Applications for mortgage loans slowed down with the summer ending. Adding to this slow down is potential first-time home-buyers wondering if they’ll be able to close fast enough receive the federal home ownership tax credit, which expires Dec. 1, 2009.
According to the Mortgage Bankers Association index, applications declined 8.6 percent last week on a seasonally adjusted basis. The index declined 18.3 percent compared with the previous week and fell 18.7 percent compared with the same week a year ago when the Labor Day holiday fell nearly a week earlier.
Mortgage interest rates were as follows:
- 30-year fixed-rate mortgages increased to 5.08 percent from 5.02 percent.
- 15-year fixed-rate mortgages decreased to 4.41 percent from 4.45 percent.
- 1-year ARMs decreased to 6.61 percent from 6.69 percent.
According to an article in the LA Times, homeowners who find themselves struggling with mortgage payments whether the situation is a short sale, foreclosure, or walking away from their homes, should look at how any of these actions could impact their credit scores.
Vantage Solutions, a scoring company created by the three national credit bureaus, suggested loan modifications may increase a borrowers’ scores, while refinancing mortgages that are upside-down may not have any or very little impact. Short sales on the other hand can trigger large declines in credit scores. Homeowners with an excellent score might see a 120 to 130 point decline after a short sale. Homeowners who walk away and stop making payments can expect their credit scores to dip 140 to 150 points. Those who file bankruptcy can have an average hit of 355-365 point drop.
Consumers who contact their lender early on may have less of an impact to their credit scores. In any of the above cases, if consumers are really having troubles due to the declining market, lenders will probably take this era into consideration when granting mortgage loans.
According to Local Market Monitor on September 9th, a Real Estate forcasting service for Banks and Investors, home prices will decline about 5 % thru 2010. But after that there may be light at the end of the tunnel with price increases in several areas, according to CEO Ingo Wisner.
In the following markets home values are expected to remain level this year but increase in value next year. If you know anyone planning on moving in these areas, they are probably going to want to act soon before home prices increase.
- Baton Rouge, La.
- Buffalo-Niagara Falls, N.Y.
- Dallas-Plano-Irving, Texas
- Fort Worth-Arlington, Texas
- Houston-Sugar Land-Baytown, Texas
- Little Rock-North Little Rock-Conway, Ark.
- Omaha-Council Bluffs, Neb.-Iowa
- Pittsburgh, Pa.
- San Antonio, Texas
- Syracuse, N.Y.
Below are the 10 largest markets where prices are expected to continue to decline through 2010. It looks like the Bay Area is still going to suffer with declining prices for a bit longer.
- Fresno, Calif.
- Las Vegas-Paradise, Nev.
- Miami-Miami Beach-Kendall, Fla.
- Orlando-Kissimmee, Fla.
- Phoenix-Mesa-Scottsdale, Ariz.
- Portland-Vancouver-Beaverton, Ore.-Wash.
- San Jose-Sunnyvale-Santa Clara, Calif.
- Stockton, Calif.
- Tacoma, Wash.
- Tucson, Ariz.
If you’ve been looking for a home in the Silicon Valley lately, chances are you competing with several other potential home-buyers on the same property. Sounds almost like a few years ago during the dot.com era. But this time, instead of the higher priced properties being snatched up, it’s the lower valued properties that a drawing the attention.
It’s great that the low prices are attracting buyers, but it’s also becoming frustrating when a lot of investors are snatching up the properties with higher-priced offers and paying cash.
A lot of bank-owned or short sale homes are pulling 20 to 30 offers. Most of these homes are in the San Jose area. Homes in the more expensive areas like Los Gatos and Saratoga are not getting as much traffic, but still get multiple offers.
Even though overall prices are starting to stabilize, we are not in a normal market yet. Buyers will have to be patient. It may take 6 to 8 months to get the property your looking for. Our team was able to get a home for one buyer after the initial counter-offer, but it was the 5th or 6th property we had made an offer on. With other clients we weren’t as successful because even though we overbidded, we were passed up because of non-cash offers.
According to the National Association of Realtors, Pending home sales are up for the fifth consecutive month, and it’s been six years since a streak like this. Based on the figures from the Pending Home Sales Index, signed contracts rose 3.6 percent to 94.6 in May. In June of 2008 the figure was 88.7 percent. Some factors that are contributing to the gain are low mortgage interest rates, affordable home prices, and buyers who’ve been waiting for something to change.
Here are the regional figures from the Pending Home Sales Index:
- Northeast: rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago.
- Midwest: increased 0.8 percent to 89.9 and is 11.6 percent above June 2008.
- South: jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago.
- West: rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.
Here’s a bit of good news from the Mortgage Bankers Association. They have reported that last week there was a slight increase in the amount of mortgage applications received by 11%. According to the report, application submitted for refinancing has gone up to 15%, while loan applications for home purchases has gone up to 6.7%. Now despite all of this good news, rising unemployment and the continued global economic issues, will more than likely keep the housing industry on a slow rebound.
