available in Utah today.
Citing a handout prepared by James Wood, Director of the University of Utah’s Bureau of Economic and Business Research, Nelson says Salt Lake County can expect about a 3 percent growth in home sales this year, or just more than 9,000 units. That would mean the recent downturn in the residential housing market was short-lived, only lasting a couple of years. However, he also expects housing prices will fall about 3 to 5 percent more this year before they bottom out and start to rise again in 2011.—utahbusiness.com

NAHB REPORT ON HOUSING STARTS

The national economy will continue to gain strength throughout the year, but at a slower pace than is characteristic for the early stages of recovery.

Real (inflation-adjusted) gross domestic product (GDP) is expected to grow about 3% in 2010, compared to essentially no growth (0.4%) in 2008 and negative growth (an estimated decline of 2.5%) for 2009.

Coming off an estimated modern historical low of 555,000 total starts in 2009, housing production should rebound by about 25% this year to just under 700,000 units, according to NAHB projects. There is certainly a measure of good news in this forecast, but it hardly represents a return to normalcy.

Based on demographics and other factors, an annual average of 1.8 million housing starts per year will be needed over the next 10 years and 2010 starts are not likely to provide even half of what is needed.

Improvements in residential construction this year will be largely concentrated in single-family construction. Builders successfully reduced their inventory of new single-family houses in 2009 to levels last seen in 1971—for a population that has grown by 80% since that time.

NAHB (National Association of Home Builders) is forecasting just over 600,000 single-family starts in 2010, up from an estimated 440,000 starts in 2009. In a normal market, we would be constructing 1.5 million single-family starts on average yearly.

Although multifamily housing activity should stabilize and improve by the end of 2010, it will be slower than in 2009, with starts declining from an estimated 112,000 last year to an even lower 87,000.

Difficulty in obtaining financing for condos and apartments remains a major stumbling block to new projects, followed closely by historically high vacancy rates that are expected to ease up by the second half of the year, though not by much.
Information courtesy of SUHBA

Moving to St. George, Utah

St. George, the largest city in southern Utah, is nestled in a picturesque valley surrounded by impressive red, sandstone cliffs. It is the county seat of Washington County, in the southwest corner of Utah, just six miles from the Arizona State line on Interstate I-15. Zion National Park and Bryce Canyon are only a few hours away. "Utah's Dixie" has been recognized as an excellent retirement spot in many recent publications, and Washington County remains a thriving area.

The City of St. George, once regarded as a retirement community, is quickly becoming a mecca for endurance sports, and favorite golf and softball destination. St. George hosts hundreds of sporting event each year, including the Huntsman World Senior Games, the NJCAA national fast pitch softball tournament, and the St. George Marathon, bringing hundreds of millions of dollars to the local economy. The World Triathlon Corporation has recently announced that St. George will be the home of the Ford Ironman Triathlon Series for the next five years. St. George is also constructing a new replacement airport; this project is the only brand new public airport under construction in the country, and is creating hundreds of jobs for area residents.

In 2005, the St. George metro area was the fastest-growing area in the country, which led to a boom in both residential and commercial growth. The subsequent downturn—now beginning to stabilize--means that there are bargains to be had. An amazing array of properties is available in St. George and the surrounding areas. The average home price in St. George is approximately $240,000 for a 2,000+ square-foot home. St. George was deemed the 7th safest city of its size in the United States by the Farmers Insurance Group based on statistics for 2007.

Education has always played an important role in St. George. The Washington County School District is one of the strongest districts in Utah. Dixie State College grew from a two-year institution to an accredited four-year college, and is currently pursuing a direct affiliation with the University of Utah. The college's setting is spectacular, with warm weather year-round. The college provides excellent opportunities in the liberal arts, business, and vocational and natural sciences.

One of the City's strengths is its ability to partner with other local, state and federal agencies to improve wildlife habitat and protect open space and hillsides throughout St. George. The City has partnered with various agencies to create the Red Cliffs Desert Reserve Habitat Conservation Plan, setting aside 60,000 acres of open space adjacent to the City for the preservation of the Mojave Desert Tortoise. The City has also worked with private landowners to purchase and protect thousands of acres of wetlands and hillside throughout the community.

With over 34 miles of paved trails and 32 parks, St. George is an outdoor enthusiast's dream. Washington County is endowed with mild, low humidity winters with over 300 sunny days per year. The desert climate promotes year-round recreation and leisure activities. St. George has captured the National Softball Association's Award for "Softball Complex of the Year" for seven years in a row, and hosts 40 softball tournaments per year. Known as the "Year 'Round Golf Capital of Utah," we also offer ten great, scenic golf courses.

Southern Utah is known for its array of outdoor and indoor activities. Zion National Park, with its incredible scenery and majestic mountains, is just 45 minutes away. Hiking, biking, horseback riding, climbing, and river rafting are some of the many possibilities for this area. Snow Canyon State Park is just 10 minutes outside of St. George, with the Tuacahn outdoor theatre nearby featuring outdoor plays, concerts and other performances year round. Brian Head Ski Resort, for those who enjoy snow skiing or snowboarding, is 90 minutes north. The summer Shakespearean Festival in Cedar City is less than an hour away.

Shoppers will also be delighted with the selections available at the Red Cliffs Mall, the Zion Factory Outlet Stores, and the Promenade Mall. These shopping plazas feature easy access from Interstate-15, and are set in an architectural style that is inviting and an attractive addition to the growing area.

The climate in St. George is semi-arid, with two separate rainfall seasons in the early spring and late summer. Although average maximum temperatures for the summer months are between 95 and 101 degrees Fahrenheit, the low humidity makes these temperatures agreeable. The Southern Utah climate features bright sunshine, low annual precipitation, clean air and a wide daily temperature range. Picture clear, blue, sunny skies, add a few white fluffy clouds, red rock mountains, green golf courses, picturesque walking trails, thriving businesses, great shopping and you've got a picture of living and working in the St George area. Join us "where the summer sun spends the winter!"


St. George, Utah

Population: 67,700

Located in Washington County

Cost of Living 2009 St George, Utah

Economic Scenarios in 2010

So what can we expect of the Utah economy in 2010? There are two possibilities going forward for the national economic recovery. We focus upon the national recovery, even though the focus of this article is upon Utah, because whatever happens within the national economic environment will be what largely happens in Utah. It was the national economic malaise that pulled Utah into this downturn, and it will be a bettering of the national picture that will lift Utah out. The two economic possibilities are a slow and steady national recovery, and the other a faltering in the recovery lending to a slip in the Gross Domestic Product and more job losses, followed by an eventual recover. The latter scenario is a W-shaped recovery, where there is an initial but short lived movement upward, followed by an eventual and sustainable recovery (which, when graphed, forms a W shape).
The underlying assumption in this forecast is that a straight but tepid recovery will develop. The possibility of a W-shaped scenario is quite within the realm of possibility, however. After all, the current signs of recovery are largely being driven by federal government spending, which, in the long run, is artificial stimulation.
Consumers and business must be willing and able to carry the economic baton once the federal stimulus gives way. It is anticipated that they will, but in this environment, nothing is certain.
If the W-shaped scenario does not develop, then it is anticipated that job growth will begin in Utah sometime during the first half of 2010. Once job growth starts, it will be slow at first, but as the year progresses, more of the strengthening economic picture will be unveiled. This should elevate the overall feel of the economy, hopefully resulting in more business confidence in the economy and a more robust hiring picture by year’s end. Yes, there will be a job movement upward during much of 2010, but the magical zero line will probably not be achieved and crossed until the end of the year.—www.jobs.utah.gov/wi—Trendlines

Foreign Investors Flooding US Real Estate Markets

The depressed prices in the real estate market are not only creating a great opportunity for American home buyers, but foreign buyers are flooding the United States real estate market like never before. The reduced value of the dollar has opened up the real estate market to international investors looking for properties to live in while they do business in the States or simply looking to cash in on the amazing value in the housing market. Properties that may have been previously out of reach have become affordable because of the plummeting values of the homes on the market and the available inventory off foreclosure properties to choose from.

Foreign investors may have an edge over some American buyers in the real estate market. In this country the inability of the banking industry to loan money freely has affected the average American’s ability to get a mortgage. The largest shares of foreign investors in American real estate are purchasing properties with cash. Those investors that finance the properties they purchase are doing so with large down payments, many times over 30% of the price of the house, making for easy loan processes and quick closings.
The prices of the homes themselves are a huge draw for foreign investors. Housing prices have dropped so dramatically in the last year or two that it is impossible for investors to turn a blind eye. In many cases investors are looking at the very same homes they had looked at in the previous 12 months and finding the prices tens of thousands, or sometimes even hundreds of thousands of dollars less than they had been just one year ago.
The opportunities for foreign investors in this housing market are immense. Not only is it more affordable for them to purchase part time residences for business dealings in the US, it is the ideal chance to get themselves a vacation home or invest in rental properties or homes to flip for profit. With the dollar at its weakest, the possibilities for building an inventory of American properties is stronger than ever before, and foreign investors are not wasting a minute of the valuable time. Property in the US is being bought up in greater numbers than in decades by citizens of other countries looking to increase their American real estate portfolio.
As the real estate market begins to stabilize, savvy investors realize that now is the time to pick up properties all across the United States. Where people had previously on the fence about making real estate purchases, the anticipated upswing in the market has helped them to decide to jump in. With the light at the end of the recession tunnel beginning to get brighter, investors understand that prices are at the lowest they are going to be because they are on the rise, and home prices on the rise means building equity quickly. Whether the purpose is to visit, stay or to invest, foreign buyers are flooding the United States real estate market. Information obtained from internet source.

House Flipping

I just wanted to let you know that FHA has lifted the hard 90 day rule that would require a seller to be on title for 90 days before the property can re-purchased from a buyer that is getting an FHA loan. This will go into effect February 1, 2010 and last for 1 year. This is huge considering how many properties we have on the market that has been acquired from investors that are flipping their properties for really good deals. There are some important issue that you will want to know if you end up making an offer with a buyer that is going with an FHA loan. So PLEASE come to me for details and we can fill you in as we go. Thanks for all of your support.

REAL ESTATE OUTLOOK 2010

Predicting the future is tricky. At best it’s two parts knowledge and one part luck. If there’s one prediction everyone wants, it’s what markets will be doing in the future.
Are we there yet?— Home prices won't hit bottom until early 2010. Some say it's really just a question of absorbing the supply of vacant properties. Home prices at the national level are expected to fall another 5 to 10 percent before stabilizing.
Tax credit—Exiting home sales rose again in November as first-time buyers rushed to close sales before the original November 30th deadline for the recently extended and expanded tax credit, according to the National Association of Realtors. NAR Chief Economist, Lawrence Yun, says the rise was expected. “This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” he said. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline.”
Mortgage rates—It is predicted that rates will begin inching up to 5.28 in the first quarter of 2010 and hitting 5.50 percent in the following quarter.
Investor activity— By looking farther ahead than next quarter’s earnings, commercial real estate companies can plan strategically to ensure success. The good news is that relatively stable cap rates and strong capital flows should keep prices up, at least for the next couple of years. Some say that for the first time in a long time, real estate is priced right relative to interest rates.
After a quiet year of investment sales, buyers are preparing to forge ahead with acquisitions in 2010. Two thirds of investors (65%) who responded to the 6th Annual Investment Survey plan to boost their investment in commercial real estate over the next 12 months.
It is clear that investors want to pursue new acquisitions. Overall, 72% of respondents indicate that they are currently amassing capital in preparation for buying opportunities.
Economic recovery—One of the few people who saw the US economic crisis coming, International Institute of Management President Med Yones, is now predicting that the economy will begin to recover in 2010.
The IIM is not a fan of expensive stimulus packages. It instead favors job creation through funding for small businesses, “The most cost effective and quickest method to stimulate the U.S. economy is to support job creation through US small businesses and innovation development. U.S. Census Bureau statistics show that 98 percent of all U.S. firms have less than 100 employees. These 27 million small businesses create over 85 percent of all new jobs and employ over 56 percent of all private sector workers. The main focus of development programs should be innovation development, export and employment support. This solution would be a much less burden on the taxpayers; it can be implemented without too much new legislation, and would have a much faster positive impact on the economy.” Information sources: Politicususa.com, Realtors Commercial Alliance, and Realtor.org