Real Estate New York
Market Update March 2009
Apparently, All We Have to Fear is Fear Itself
WASHINGTON (CNN) -- A new national poll indicates that nearly three out of four Americans are scared about the way things are going in the country today.
Yet three out of four questioned say that things are going well for them personally.
This data suggests more anxiety than reality in the real world, that only 25% of Americans consider their situation challenging, about the percentage normally seen in a thriving economy. Or . . .
In the famous words of Franklin D. Roosevelt, "The only thing we have to fear is fear itself." This said at a time in our nation's history when a similar lack of confidence fueled the fires of the great depression.
Viewed in terms of the current real estate market: there is a wide selection of homes on the market in every price range available now at the lowest prices in years, mortgage rates are at a 50 year low and funds are readily available.
But this same fear is keeping the faint hearted at home. This lack of competition in an historic buyer's market provides an excellent opportunity to own the best home at the best price.
Read the entire CNN/Opinion Research Corporation survey
Click to comment on this article
The Stimulus and Real Estate
American Recovery and Reinvestment Act
H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 - 184 . Later that day, the Senate also passed the bill by a vote of 60 - 38 . The President signed the bill on February 17, 2009. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.
View how the U.S. House of Representatives voted>
View how the U.S. Senate voted>
The mix of provisions of interest to REALTORS® and their clients changed frequently throughout the legislative process, with changes continuing to be made just hours before the measure was released prior to the vote. In the end, the elements of NAR's housing agenda were included. Congress and the President have announced that a finance and housing package (including tax provisions) will be the next “big” initiative, so Congress has by no means finished its work as it affects the housing industry and REALTORS®.
The bill includes the following provisions:
Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Chart Highlighting the Major Modifications to the First-Time Homebuyer Tax Credit> (PDF: 309K)
Frequently Asked Questions> (PDF: 483K)
NAR's Presentation: The 2009 First-Time Homebuyer Tax Credit (PDF: 319K)
FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.
The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not. NAR's Call for Action to both the House and the Senate prior to the final vote advocated strongly for the provisions which were then included in the final bill approved by both Chambers.
Estimated 2009 FHA, Fannie Mae and Freddie Mac Loan Limits> (PDF: 1.3M)
Read more from the National Association of Realtors:
Neighborhood Stabilization
Commercial Real Estate
Rural Housing Service
Low Income-Housing Grants
Tax Exempt Housing Bonds
Energy Efficient Housing Tax Credits & Grants
Transportation Investments
Broadband Deployment
Click to comment on this article
Mortgage Interest Deduction CUT in Obama Budget
As currently drafted, the plan changes the Mortgage Interest Deduction (MID) by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will set of a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
View section of the budget proposal modifying the mortgage interest deduction> (PDF: 150K)
The MID has been part of the federal tax code since it was first enacted in 1913.
A home purchase – the largest investment most families will ever make – builds family wealth, provides tax revenues for local governments and stimulates growth in all housing-related industries.
People with both low and middle incomes use the MID. According the most recent IRS tax return data available, 63 percent of the families who claim the MID earn between $50,000 and $200,000 per year.
While in any particular year only about one-third of taxpayers itemize, of the taxpayers who do itemize deductions, more than 81 percent take the MID.
A National Association of Realtors® survey of home buyers found that both first-time buyers and repeat buyers ranked the desire for tax incentives as an important reason to buy.
Read more from the National Association of Realtors®
If you too are opposed to reducing the MID please consider emailing your representatives.
Congressman Paul D. Tonko (21th)
Maurice Hinchey (22nd)
20th Congressional District Seat presently vacant
Architectural Coach: Dutch Colonial
This American style originated in homes built by German, or "Deutsche" settlers in Pennsylvania as early as the 1600s. A hallmark of the style is a broad gambrel roof with flaring eaves that extend over the porches, creating a barn-like effect. Early homes were a single room, and additions were added to each end, creating a distinctive linear floor plan. End walls are generally of stone, and the chimney is usually located on one or both ends. Double-hung sash windows with outward swinging wood casements, dormers with shed-like overhangs, and a central Dutch double doorway are also common. The double door, which is divided horizontally, was once used to keep livestock out of the home while allowing light and air to filter through the open top. The style enjoyed a revival during the first three decades of the 20th century as the country looked back with nostalgia to its colonial past.
Learn about more architectural styles
Lender's Corner: FHA
While we may not see 100% loans for some time, if ever again, the Federal Housing Authority (FHA) has mortgage funds readily available at record low interest rates to anyone who can demonstrate adequate financial responsibility.
FHA mortgages are designed to provide low down payment financing and are a great option to consider if you are trying to finance a new home with as little cash as possible. A fixed rate mortgage provides the security of a monthly payment that won't change. TD Banknorth has been offering FHA loans for many years and we are in a position to explain this and other loan programs and provided great rates and service.
FHA 30 Year Fixed Rate Details
-
Owner Occupied
-
1 to 4 family homes
-
3.5% down payment
-
Seller can contribute up to 6%
-
Free Rate Lock up to 60 days
-
Rate reduced automatically if income qualified by 0.5% (income at 80% of HUD median income is about 56,000 (lender specific)
-
No application fee or lock in fee
Link to FHA site www.hud.gov/buying/index.cfm
Bill Powell
AVP, Mortgage Officer
TD Banknorth
343 Delaware Ave . Delmar NY 12054
Tel: (518) 439-4426
Blackberry: (518) 330-7412
Mobile: (518) 396-5204
Fax: (518) 439-5513
william.powell@tdbanknorth.com
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Consumer Confidence at All-Time Low
Fueled by daily news reports of the continued collapse of the financial markets and headlong plunge of the DOW the American public has become unsure of the future of the nation's economy and their own financial security.
In the words of
Investment strategist Eugene Peroni of Advisors Asset Management:
"I think we are in a valley that is pretty extraordinary, where so much of the bad news is playing into the economy, into the stock market, so much of the bad news is playing on investors' psyches that this usually indicates a turning point - in this case, I think, a bottom," said Eugene Peroni. Read more from VoA News
in addition, Real estate prices continue to plummet in the twenty city S&P/Case-Shiller index by an average of 18.5%.
However, Capital Region prices continue to hold fast with less than a nine percent drop in selling prices from the height of the market in February 2007 to the present.
While this modest price decline is welcomed by area buyers as an opportunity to maximize their housing investment it also affirms the solid financial foundation of Capital Region housing in a time when safe investment--as real estate is generally considered--is the order of the day.
Click to comment on this article
Number of Capital Region Home Sales Slip
The number of homes sold in the Capital Region is down 24% from January 2008: 623 to 475 homes sold January 2009
“Certainly, we know the activity is very slow around here,” said Jim Ader, CEO of the capital area's real estate trade group.
“Although the median price has come down, I think this does create some opportunities especially for people who had been waiting for their income to catch up to the market,” he said.
A new $8,000 tax credit for first time home buyers also could help stimulate sales, Ader said.
Read more from the Capital Region Business Review
Click to comment on this article
Market Statistics as of March 1, 2009
This graph represents average sale versus list prices 
The average list and sale prices for the month of February 2009 show a typical February 2008 drop, though into deeper territory than seen in the last two years.
However, the average asking price to sale price has risen from
95.11% in January to
for
95.37%
February.
February's average sale price is a strong indication that buyers are concerned over the future of the economy. The number of sales is also down from 255 in February 2008 to 199 for February 2009.
Click to comment on this article
Mortgage Rates and Trends
The link to up to the minute New York State mortgage information seems to work better than presenting the actual graph.
Click for up to the minute mortgage rate information
Buyers' versus Sellers' Market Report
----
The graph above shows the number of sales in a given month divided by the number of homes on the market in the four main counties of the Capital Region. After a brief dip into seller territory in July the market has once again returned to favor buyers.
February's sales figures show the strongest buyer's market in Capital Region history. Prices are the lowest in recent years and inventory is high. This may be the best time to buy, ever.
*This ratio can be used to determine whether we are in a buyers' or sellers' market as indicated in Dennis Maier's article on Market Timing featured in eZine Real Estate. In general, if it would (theoretically) take less than 6 1/2 months to sell the current inventory it's a sellers' market. If it would take more than 9 months to sell all the homes on the market it's a buyers' market.
National Association of Realtors® Looks at Recovery Plan
THE NATIONAL ASSOCIATION OF REALTORS ® is open to President Obama's broadened focus of the nation's economic recovery that stresses housing stability and making health care an important component of his economic revitalization strategy, in addition to “restarting lending” and preventing foreclosures.
“We fully agree with President Obama's emphasis that housing is the backbone of our national economy,” said NAR President Charles McMillan. “As he said, when a family buys a home, workers are hired to build it. Those workers spend money and open businesses. As a result, investors return. In short, housing is the key to revitalizing America and we pledge to work with him to help jumpstart our economy.”
Initial steps taken by the Obama administration and the 111th Congress to begin stabilizing the housing market meet many of NAR's policy recommendations. NAR called for lowering interest rates, reducing preventable foreclosures and reinstating the higher loan limits for FHA, Fannie Mae and Freddie Mac. In addition, NAR was the leading advocate for increasing and improving the home buyer tax credit.
“All of these measures will help stabilize housing values and allow the housing market to begin to strengthen and the economy to begin to heal. This will improve communities and create jobs,” McMillan says.
NAR has long advocated providing health insurance to millions of Americans. “Health care for small businesses and the self employed has been a high priority for NAR and one that we hope will be fully addressed by the president and administration this year. Small businesses provide millions of jobs and are the engines behind the U.S. economy,” adds McMillan.
Although much of the President's and the country's focus is on the nation's financial and housing markets, providing affordable health care to America's working families should not be delayed any longer. Nearly 30 percent of NAR's members are without health care insurance and the primary reason given is cost.
“We are eager to work with President Obama and the Congress to help rectify the health care situation while continuing to address the need to help people avoid foreclosures and stay in their homes,” McMillan said.
—NAR
Click to comment on this article
Real Estate Today NAR Radio
Real Estate Today will cover the benefits and challenges of homeownership, from expert advice on buying and selling, to remodeling and landscaping, to the state of the current market and home financing issues.
The show will be an interactive experience that offers listeners an opportunity to exchange information and learn from some of the nation's most recognized experts on a variety of real estate related topics such as landscaping, gardening, carpentry and general contracting, as well as mortgage experts and respected members of the media.
Hosted by award-winning radio broadcaster Gil Gross, the show will offer a fast-paced format that includes provocative experts, listener call-ins, field reports and a customized segment on local market conditions, plus podcasts.
Where to tune in to Real Estate Today :
In the Washington, D.C., area, Real Estate Today will air on the show's flagship station, 630 WMAL AM, every Sunday from 1-3 p.m., EST.
Satellite radio subscribers can hear Real Estate Today on:
-
America's Talk, XM Channel 158, Saturdays 5-7 p.m. EST
-
Talk Radio, XM Channel 165, Saturdays 1-3 p.m. EST
-
Stars, Sirius-XM Channel 102, Saturdays 6-8 a.m. and Sundays 9-11 a.m. EST
For more information and to stream the show:
Visit the Real Estate Today Web site at www.RETRadio.com .
Frequently Asked Questions (PDF: 48KB)
Click to comment on this article
Archives
We've been asked to again include links to past market updates. But since our stories link to other web sites over which we have no control we only want to link to our most recent issues. Otherwise, the article links may fail to work as they once did.
Tell a Friend
If you know someone who may benefit from our monthly market update please forward this page. To sign up for our free, no obligation, market update click here: Market Update SignUp
A final Word from Real Estate New York's Principal Broker
You may have noticed that counter to the present media predictions of imminent and certain Armageddon for America, the Capital Region Market Update tends towards presenting a more positive view of the current housing situation as it actually exists in our community. This is not to say that our articles are in any way slanted to distort the facts. Each piece comes complete with links to source material and, where germane, opposing views.
Simply put, the sky is not falling, as we affirmed way back in July of 2007, the American dream of homeownership is not seriously threatened. The problems we have now are the direct result of rampant greed by the financial industry. In the words of President Obama:
“ . . . And to ensure that a crisis of this magnitude never happens again , I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse. “
Nor have we at Real Estate New York ever allowed a single client to enter into a sub-prime loan that may have jeopardized his or her financial future. Rather, we have refused to be a part of any unsound transactions, though it usually costs our commission.
What will happen is that confidence in the market will return and the upward price spiral will resume. Interest rates will go up and the best opportunity in a lifetime will be lost to those who do not have the courage and foresight to act on faith in the strength and solvency of the United States.
One last thing, everyone here is actively looking for investment property. I haven't seen this much enthusiasm since the mid 80's.
Dennis J. Maier
Principal Realtor Broker