Monthly Sales Analysis

The single family home market was once again dominated by forclosures and short sales in unit sales in May. Looking back however, the proportion of 'Distressed Sales' is shrinking compared to 'Arms Length' transactions.

Mortgage Rates at 7-Month High

“Mortgage rates followed the increase in bond yields this week as the May employment report showed that the economy lost fewer jobs than the market consensus had expected,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Revisions to the jobs report for earlier months also showed the job loss was not as large as early estimates had indicated: March and April figures were revised to add an additional 82,000 jobs to the work force. As a result, federal funds futures rose after the report, signaling that the market expects the Federal Reserve may raise its benchmark rate sooner rather than later.

Ya' Just Can't Keep a Good Real Estate Market Down

The numbers keep pointing to a much healthier market from the moribund months of the last few years. Buyers are responding to a steep decline in property inventory and finally finding value in properties as prices return to a state of true-affordability. Over half of all sales are 'distressed' (either foreclosure or short sale) but most of us are seeing that a lot of the 'great buys' are sold already. It's still unclear what the impact of the predicted second-wave of foreclosures (driven more by the down economy/unemployment) will be but all indications are that it is a great time for qualified people to purchase real estate.

Details on $8,000 Tax Credit Loan at Closing

The details for the implementation of advance loans for the "$8.000 tax credit" are slowing filtering in. There had been conflicting information related to the down payment requirement for FHA loans. FHA mortgages require a 3.5 percent down payment, and the $8,000 tax credit cannot be used to override that requirement. Once the 3.5 percent down payment requirement has been met, however, the tax credit can be applied to additional costs, including a higher down payment, paying points to lower the mortgage rate, and/or closing costs. Lenders will treat the tax credit money as a second lien on the home until it’s paid back.



The best source to determine exactly how this credit can be applied to a transaction you're considering is your mortgage lender.

Catastrophic Insurance Plan

Rep. Ron Klein has re-introduced a plan to pool catastrophic property insurance risk among 30 or so states. This could help reduce high property insurance rates in Florida and other 'high-risk' areas of the country. The proposal is similar to one he authored two years ago but failed to gain traction due, in part, to opposition from the Bush Administration.

Rep. Klein's website offers details on the proposal and a link to the actual bill.

http://klein.house.gov/?sectionid=57&sectiontree=23,57&itemid=687