Reforming America’s Housing Finance Market

Here is the 32 page document

So the Federal Government has come out with a 32 document trying to explain how they are going to fix the housing finance market.

Remember back when they said they were going to lower the FHA upfront mortgage insurance and raise the annual mortgage insurance to save you money? That’s OK if you don’t they did. Well it never saved anyone any money! In fact it increased a $200,000 loan by about $48 per month. Save money? REALLY?

Well one of the things the feds also did in that move was to give themselves the right to increase the annual mortgage insurance without going back to congress.

Page 15

“We have already acted on this front, raising premiums two times since the beginning of this Administration. And we will put in place another 25 basis point increase in the annual mortgage insurance premium that is detailed in the President’s 2012 Budget.”

Does increasing the insurance premium really help? I guess the better question is who or what does it help? It doesn’t help the housing market, it doesn’t help the job market.

Just as a rose by any other name is still a rose or if it smells like fish its fish, a tax by any other name is a tax! If the government raises a fee or whatever they decide to call it is a tax.

What it really does is move a little more equity from the market and gives it to the feds, and we all know how responsible with money they are.

The more people that are employed, the more taxes the government can collect, less houses would go into default and so…

Let’s take a look at how many people are directly and indirectly employed by the housing market.

When a home sells there are a boat load of folks involved.

This does not account for the all the cell phones, web sites, marketing, supplies, cars, gas. What about the folks moving, they hire movers, buy boxes, order lots of pizza. Then there are the several trips to Home Depot, Target, Walmart.

Then there are the investors that buy houses and “remodel” which is code word for people working and the buying of materials which employs more people.

So here is the question. Would making it more or less expensive for a buyer to buy a home create more jobs?

We keep hearing that because the tax credit is over that the buyers will dry up. I personally think there will a lull a hangover if you will.

There are different reports that tell us buyers didn’t buy because of the tax credit. Those that were going to buy may have adjusted their time table to take advantage of it.

The number one reason among first time buyers for buying a home simply was the “Desire to own a home” by a whopping 62%, the next reason was affordabilty at 10%.

Another survey was done with the folks that received the Home Run Grant for purchasing new construction.  Their top reason was affordability and the second reason was the low interest rates.

So does that mean we are going to see the same numbers to continue? I really think there will be a slow down and then it will pick back up. Really all we did was borrow buyers from the immediate future.

Our market is in pretty good shape because we are pretty well employed compared to other parts of the country.

Congresswoman Waters from California serves on two House committees and their various subcommittees:

• Financial Services Committee
  • Chairwoman, Subcommittee on Housing and Community Opportunity
  • Subcommittee on Financial Institutions and Consumer Credit
  • Subcommittee on International Monetary Policy, Trade and Technology
• Judiciary Committee
  • Subcommittee on Crime, Terrorism, and Homeland Security
  • Subcommittee on Immigration

It is important to understand that what is called the “Fed Rate” is a short term rate and is not directly tied to mortgage rates.

It is for overnight lending. Short term rates affect short term rates. Long term rates affect long term rates.

Now all economics are tied together eventually.

But as someone that is serving in the Congress and especially on the Financial Services Committee she should have some working knowledge of the system.

Click here to view the embedded video.

She claims that she saw something on TV and has talked to some people.
Now remember she was adamant for some sort of assurance that rates would not go up.
OK Now what has Congresswoman Waters been up to?

H. R. 5072

To improve the financial safety and soundness of the

FHA mortgage insurance program.

IN THE HOUSE OF REPRESENTATIVES

APRIL 20, 2010 Ms. Waters (for herself, Mrs. Capito, Mr. Frank of Massachusetts, and Mr. Al Green of Texas) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To improve the financial safety and soundness of the FHA mortgage insurance program.

The table above shows the difference between the two loans with the same interest and the increase in FHA’s mortgage insurance. It would affectively raise what is a payment rate from 5.75% to 7.010%.

How does this help the consumers and the current economic situation? It doesn’t!

It is just another form of tax to fill the coffer of the Federal Government for more squandering.

What’s worse is rates will eventually go up. Rates have been kept low because the FEDs were the ones buying the mortgage backed securities and that ended March 31st.

The historical averages of mortgage interest rates has had some dramatic swings.  There have been extreme highs and extreme lows.

The extreme highs were around 18% and the extreme lows were around 4.5% .

We are approximately 5-5.25 which means we are near the extreme lows. The “annual average” since 1971 has been around 8.75% RATES WILL GO UP!

In case you missed it at the top of the page, she is on the Subcommittee of Crime, Terrorism and Homeland Security and another Subcommittee on Immigration.

Sleep Tight!

People always ask. How’s the market? Of course the answer is depends.

Depends on many factors, geography, price point, whether you are buying or selling.

Another thing it depends on.

Are you buying or selling?

Are we in a buyers market a sellers market? What’s going on?

A Buyers market is defined as having less than 6 months supply of homes.
A sellers market is defined as having more than 7 months  supply of homes.
A neutral market is defined as 6-6.99 months supply of homes

The formula that is used to determine how many months supply of homes is.
Take the number of sold for the last 60 days added to the sale pending then divide by 3.
Then divide the number of active listings by that number.

Actual Cottonwood Heights numbers

Based on that we are in a slight sellers market, not to be confused with a run away sellers market of a few years gone by.

Currently Salt Lake County has three markets.

Under $250,000 based on the current numbers there are 4.99 months supply of homes. That is a seller’s market.

$250-450,000 there is a 6.86 Months Supply which is considered a neutral market.

$450,000 and above there is a 11.51 Months supply of homes, pure buyers market.

If you would like a more detailed report for your area, contact me.

Voice or Text 801-999-8209
Rob@Aubrey.net

Currently there is an application to amend the General Plan  to allow up to a 12 story building over at the Old Mill Corporate Center.

The City Council has decided that that while they are at it to explore the feasibility of possibly adding other sections of the city.  The other sections would be the Gravel Pit on Wasatch and the Union Park Office Complex.

This of course has pros and cons and will make for some interesting and quite possibly entertaining hearings and city council meetings.

One thing I learned that no matter what is proposed there are folks that think any sort of change is from the dark side and everyone involved is evil.

So the pros are more taxes and usually with this type of tax there are not as much city services required to generate as would be with the same amount collected by  a residential tax.

So far the only cons I see is more traffic. None of the proposed sites back up to residential properties.

The Cottonwood Heights City Council has two open houses scheduled April 14th and 15th followed by public hearings on May 5th 2010 and in June.

Here is a link to the application for the General Plan Amendment.

There are some interesting comments about LEED (Leadership in Energy and Environmental Design).

This month in real estate featuring
Jay Papasan and Bryon Ellington

They discuss Gallup Healthways top ten major metro areas to live
based on happiness.

Bryon discusses distressed properties.

If you would like to find out if home prices have stabilized in your area

go to www.MoreHaouseValues.com

Of course you can call me at 800-999-8209

The Different Ways to Pay for Closing Cost

Again the key is how long will you own the home or own the loan. If you are a first time home buyer I really recommend paying your closing cost in the rate. The odds are great you will not own the property long enough to matter too much. I am a big fan of owing less money.

Here is a table that I used to explain the different scenarios in the video.

Fell free to contact me if you would like to discuss this further.

Don’t forget you can search all homes listed by Realtors by clicking on the Search Homes Tab up top.

Here is a nice little two and a half minute video on staging a home. Stay tuned for more to come.

If you need a stager or just some basic questions just contact me and I will be glad to answer or find out for you.