Insurance quick hits:

• C.L.U.E. reports display 5 years of claim history on the house being purchased AND on the buyer at any location.
• Most insurance companies consider claims and credit history in their underwriting and pricing.
• A home insurance policy does not protect against flood damage.
• Most home insurance policies have strict limitations for how much your jewelry, artwork, furs, and others are protected, unless you ADD specific amounts for each.

 

September 2007

Home Sales Pace Steadies   Sales of existing homes were down very slightly in the most recent data released by the National Association of Realtors.  The decline was 0.17% to an annual pace of 5.75 million homes, just a little above the level of sales from 2002.  Last month's sales pace was 5.76 million homes. This reflects the activity of July closed sales.  August sales data will be released near the end of September. Most problems in the housing industry right now, as we've been saying for months, has little to do with the sales pace, but the fact that there are just too many homes on the market.  See the section on Inventory Levels   Sales Pace by Region   For month to month comparisons, the West region showed a sales pace gain of 1.82% and the Northeast showed an increase in sales, up 0.99% from last month.  Sales in the South were flat (no higher, no lower) and sales in the Midwest declined by 2.17%. Comparing sales to last year reveals a different story.  Nationwide, sales were down just over 9% from last year, with the sharpest decline in the West (-15.15%).  Sales declined in the South by 10.67%, the Midwest by 5.59%, and only declined 2.86% in the Northeast.   Inventory Levels Leap Again   The number of homes for sale in July grew by 224,000 to almost 4.6 million homes.  At the current sales pace, it would take 9.6 months to sell all those homes.  That is a phenomenally high level of inventory.  It is certainly a buyer's market out there.

Home Prices Fall Nationwide     Nationally, the median average sales price decreased slightly compared to last year, down just over a half percent (0.56%) to $228,900.  Since the early sixties when experts began tracking this data, there has never been a year when the national median average price decreased.    It won't be until late January 2008 that we will get definitive figures on price appreciation (or depreciation) for 2007.  However, real estate is local.  Drops in prices are not occurring everywhere.  This is an average. The Northeast showed an increase of 5.94% in value and the West increased .92%.  The Midwest declined by 1.81% and the South fell by 3.22%. The biggest problem with declining values is not the lack of buyers or slower sales.  We are still above the sales pace of 2002 when values increased approximately 7%.  The problem is oversupply of inventory. During 2002 when the sales pace was close to what it is now, there were only approximately 2.1 million homes for sale at a given time.  Today's ridiculously high inventory levels impact sales prices. As an experiment, if someone could wave their magic wand and make a wish, they might ask everyone that absolutely didn't HAVE to sell to take their homes off the market.  It would be interesting to see what effect that would have on prices. We compare values to the same period a year ago, because month-to-month there are sometimes huge fluctuations in the size of houses that sell.  Larger houses sell during the summer which causes seasonal fluctuations in price averages.

 

August 15, 2007

Md. mortgage program thriving

Nearly 4,000 turned to the state last year for $767 million in low-interest home loans

By Jamie Smith Hopkins | Sun reporter

Here's a mortgage program that's not in trouble.

Nearly 4,000 homebuyers turned to the state for their home loans last fiscal year, a record for Maryland's 28-year-old loan program at a time of increasing disarray in the mortgage industry.

The state made about $767 million in low-interest loans to buyers, almost all of them purchasing their first home, in the 12 months that ended June 30. That's three-and-a-half times the amount it lent the previous fiscal year - and far above the $269 million record set in the 1995 fiscal year.

Stephen D. Silver, the state Department of Housing and Community Development's chief financial officer, credits timing for the big jump in demand.

The state expanded its "More House 4 Less" offerings a few years ago from a single product to several - 30-, 35- and 40-year mortgages including interest-only loans - but word filtered out slowly.

Meanwhile, first-time homebuyers found their private mortgage options shrinking this year as foreclosures rose and lenders, stung, backed away from borrowers with shaky credit or little money to put down.

"I'm sure we are picking up some people that were being steered toward subprime," said Silver, referring to loans aimed at borrowers with credit problems.

Thus far, the state has fewer delinquent loans than do lenders with mortgages in Maryland insured by the Federal Housing Administration, the state housing and community development agency said.

The state's loans have below-average interest rates - about 6 percent last fiscal year while the market rate was closer to 6.5 percent. Borrowers are also eligible for assistance with down payment and closing costs.

The products are all fixed rate. "We wanted to make sure our borrowers were getting something with no surprises," Silver said.

The state made 3,882 loans last fiscal year, triple the number a year earlier. Though that's a fraction of all new loans, it's a hefty increase at a time of slumping home sales.

Home values, which remain high, are part of the reason homebuyers would flock to a program that offers down payment and closing-cost help. Many first-time buyers are hard pressed to put even 5 percent down. With average sales prices in Maryland at $380,000, a 5 percent down payment would equal $19,000.

Ryan W. James, senior mortgage banker with First Horizon Home Loans in Timonium, said the More House 4 Less loans - sometimes called "CDA" because they're handled by the state's Community Development Administration - have grown in popularity as the state made it easier and quicker to get one.

"CDA had a bad reputation for a long time," said James, who said he now does 10 to 15 of the loans a month and said the processing time is much faster than it once was. "What took weeks with CDA now takes days. ... That helped a lot."

The average More House 4 Less borrower got a loan equaling 99 percent of the value of the home. Nine out of 10 participants got down payment assistance, closing-cost help or both from the state.

Borrowers had to be buying either for the first time or in targeted areas, such as Baltimore City. The average borrower had a household income of about $55,000 and purchased a home priced at almost $200,000.

The state housing agency, which finances its loans with mortgage revenue bonds, said it hasn't run into trouble getting money as investors abandon other parts of the mortgage market. Silver figures that's because the bonds are rated AA and are mostly tax-exempt, and because all the mortgages the state approves have either private or government insurance.

jamie.smith.hopkins@baltsun.com

 

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