Real Estate News

Real estate technology company Zillow released a market report this month revealing that 29.1 percent of homeowners who purchased in the past five years owe more on their mortgage than their homes are worth. The company also reported that about 45 percent of those who bought at the national market peak in 2006 now have negative equity, and about 60 percent of homeowners in the Western region of the country who purchased in 2006 are now underwater.

With news like this it’s no wonder that consumer confidence is low and buyers are skittish. Human nature is interesting. For some reason, we tend to hang on to the negative past and ignore the possibilities of the future.

This is even more interesting when one realizes that there is nothing that can be done to change the past. We only have control over the future and how we deal with the problems of today which were created by the past.

Those that can objectively look at the market today will realize that now is the best time to buy. Inventories have stabilized and interest rates are still at historically lows levels. While prices will remain soft for a time, choices for buyers will gradually become fewer and interest rates will most likely rise.
As I have stated in the past, most financially successful people I know are contrarians. They do not let themselves bask in the past like others, but take advantage of the opportunities that most others won’t allow themselves to see. Many of your clients may need this trusted advice now more than ever. They will thank you later.

Wellington Chase Homes, in conjunction with Weir Manuel Realtors and several other local corporate sponsors, is currently constructing a magnificent new home in Birmingham. Known as the Birmingham Showhouse, it will be completed next month and, when sold, all profits from the sale will be donated to the Karmanos Cancer Institute. This home is value priced at $1,395,000. Due to the variety of subsidized and/or donated materials and services, a home of this superb quality could not be duplicated at this price.



While the charity show home concept is not entirely new, what is unique about this project is that every penny of profit from the sale will be donated to charity. Prior endeavors of this nature have donated preview event receipts and portions of profits, but I believe that generosity of this magnitude has not occurred with prior projects. It speaks highly of the real estate industry that even in such difficult economic times, a company would go out of its way to support such a worthy cause.



We have always known Wellington Chase Homes for their outstanding quality and attention to detail. Now we know also them for their philanthropy. And the same goes for the rest of the sponsors.



I encourage all of you to help us promote this property by inviting your preferred clients to the Charity Preview, by attending yourselves, and by showing the home to your qualified prospects. This is an opportunity to create a truly winning opportunity for everyone involved. The purchaser of this home will acquire a very special property at a special price and also receive the benefit of helping cancer research and treatment. This is a legacy that will follow this home forever.



Please see Rebecca Meisner if you would like formal invitations to the Charity Preview for your clients.

While the FHA loan process of the past was sometimes difficult and cumbersome, it has now become the savior of the real estate market. In the wake of the sub-prime crisis, FHA loans have now become the darling of the industry. Why? Because they are now easy! Consider this:

• Just like conventional loans, FHA loans can be underwritten via automated underwriting systems. As long as you are using a competent lender, you will get a rapid approval.

• FHA loans now use the same appraisal process as conventional loans and require the same repairs as conventional loans. No more, no less.

• The rate on a 30 year fixed FHA loan is comparable to a conventional 30 year fixed. FHA rates are based upon different funding sources and occasionally have a small variance in price, but not much. Now that conventional loans have enacted rate adjustments based upon credit score and down payment, FHA loans can even be priced much better…way better.

• Closing cost are comparable to those of a conventional loan.

• FHA loans are available to almost anyone – but you can only have one outstanding at a time. Credit requirements are less stringent than on conventional loans.

• FHA loans do not have income limitations. You can earn a million dollars or more per year and use this product.

• The down payment requirement is only three percent, which can include most closing costs! The three percent down payment may be gifted.

• FHA loans do not adhere to declining market policies.

• FHA loans can be used to acquire single family homes, condominiums, and 2 to 4 unit properties.

There are a few simple restrictions that apply. FHA loans are only for principal residences. They can be used to finance multifamily properties as long as the borrower lives in one of the units. The current maximum loan limit is $297,500. Watch for that to be significantly increased this fall.

Last week Congress and the President approved a landmark housing bill that will help stimulate the residential real estate markets in a number of ways.

GSE, FHA and VA loans limits have been increased. At the time of this writing, the actual amount of the new limits for these types of residential mortgages for Michigan is unknown. We will be reporting those new limits to you as soon as they are available.

One of the most important elements of the legislation is the Homebuyer Tax Credit. Although the program is complicated, here is an abbreviated description of the qualification requirements for the tax credit.

• First time buyers only. Defined as not having owned a home for the past three years.

• Income limits of $75,000 for singles, $150,000 for couples

• Homes or condos, principal residences only

• The credit is equal to 10% of the purchase price, capped at $7,500

• This is a tax credit, not a tax deduction, so the full amount is refunded against any income tax liability due. If the buyer owes no income tax, he will receive a check for the amount of the credit.

• Applies to homes purchased from April 8, 2008 until June 30, 2009.

The credit must be repaid over a fifteen year period beginning in 2010. If the home is sold prior to full repayment, the balance is taken from the gain. If no gain on sale, the balance is forgiven
It is expected that this program will stimulate housing demand and support falling home prices. For a more detailed description of the program, visit www.federalhousingtaxcredit.com.