Senate Panel OKs Extension for Home Buyers Credit

Senators reached a compromise to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.

Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.

Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, the sources said. The measure still faces votes in the full Senate and the House.

Source: The Philadelphia Inquirer

Senators Differ on Extending Homebuyer Tax Credit

Top Democrats in the Senate are pressing a plan that would extend a popular tax credit for first-time homebuyers but gradually phase it out through March 31st of next year.

The proposal, by Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., would extend the $8,000 tax credit – which expires Nov. 30 – through March 31. Its value would drop by $2,000 for each of the subsequent three quarters of 2010.

The plan, which could face a vote in the Senate this week, appears aimed at countering a far more generous $17 billion bipartisan plan that would extend the $8,000 credit through June 30, 2010, boost the income cap for eligibility and open the credit to all buyers, rather than first-timers.

Senators are maneuvering to add the homebuyer tax credit extension to legislation to extend unemployment benefits by up to 20 weeks.

Supporters say the tax credit has helped revive the housing market and say that if it’s cut off as scheduled at the end of next month, home sales could drop off.

Reid sought to schedule a vote on the competing measures on Monday but was blocked by top Senate Republican Mitch McConnell of Kentucky, who is demanding votes on unrelated GOP proposals.

One such proposal would require people receiving unemployment insurance to be processed through the E-Verify program to prove legal immigration status and would require all federal contractors to use E-Verify. E-Verify is an Internet-based system that employers use to check on the immigration status of new hires.

The Democratic plan also would extend the ability of money-losing businesses to claim refunds on taxes paid during profitable times up to four years ago. All businesses could take advantage of the credit; when passed in February it was limited to smaller companies with annual revenues of $15 million or less.

Source: The Associated Press

Tax Credit Fuels Rise in Florida’s Home and Condo Sales in September

Florida’s existing home sales rose in September, which marks more than a year (13 months) that sales activity has increased in the year-to-year comparison, according to Florida Realtors. September’s statewide sales also increased over sales activity in August in both the existing home and existing condominium markets.

Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August.

Florida Realtors also reported a 77 percent increase in statewide sales of existing condos in September compared to the previous year’s sales figure; statewide existing condo sales last month rose 8.9 percent over the total units sold in August.

All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed a gain in condo sales. A majority of the state’s MSAs have reported increased sales for 15 consecutive months.

Florida’s median sales price for existing homes last month was $142,000; a year ago, it was $174,900 for a 19 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in August 2009 was $177,500, down 12.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $315,000 in August; in California, it was $292,960; in Maryland, it was $265,862; and in New York, it was $205,000.

NAR’s latest industry outlook notes positive signs in the housing sector, but adds that extension of the federal first-time homebuyer tax credit would help sustain a fragile recovery. “Now that the market is showing some momentum, we have an opportunity to achieve a more rapid and broader stabilization in home prices,” said NAR Chief Economist Lawrence Yun. The outlook for home sales and prices depends on whether the tax credit is extended, he said, describing it as “the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”

In Florida’s year-to-year comparison for condos, 5,088 units sold statewide last month compared to 2,870 units in September 2008 for a 77 percent increase. The statewide existing condo median sales price last month was $102,500; in September 2008 it was $153,500 for a 33 percent decrease. The national median existing condo price was $179,300 in August 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.06 percent last month, a significant drop from the average rate of 6.04 percent in September 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Pensacola MSA reported a total of 275 homes sold in September compared to 267 homes a year earlier for a 3 percent increase. The market’s existing home median sales price last month was $135,000; a year ago it was $146,900 for an 8 percent decrease. A total of 48 condos sold in the MSA in September, up 41 percent over the 34 units sold in September 2008. The existing condo median price last month was $190,000; a year earlier, it was $180,000 for a 6 percent gain.

Source: Florida Association of Realtors

Summer House condos sold at auction

J.P. King Auction Co.  sold 23 condominium units at the Summer House at Old Ponte Vedra Beach for $2.4 million at auction.

The auction took place at the Sawgrass Marriott in Ponte Vedra Beach Oct. 10 with more 95 registered bidders from Florida, Massachusetts, Maryland, New Hampshire, Pennsylvania, New Jersey, New York, Ohio, Georgia, Michigan, Idaho, Tennessee, Montana and one international bidder from the Virgin Islands.

According to St. Johns County public records, so far in 2009 several dozen of the units have been issued a judgement of foreclosure ordering them to be sold at public auction or a lis pendens, which is the first step in the foreclosure process.

Atlanta-based Julian LeCraw & Co. is the master developer of Summer House, located at 700 Ocean Place.

Source: Jacksonville Business Journal

Forbes ranks Jacksonville 14th among America’s recession-proof retirement markets

The Jacksonville area ranks No. 14 on a new list by Forbes of America’s 40 “recession-proof” retirement cities.

Forbes said it considered such factors as average income for seniors, current and expected home prices, job-growth predictions through 2014, the cost of living and median monthly housing cost.

Jacksonville ranked 13th for number of sunny days, 8th for income of residents 65 and older, 14th for median home price, 32nd for home price change predicted for 2009-2014, 13th for cost of living and 15th for median housing cost.

Atlanta was No. 1, followed by Dallas-Fort Worth, Tampa-St. Petersburg, Houston, St. Louis, Austin, Las Vegas, Phoenix, Kansas City and San Antonio. Jacksonville ranked ahead of No. 26 Orlando and No. 29 Miami.

New York finished last among the 40 cities, with Milwaukee and Boston near the bottom.

Source: Forbes.com

Economic Growth Expected to Slow in First Half of 2010 before Picking up in Second Half

Mortgage Bankers Association (MBA) expects economic growth to continue through the rest of 2009 before slowing in the first half of 2010. Unemployment is expected to climb to 10.2% by the middle of 2010 before beginning to moderate as economic growth resumes sustained growth in the second half of the year.

Mortgage originations should reach $1.5 trillion in 2010. Modest increases in home sales should drive purchase originations but refinance originations are expected to decline as mortgage rates rise.

“The recession is behind us, but the effects of the recession will linger for some time in the form of higher unemployment, and lower levels of business investment and home construction. One of the big questions regarding growth will be the behavior of consumers. The large losses of consumer wealth in the form of reduced home values and stock market losses, as well as the absolute losses of income resulting from unemployment, reduced employment and the fear of unemployment have constrained consumer spending,” said Jay Brinkmann, MBA’s chief economist and senior vice president for research and economics.

“Timing of the economic recovery is very much tied to the growth in consumer spending. In addition, the effect of the bulk of the federal stimulus package, particularly the construction components, is not expected to be felt until 2010.

“Perhaps the biggest unknown is the level and volatility of interest rates. While the lack of inflation, high unemployment and excess capacity in the economy should hold interest rates down, there is a lot of uncertainty regarding rates immediately following the termination of the Federal Reserve’s purchase of mortgage-backed securities. No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries. The size of any resulting rate move will largely determine the size of the refinance market.”

Following are the key points of the latest MBA forecast:

-Real GDP growth was negative in 2009, with the economy contracting by around 0.5% resulting from sharp drops in the first half of the year followed by growth in the second half. Growth is expected to be about 3% in 2010.

-The unemployment rate will continue to increase from the current level of 9.8% to about 10% by the end of 2009 and peak at 10.2% in the second quarter of 2010, before declining slowly through 2011.

-Fixed mortgage rates are expected to average about 5% in the fourth quarter of 2009 and increase to 5.6% by the end of 2010.

-Total existing home sales for 2009 will end up about 2% higher than those for 2008. Existing home sales are projected to increase further in 2010, increasing by about 11.2%.

-New home sales for 2009 will be down by about 18% relative to 2008. Sales seemed to have bottomed in the first quarter of 2009 and have been rebounding modestly since. For all of 2010, new home sales should post an increase of about 21% from 2009’s very low levels.

-National average home price declines should abate by early 2010, but will vary by state and home value. The demand will be highest for entry-level homes.

-Purchase originations for 2009 will be $718 billion, about 2% below the 2008 level of $731 billion. Purchase originations should rise about 12% in 2010, as existing home sales recover and home prices stabilize.

-Refinance originations will end 2009 at $1.245 trillion, up about 60% from $777 billion in 2008. Refinance activity will likely decrease in 2010 to about $745 billion as mortgage rates increase.

Source: http://www.mortgagebankers.org

Homeowners with Modified Loans Re-Default Within a Year

As lenders are ramping up efforts to avoid home foreclosures, bank regulators report that more than half of borrowers who get help fall behind again.

More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year later, according to the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision.

But the results were better among those who saw their payments drop substantially.

About one in three borrowers whose monthly payments were reduced by 20 percent or more had fallen behind again within a year. That compares with more than 60 percent for borrowers whose loan payments were left unchanged or increased.

The report highlights a significant challenge for the Obama administration’s plan to tackle the foreclosure crisis, backed by $50 billion in money from the financial industry bailout fund.

The administration’s effort got off to a slow start, but has picked up speed in recent months. As of last month, about 360,000 borrowers, or 12 percent of those eligible, have signed up for three-month trial modifications. They are supposed to be extended for five years if the homeowners make their payments on time. There is currently no data on redefaults within the plan.

Traditionally, most lenders have offered payment plans that allowed borrowers to catch up on missed payments. But those modifications often do not involve an interest rate reduction and result in a higher monthly payment.

All that does is set the borrower up for failure because they are not true loan modifications.

Bank regulators say they have pressed lenders to shift their focus to modifications that reduced borrowers’ payments. They made up nearly 80 percent of new modifications in the April-June quarter, up from about half in the first three months of the year.

The report covers 34 million loans, representing more than 60 percent of primary home mortgages. Consistent with other reports, it showed borrowers are continuing to fall behind as job losses mount. More than 11 percent of borrowers covered by the report had missed at least one payment as of June 30, up from 10 percent in April.

It also highlighted mounting problems with an especially troubling category of loans’s “pick-a-payment” or option ARM loans, which allowed borrowers to defer some of their interest payments and add them to the principal. At the end of June, 10 percent of these loans were in foreclosure, more than triple the rate for all mortgages in the survey.

The lenders included in the report offered help to about 440,000 borrowers in the April-June period, they started foreclosure on about 370,000 homes, unchanged from the January-March period.

Source: Federal Office of the Comptroller of the Currency, The Office of Thrift Supervision, The Associated Press

Record Streak Continues for U.S. Pending Home Sales

Pending home sales have increased for seven straight months, the longest in the series of the index which began in 2001, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, rose 6.4 percent to 103.8 from a reading of 97.6 in July, and is 12.4 percent above August 2008 when it was 92.4. The index is at the highest level since March 2007 when it was 104.5.

Lawrence Yun, NAR chief economist, said not all contracts are turning into closed sales within an expected timeframe. “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” he said. “No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month.”

The Pending Home Sales Index in the Northeast jumped 8.2 percent to 85.3 in August and is 12.0 percent higher than August 2008. In the Midwest the index rose 3.1 percent to 90.8 in August and is 7.6 percent above a year ago. In the South, pending home sales increased 0.8 percent to an index of 104.6 and is 8.2 percent above August 2008. In the West the index surged 16.0 percent to 130.5 and is 22.3 percent above a year ago.

“There is likely to be some double counting over a span of several months because some buyers whose contracts were cancelled have found another home and signed a new contract to buy,” Yun explained. “Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being cancelled? Without historic precedents, it’s challenging to assess.”

Yun also noted that the data sample coverage for pending sales is smaller than the measurement for closed existing-home sales, so the two series will never match one for one.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers need to act now. “Potential first-time buyers must make a contract offer very soon to have a reasonable chance of qualifying for the tax credit,” he said. “Congress needs to extend and expand this program because it’s stimulating the economy and reducing inventory close to price stabilization points.”

McMillan said a sizable number of homebuyers already in the pipeline could be let down because of the tight deadline. “We know there is a pent-up demand because sales are below normal levels for the size of our population. The faster we absorb excess inventory, the sooner we’ll turn the corner on home prices, prevent additional families from becoming upside-down in their mortgages, and give Wall Street the confidence to extend credit to other sectors,” he said. “Each home sale pumps an additional $63,000 into the economy through related goods and services, so the benefits of extending and expanding the tax credit far outweigh the costs.”

Yun said the forecast for home sales and prices depends very much on whether a tax credit is extended. “All we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession,” he said. “Extending and expanding the tax credit is the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”

Source: Florida Realtors

Jacksonville Ranks 38th for Income Growth

Jacksonville ranks 38th in a new bizjournals study of income growth among 100 large U.S. cities over the last quarter-century.

As of 2008, per-capita income in metro Jacksonville was $39,305, up nearly 225 percent from 1983 and up 26.2 percent between 2003 and 2008, bizjournals reported. Bizjournals is the online division of American City Business Journals, the parent company of the Jacksonville Business Journal

The rankings were based on comparisons of growth among 100 cities over 25 different time spans, all ending in 2008, ranging from a 25-year span to one year, so the results are weighted toward more recent growth.

Bizjournals ranked New Orleans No. 1, noting that the city has experienced rapid income growth since it was ravaged by Hurricane Katrina in 2005.

New Orleans’ per-capita income (now $44,136) grew 255.8 percent between 1983 and 2008, and 50.9 percent — highest of all 100 cities — between 2003 and 2008.

Rounding out the top 10: Oklahoma City; Bridgeport-Stamford, Conn.; Tulsa, Okla.; Houston; El Paso, Texas; San Francisco-Oakland; Baton Rouge, La.; Birmingham, Ala.; and Boston.

See income growth chart.

Source: Jacksonville Business Journal