“Keep the Momentum Going”

NAR President Charles McMillan said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said.

“To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.

NAR’s Housing Affordability Index stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates, and family income.

Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later?’ to ‘I don’t want to miss out on a recovery.’”

Pending Home Sales on a Record Roll
Contract activity for
pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007, when it was 100.7.

Affordability at Record High
Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said.

“Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.

First-Time Buyers
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.

By Region

  • Northeast: The Pending Home Sales Index declined 3.0 percent to 78.8 in July but is 4.7 percent higher than July 2008.
  • Midwest: The index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago.
  • South: Pending home sales activity rose 3.1 percent to an index of 103.8 in July and is 12.0 percent above July 2008.
  • West: The index jumped 12.1 percent to 112.5 and is 20.0 percent above a year ago.

Source: NAR

Small Homes Are In, but Big Homes not Gone

McMansions have fallen out of favor, according to a new study by the American Institute of Architects.

The survey of 500 architects showed that only 4 percent thought their clients wanted more space in their new homes, compared to 16 percent in 2008.

Home builders have already taken that information to heart with 59 percent of builders surveyed in May by the National Association of Home Builders saying they plan to build smaller homes in the coming year.

But don’t dismiss big houses. The builder association predicts that homes will stabilize at 2,500 square feet over the next five years, the average size of home in 2007 at the height of the housing boom.

Source: the Wall Street Journal, June Fletcher (06/29/2009)

Tax Credit Can Be Used for Down Payment

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Source: NAR

Barack Obama Takes Oath of Office

Barack Obama on Tuesday became the 44th president of the United States.

Following a swearing-in ceremony witnessed by hundreds of thousands of onlookers in Washington, D.C., and millions more who watched on television, the new president acknowledged there there will be challenges ahead, but that he will seek to confront those issues without partisanship or divisiveness that has recently pervaded national politics.

“Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered,” Obama said.

The full text of Obama’s speech is available here.

Simultaneous with Obama’s swearing in ceremony, the White House rolled out a new Web site at the previous address, www.whitehouse.gov, which includes details on all aspects of the president’s agenda, including his plans for the economy. The site also has a blog and a section devoted to the White House itself.

The NATIONAL ASSOCIATION OF REALTORS® plans to work with Congress and the Obama administration to pass an economic stimulus plan that is expected to include many components championed by NAR to improve housing.

NAR’s Housing Stimulus Plan includes both legislative and regulatory fixes. Its focus includes keeping mortgage interest rates low, boosting home buyer confidence, and reducing the current foreclosure rate. It also asks that regulators be encouraged to help financial institutions resolve problems in the short-sale process, make it easier for servicers to modify existing loans, remove unreasonable underwriting guidelines and insist that credit reporting agencies correct errors promptly.

Source: NAR, CNN.com

What a special day… we also heard a special prayer from Dr. Joseph Lowery– I couldn’t help but smile while driving on Joseph Lowery Blvd in West End today .. The West End has so much history!

Home Buyer Tax Credit: How It Works

First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

[Editor’s Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]

Source: Chicago Tribune, Mary Umberger

Employer-Assisted Housing Can Be the Answer

Rising home prices, increased housing costs, and today’s tightened mortgage market have put homeownership out of reach for many working families.

In fact, nearly 40 percent of Americans believe there is a shortage of available affordable housing, according to a recent survey by the NATIONAL ASSOCIATION OF REALTORS®.

The survey also found eight out of 10 Americans believe that having enough money for down payment and closing costs is an obstacle to purchasing a home. Another 69 percent think it’s difficult to find a home that they both like and can afford.

To promote more affordable housing solutions for the nation’s workforce, hundreds of housing advocates from across the country are coming together Monday for the first-ever conference on employer-assisted housing benefits.

“Employer-Assisted Housing: Bring Workers Home” is taking place in Chicago at the InterContinental Hotel. The conference will highlight case studies of successful EAH programs from public and private sector employers and local governments and allow key stakeholders to connect and explore opportunities to work together to help increase awareness about EAH benefits.

“REALTORS® build communities and care about the lack of housing opportunities available to America’s low- to moderate-income working families, many of whom can’t find affordable housing near their workplace,” says NAR President Dick Gaylord.

The conference keynote speakers are national housing consultants Beverly Barnes and Beth Marcus; Sharon H. Douglas, vice president of human resources and chief people person, Aflac; and Carl Guardino, Silicon Valley Leadership Group.

NAR is sponsoring the event in partnership with the Chicago Association of REALTORS®, Illinois Association of REALTORS ®, Metropolitan Planning Council, National Association of Counties, National Housing Conference and the U.S. Conference of Mayors.

Source: NAR