Real Estate News

Congress Reinstates Higher FHA Loan Limits in DC & Higher End Markets

Washington DC and Greater Bethesda, Maryland areas Included in FHA Reinstatement...

As you may have already caught on the news, The National Association of Realtors®  announced that  Congress has reinstated the loan limit formula up to $729,750 in highest cost markets.  For those not familiar with the Washington DC Metro area, this is the limit that had been in place for the last few years, but reverted back to $625,500 on October 1, 2011. 

Washington DC

The new FHA loan limits, which will be in place through 2013, at 125% of local area median home prices, up to a maximum of $729,750 in the highest cost markets (that's us!) 

Fannie Mae + Freddie Mac = FHA? Nope

Please note, lawmakers chose not to extend the limits for Fannie Mae and Freedie Mac backed loans - who are already receiving a "substantial" (yes, in big quotes!) ammount of taxpayers' assistance for bad loans.  

I've yet to research and digest the implications of an FHA reinstatement so I'm reticent to make any predictions on possible effects in Washington DC's  home sales.  But, If I were to guess, I wouldn't see this legislation making much of a dent across any price strata in the Washington DC and surrounding close-in suburbs.  



S&P Case Schiller Says - Washington DC Ranks Top in Year Over Year Gains in Home Prices

Although the data released today by S&P/Case-Shiller shows that the majority of the country is showing a continued decline in home prices, Washington, DC had a healthy 3.5% increase over the previous year. Washington was one of only four cities that could boast an increase. The other three cities that ended up with a gain are Los Angeles, San Diego and San Francisco, all (obviously) in California.

Washington DC A lot of the gain for the year occurred in late spring, with Washington’s May 2010 showing a 7.7% increase over the previous year. This momentum was not sustained thru the end of the year, and November actually showed a decrease from the previous year.

Still, the numbers are positive and the fact that Washington, DC was the strongest in the country allows us to remain optimistic about future growth and productivity.


Housing Market Showing Signs of Progress

Guest author, Eric Bramlett

According to a recent Reuters article, housing prices in the United States experienced a rise during the third quarter. Given the state of the economy and the housing market over the past couple of years, this is certainly good news, as it ends the two-year downward trend the market had been experiencing over the past two years.

According to an independent study that was conducted by IHS Global Insight, the housing market is now slightly undervalued. In fact, the survey found that prices had increased by 0.2 percent when compared to the second quarter. In California, the quarterly rise was even greater at 2.1%. A separate survey conducted by the Federal Housing Finance Agency reported similar results, stating that housing prices rose by 0.9% for the year-over-year July through September period. This growth represents the first increase posted since the second quarter of 2007, which is when the housing market began its downward spiral.

These recent surveys show hope that the most recent recession, which is considered to be the worst recession the country has experienced in over 70 years, is finally beginning to stabilize. After all, the collapse of the housing market was the primary trigger of the recession. Thanks to the low mortgage rates, low housing prices and government tax credits for homebuyers, however, the market has slowly but surely started to enjoy an upward trend in terms of home sales.

According to the IHS Global Insight survey, which took a closer look at 330 metropolitan areas, determined that, while prices fell in 161 markets, they actually rose in 169. Furthermore, for the first time since the survey started to be conducted in 2005, no metropolitan areas were considered...

Extension and Expansion of Homebuyer Tax Credit

Last Friday, President Obama signed into law a bill that includes provisions to extend and expand the $8,000 credit for first-time homebuyers. The credit, due to expire on November 30th of this year, will be extended to contracts signed thru April 2010, for purchases completed by the end of July 1, 2010. In addition, there is a new $6500 credit for current home owners who purchase a home and the income limits for purchasers have been increased substantially – singles can now earn up to $125,000 and couples still qualify for the full credit with a combined income of $225,000.

The eligibility for first time buyers (the $8000 credit) remains the same – i.e., buyers must not have owned a principal residence for the 3 years prior to purchase. For the current homebuyer (the $6500 credit), the requirement is that they must have been in their current home consecutively for 5 of the past 8 years.

The new income limits as noted above apply to the full credit. There is a “phase out” of an additional $20,000 in each category (single and married); so buyers who fall within that income limit would get a reduced tax credit. In other words, single buyers who earn $145,000 or more would be totally ineligible as would married buyers who earn $245,000 or more.

This new law also places a limit on the cost of the home that is eligible – and that is $800,000. So, regardless of the income of the buyers, if the house is sold for more than $800,000 no credit would be received (do you think we’ll see a lot of $800k homes negotiated to a price of $799k?). And, remember, the credit is 10% of the purchase price, up to a maximum of $8,000.

The new law went into effect on the date it was signed by the President…so the new income limits and the extension to current homeowners is effective immediately.


Maryland Homestead Tax Credit Process for Eligibility Reminder

Just a little over a year ago, I posted the new regulations in Maryland requiring that property owners whose homes are their primary residence sign up for the "homestead exemption.” I reminded people that in the State of Maryland property taxes cannot go up more than 10% per year for owners in homes that are their primary residence.  In the past, when you bought a house, you indicated whether or not you intended to occupy that house as your primary residence and, if you did, that established the “homestead exemption.” The new law required all owners to fill out a form, attesting to this primary residence status. The form is provided in the tax assessment, which is sent to owners on a three year rotating basis.

Since writing that blog, many people have indicated that they did receive the form and made sure to fill it out and return it. I fear that others, however, were more focused on the amount of their new assessment -- and their right of appeal -- and perhaps missed the Homestead Exemption Form.

The change in the process for getting this tax break corresponded with the downturn in the market. No one planned this, of course – but the result could be that many people open their assessments and immediately start planning their appeal – and miss the fact that they need to process the Homestead Form in order to keep that important status.

For current homeowners it is extremely important to LOOK FOR THE FORM IN YOUR NEXT ASSESSMENT STATEMENT. If you’ve already received your assessment and didn’t see the form, you can call the Maryland Department of Assessments and Taxation at 410-767-2165 or 1-966-650-8783.

This credit is a substantial savings for homeowners, so don’t unintentionally give it up!

And, for those of you who missed the form because you were focused on your tax assessment, feel free to contact me for information on “How...

Forbes Ranks DC #2 For Job Growth In 2009

According to a recent Forbes Magazine article, Washington, D.C. ranks only behind Madison, Wisconsin in potential job growth for the coming year.

Thanks to expected increases in government and government related employment, the D.C. area should fare well in 2009. In addition, defense contracting and law are big employers in our Nation’s Capital, as is education. Washington, D.C. is home to many well respected colleges.

Madison, Wisconsin does well on the education front because of it is the home of the main campus of the University of Wisconsin which has a very large technology and medical arm. It is also the center of state and county government.

Ranking #3 is Boston, Massachusetts which, of course, also employs many people in the field of education. It has also become a hub for both technology and pharmaceutical industries.

The other cities noted in the Forbes study are: #4. Richmond, VA #5. Milwaukee, WI #6. Pittsburgh, PA #7. Baltimore, MD #8. Seattle, WA #9. Houston, TX #10. Dallas, TX


HUD Bans Builder Incentives to Use Affiliated Mortgage and/or Title Companies

Here’s an email that I just got from a lender from Bank of America:

“Good news for our buyers!! Beginning January 16th, builders will not be able to offer discounts if the buyer uses their affiliated mortgage or title companies. My experience is that ultimately the buyer gets higher rates and inferior service when using affiliated companies of the builder. Now we can get our buyers into professional lenders hands like me! Please take a minute and read below.

The Department of Housing and Urban Development, in rewriting the RESPA rules, has clamped down on builder discounts that are tied to use of the homebuilder's mortgage company. Starting Jan. 16, builders won't be able to offer $10,000 discounts on the purchase price if the homebuyer uses their affiliated mortgage or title company. The final Real Estate Settlement Procedures Act rule issued by HUD on Nov. 17 says these referral arrangements are potentially "problematic" under RESPA. "RESPA and this final rule limit tying such a discount to the use of an affiliated settlement provider," HUD says. Homebuilders, Realtors, mortgage bankers and other industry groups opposed this rule change. The National Association of Home Builders contends the change will eliminate significant savings for homebuyers. But a NAHB spokesman said the builders are not ready to comment on HUD's action. RESPA attorney Phillip Schulman said builders will have to change the way they promote their affiliates. "They won't be able to link the incentive to the use of the affiliate," the K&L Gates partner said.”

I must admit that I have to agree with HUD’s decision on this - although I don’t agree with my lender buddy’s assessment that builder affiliates often have higher rates (note that I didn’t question his comment about “inferior service” – because I’ve seen this much too often with these affiliates). Oftentimes, the lenders...

Estimated Future Property Taxes in Montgomery County Website Now Available

As many of you may know, the County Council passed a regulation which requires all homeowners (as of April 1, 2007) to notify prospective buyers of not only the current property taxes, but also the estimated future property taxes. The Council felt that there were home buyers who were surprised to see their property taxes going up after taking possession of a property, and they felt this was something that needed to be disclosed.

The good news is that the County has now released a Tax Disclosure Website to the public. Homeowners who are selling can simply plug in their address and they will be provided with the “estimated post occupancy tax for the 2008-2009 tax year.” I've provided the link for the tax disclosure information below.

It is mandated that the dollar amount of estimated future taxes, be disclosed as follows:

“Estimated tax and non-tax charges in the first full fiscal year of ownership are $_____________.”


New HUD Conforming Loan Limits Released!

Washington DC Real Estate Update

So the answer to many prospective home buyer's question has come! I just posted a new entry in my REW blog about the new conforming loan amounts and what that means to those of you looking to buy a home in the DC Metropolitan areaClick here to read all about it! 


Proposal To Raise Conforming Loan Amount

As part of the Economic Stimulus Package being considered by the administration and by Congress, there is a proposal that would be a great boon to the housing market in the Washington, D.C. area – that is the increase in the conforming loan amount. Depending on what you read, this amount (which is currently capped at $417,000) could temporarily increase to $625,000…or even more.

My understanding is that the temporary increase would be different for different parts of the country. Where housing prices are more expensive, the loan limit would be allowed to go higher than where housing prices are less. This makes great sense and, even if the increase is only temporary, it seems that” the powers that be” should give consideration to the fact that housing prices in our country vary tremendously. In some locales, the $417,000 limit makes sense and leaves only the very wealthy having to deal with a “jumbo” loan. But, for real estate in areas like Bethesda, or Chevy Chase, or Potomac or many areas of Washington, D.C., a conforming loan just doesn’t do the trick and one of the fallouts of the subprime crisis is the increase in jumbo rates. Currently, in our market, there is a one point difference between conforming and jumbo rates – and that adds up quickly over the years of a mortgage.

An increase in the conforming loan amount would be extremely helpful to Washington area home buyers. A recognition by our government that the cost of housing in our country varies dramatically and that this should translate into varying loan programs is also extremely important. Even if the former is a temporary fix, the latter may just be the beginning...

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