Real Estate Information

Many of you are hearing that mortgage giants Fannie Mae and Freddie Mac were taken over by the federal government over the weekend.  It is still a little early to know what the full impact of this action will be.

Here is a very imformative article that will give you more information about this and what it might mean for the real estate industry.

www.dsnews.com/view_story.cfm

Sales of single family homes in the and Spanish Springs areas dropped 17.3% in August as compared to July this year.  But when compared to August of 2007 the drop is only 6.5%.  The median home price in and Spanish Springs for August 2008 was $227,650, which is down from $291,500 in 2007.  The average number of days homes are on the market was 133 this year compared to 106 last year.

Let's take a look at how each area is doing...

Spanish Springs East (Bridle Path etc.) accounted for 6.9% of the area's sales.  Sold prices ranged from $365,000 to $650,000 with a median price of $413,950.  Homes in this area were on the market an average of 172 days.

Spanish Springs South (Wingfield Springs & Cimmaron) accounted for 12.7% of the area's sales.  Sold prices ranged from $215,000 to $415,000 with a median price of $300,000.  Homes in this area were on the market an average of 132 days.

Spanish Springs West accounted for 13.9% of the area's sales.  Sold prices ranged from $157,000 to $540,000 with a median price of $229,000.  Homes in this area were on the market an average of 133 days.

accounted for 13.9% of the area's sales.  Sold prices ranged from $118,900 to $199,900 with a median price of $161,000.  Homes in this area were on the market an average of 91 days.

East accounted for 27.9% of the area's sales.  Sold prices ranged from $145,000 to $540,000 with a median price of $208,500.  Homes in this area were on the market an average of 147 days.

Foothills (D'Andrea) accounted for 9.3% of the area's sales.  Sold prices ranged from $197,000 to $390,000 with a median price of $231,500.  Homes in this area were on the market an average of 127 days.

Suburban (The Vistas & Kiley Ranch) accounted for 16.2% of the area's sales.  Sold prices ranged from $215,000 to $333,000 with a median price of $280,500.  Homes in this area were on the market an average of 131 days.

The East area and the Spanish Springs West area had the highest number of short sale and bank owned closings in August.  East accounted for 29.7% of the short sale and bank owned sales, and Spanish Springs West accounted for 23.4% of the short sale and bankowned sales.

Data taken from the NNRMLS as of 9/2/08.

Today the President signed into law HR 3221 otherwise known as "Housing and Economic Recovery Act of 2008".  This legislation has gotten a lot of press coverage and interest.  There are thousands of articles being written about it on the Internet.  I have people asking me, "Is this going to help the real estate market?"  My answer is it's a little to early to tell, but there are definitely some positives in this legislation.

Here are the key highlights of the legislation:

• Reform for Freddie Mac and Fannie Mae in the form of more oversight and permanent caps on loan limits for conventional loans.
• FHA Reform.  FHA loans have become the loan of choice in our market as they currently only require 3% down.  Changes that we are expecting to take place are loan limit changes, increase in down payment to 3.5% and modernization or streamlining of the FHA loan process.
• Homebuyer Tax Credit - a $7,500 tax credit that would be available for qualified purchases between April 8,2008 and June 30,2009.  The credit is repayable over 15 years, effectively making it an interest free loan.
• FHA Foreclosure Rescue - The is a refinance program that is supposed to help homeowners avoid foreclosure.  It involves the mortgage holder agreeing to writing down the homeowner's loan so that they can refinance into  an FHA 30 year fixed rate.  The homeowner would have to share 50% of any future appreciation with FHA.
• Seller Funded Down Payment Assistance Programs - These programs will be prohibited by FHA beginning October 1, 2008.  Commonly known as Nehemiah or Ameridream.  This does not affect assistance programs such as Nevada Housing or Nevada Rural Housing Bond Programs.
• VA Loan Limits - Temporarily increases in the VA home loan guarantee limits.

These are just a few of the provisions of this new legislation.  Over the next couple months we will get more details on how this is going to affect loan programs etc.  If you have specific questions please contact me and I can help you with those. 

Most buyers would not consider offering full price much less above full price given their perception of the current market conditions.  But here are the facts  In the /Spanish Springs area so far this month 35.4% of the homes sold for prices above asking price and another 25.8% of homes sold at asking price.  That’s a total of 61.2% of the homes sold so far this month selling at or above the seller’s asking price.  Overall the homes that have sold this month sold at an average of 99.1% of asking price with an average list price of $275,674 and an average sales price of $273,280. 

Why are sellers getting their asking price or above? Competitive pricing. 60% of the sellers that got their asking price or above were bank owned properties.  This is due to the fact that most banks are having several appraisals or broker price opinions done prior to listing the property and then pricing them competitively.  In many cases these properties are getting multiple offers if they are very competitively priced.  So if you are considering submitting a “low ball” offer on a competitively priced home you should be prepared to possibly loose out to another buyer.  Ask your agent to do a competitive market analysis of the property you are considering so that you can make a strong offer based on the market value.

So what are homes in /Spanish Springs selling for?Here are how the prices break down for homes sold this month:

• Under $200,000 - 26%
• $200,000 - $250,000 - 26%
• $250,000 - $300,000 - 13%
• $300,000 - $350,000 - 13%
• $350,000 - $400,000 - 16%
• $400,000 - $450,000 - 0
• $450,000 - $500,000 - 3%
• Over $500,000 - 3%

So far this month 54.8% of the sales were bank owned and 16.1% were short sales.  The average sold price per square foot was $135/sqft. with an average 116 days on the market.

Many of you are hearing about short sales, but perhaps you are uncertain about what a short sale is.  A short sale is when the seller of a home has an outstanding mortgage or mortgages that exceed the current market value of the property.  Currently in , short sales represent about 25% of the active listings and 45% of the pending sales.  They key is that since April 2008 they have only accounted for 15% of the closed sales. 

In contrast bank owned properties currently acccount for only about 13% of the active properties and 30% of the pending sales.   Yet since April 2008 they account for over 40% of the homes sold. 

So with more active listings and pending sales being short sales why aren’t more closing?  The answer to this is that there are some key criteria that determine whether or not a short sale has a high success rate to get to closing.  Here are the key factors:

1. Is there more than one mortgage on the property?  If there are multiple mortgages on the property the likelihood of a successful close go down.  Further if the mortgages are with two different lienholders the chances of closing on the short sale drop significantly.
2. Does the seller have a ligitimate hardship and are they willing to accept the consequences that might be required by the lender - for example a promissory note?
3. The knowledge of the listing agent in the transaction and their experience closing short sale transactions is key.  These transactions required many additional hours of work by the listing agent and training on how to navigate the short sale systems that vary so widely from lender to lender.
4. Time.  Because of the volume of short sales that are in our market and markets across the country, many lenders were not prepared for the large number of borrowers that are facing difficulties.  Their back log of files can cause a lag in the time it takes to get the bank to respond once an offer is submitted.  Therefore many buyers loose patience and move on to another property where they can close more quickly - either a bank owned or traditional seller.

So to sellers in I say, if you are in a short sale situation be sure to contact a qualified agent to list your property.  Ensure that they have experience in closing this type of transaction and do everything you can to cooperate with your listing agent, your lender and the prospective buyer who will all be working to help you out of this stressful situation.

I am happy to report that the and Spanish Springs markets took a step in the right direction for the month of April.  The number of residential listings sold in the and Spanish Springs area rose 53% in April 2008 over March 2008 and was just slightly below April 2007 numbers according to data from the Northern Nevada Regional MLS.  The average sales price was $278,595 for April 2008 which is down about 9.1% from the average sales price in April 2007 of $306,743.  Homes sold on average at 96.6% of the seller’s asking price.  The average market time for homes sold in April was 140 days. 

Here’s where the action was….

East Truckee River – 1% of total homes sold

Sparks – 12% of total homes sold.

East Sparks– 15% of total homes sold.

Sparks Suburban – 31% of total homes sold.

Sparks Foothills – 8% of total homes sold.

Spanish Springs South – 19% of total homes sold.

Spanish Springs West – 8% of total homes sold.

Spanish Springs East – 6% of total homes sold.

What is driving the sales for the month of April?  Approximately 48% of the sales for the month of April were either bank owned/REO properties or short sales (pre-foreclosures).  While this is not the best of news for sellers it does present outstanding opportunities for buyers looking to buy in the and Spanish Springs area. 

In 1908 the National Association of Real Estate Exchanges, today called the National Association of REALTORS, was established as the preeminent organization for the nation’s real estate professionals.  1908 was the height of Progressive Era marked by social changes focused on improving the quality of life for all Americans.  Men wore bowler hats and women still dressed within the formality and lavishness of the Victorian Era.

Celebrating 100 years, the National Association of REALTORS promotes professionalism in our industry and helps Americans fulfill the dream of home ownership.  Home ownership peaked in 2005 at 68.9% of Americans with 1.3 million REALTORS holding membership in the association. 

As we face the current challenges in the marketplace it is nice to know that we have such a strong history, overcoming many challenges in the past.  Those REALTORS who continue to practice with the highest level of professionalism and ethics will continue to succeed over the next 100 years.

Happy Birthday National Association of REALTORS.

Have you watched the eveing news lately?  Every channel has a report about the real estate market and the rising number of homeowners facing foreclosure.  Doom and gloom.  Due to the perfect storm - poor lending practices, declining markets and homeowners taking on more than they can handle - we find ourselves in the market we are in. 

How can we make it better? The federal government is posturing about all kinds of fixes, but I for one don't think they will have a widespread affect.  (Hello, it's an election year.) I think that getting the buyers who have been sitting on the sidelines for the past year back into the market would give our market the stimulus it needs.

BUYERS - What are you waiting for?  There hasn't been a better to time to buy a home than right now - at least not in the last couple of years.  There are some tremendous deals out there right now as the banks are getting so many homes back via foreclosure and now trying to sell them.

Bank-owned foreclosure properties are proving to be some of the best buys for buyers right now and buyers are flocking to these homes.  Do you have to have special knowledge or expertise to buy one of these homes?  No, you just need to be working with a good real estate professional that can help you locate the properties and guide you through the process just as they would in a standard transaction. 

If you are renting or living with a family member - now is the time to consider purchasing a home for yourself.  WHAT ARE YOU WAITING FOR?

The Reno-Sparks market showed improvement for the second month in a row.  Sales increased and the number of months of inventory on the market decreased.  Although we typically see a surge in new listings at this time of year many would be sellers are recognizing that this is a "need to sell" market verses a "want to sell" market and holding off putting their homes on the market.  Therefore we only saw a very small increase in the amount of inventory. 

We still have a long way to go....Sales volume was down about 34.5% from last March.  But we are headed in the right direction.  Hopefully we will see April higher yet and continue this upward trend in sales.

Where do most buyers focus their energy when considering a new home purchase?  On the purchase price.  The purchase price is one of the primary concerns in a real estate transaction.  Often times buyers forget the importance of interest rates and the role they play. 

It is easy to understand the difference between paying $200,000 and paying $195,000 when purchasing a home.  But it is more difficult to understand the difference between paying 6.5% or 6.0% interest.  Interest rates have a large influence on your payments.  Let's look at a couple of comparisons.

$200,000 with a 6.5% interest rate on a 30 year fixed rate loan = payment of $1,264.13/month.

$195,000 with a 6.5% interest rate on a 30 year fixed rate loan = payment of $1232.53/month.

That is only a difference of $31.60 per month. 

Now let's look at what would happen if you were to find that same $200,000 loan, but at a better rate.

$200,000 with a 6.0% interest rate on a 30 year fixed rate loan = payment of $1,199.10/month.  That simple 1/2 point (percent) drop lowered the mortgage payment by 5.4% or $65.03 per month. 

Interest rates change constantly and lenders all have different programs.  It is very important that when considering a home purchase that you talk to a couple of different lenders and make sure that you are getting the best rate possible for your circumstances. 

The best way to compare lenders is to get "Good Faith Estimates" and compare the Annual Percentage Rate.  The Annual Percentage Rate reflects the cost of your loan including the payment and all the lender's fees.  This will help you clearly identify which loan is going to cost you more over the life of the loan. 

Working with a great lender is key to a successful home purchase.  Please feel free to contact me and I will gladly refer you to one of the great lenders that I use.