Tuesday, May 25, 2010
Sunday, May 23, 2010
Hinsdale Central High School District Distressed Home Sales Significantly Better Than National Average
Distressed single family home sales in the Hinsdale Central High School real estate submarket totaled 42 units or 11.9% of total units sold in the 12 month period from May 2009 to 2010 according to MLS data for the area. The average sale price of foreclosed homes was $734,119 and the median value was $699,000 while short sales (distressed sales in pre-foreclosure) averaged $911,287 and the median value of these was $722,500. The total value of distressed sales in the submarket was $26,357,510 or 8.22% of the total homes sales value of $320,772,885 for the period. The percentage of distressed sales in the United States housing market has been estimated at 29% by first American CoreLogic and for Chicago they have estimated about 34%.
Tuesday, May 11, 2010
What to Do Now That the Home Buyer’s Tax Credit Has Expired?
So now that the first and repeat buyer’s tax credit has come and gone some people who missed out due to timing reasons might be asking themselves what they can do to buy a home. The tax credit, particularly the first time buyer’s tax credit, was a tremendous tool to stimulate housing demand and to make home ownership more affordable for many. However, just because the credit has expired does not mean that there aren’t still tools and strategies which aspiring home owners can take advantage of and which encourage action now.
Here are some ways:
1. Take advantage of the current FHA lending rules for low down payment loans. With qualifying credit and income stability, it is still possible to get an FHA loan and buy a home with as little as 3.5% down. The 3.5% requirement can be satisfied with the borrower using their own cash or receiving a gift from a family member, their employer, labor union, non-profit or government entity. There have been discussions of raising the minimum down payment for FHA to 10% (the current level for lower credit qualifiers which may also increase in the future).
2. Focus on short sales. Much of the under $200,000 housing stock was snapped up by first time home buyers in the run-up to the expiration of the tax credit. Many of these homes were foreclosures and short sales (mortgage owed is greater than the home value). In fact, foreclosures became objects of bidding wars. Short sales require bank approval, but because they are not yet bank-owned the period of time for bank approval is much longer (2 – 3 months or more). It is possible that some first-time buyers established multiple short sale contracts before April 30 2010 in order to satisfy that deadline and once one of the contracts is accepted by the bank, they will drop the others causing these homes to come back on the market (this is my theory right now and I am trying to develop the data which supports this view). In any event, there are still plenty of short sales available and the removal of the tax credit deadlines might make these a more attractive package than a foreclosure.
3. Take advantage of lower Mortgage Insurance premiums. Mortgage insurance premiums currently stand at 2.25% upfront and 0.55% monthly. Until just recently the upfront premium was 1.75% and there is talk of the monthly 0.55% premium rising in the future.
4. Take advantage of low interest rates. There is some debate as to whether home prices have bottomed. Who knows? There is also a lot of discussion about possible rate hikes. This is much clearer to predict. The amount of stimulus money which has been put to work coupled with a gradually improving economy point to rate hikes as a matter of when not if. If a $200,000 house were to drop another $10,000 the savings at a current interest rate of 5.25% would be just under $20,000 over the life of the loan ($10,000 upfront and $9,879 in interest over the loan life. However, if the interest rate for the same $190,000 house increases by just ½% the savings are erased. Which way do you want to bet?
5. Take advantage of 6% closing cost credit for FHA loans before it is reduced to 3%. Currently buyers can receive up to 6% closing cost credit from the seller which can be used to pay for transaction costs, upfront mortgage insurance premiums and interest rate buy-downs.
Capping all of this discussion is the fact that it is currently substantially less expensive to own a home today than it is to rent (see Rent vs. Buy) and there are compelling reasons to act now and buy a home.
Here are some ways:
1. Take advantage of the current FHA lending rules for low down payment loans. With qualifying credit and income stability, it is still possible to get an FHA loan and buy a home with as little as 3.5% down. The 3.5% requirement can be satisfied with the borrower using their own cash or receiving a gift from a family member, their employer, labor union, non-profit or government entity. There have been discussions of raising the minimum down payment for FHA to 10% (the current level for lower credit qualifiers which may also increase in the future).
2. Focus on short sales. Much of the under $200,000 housing stock was snapped up by first time home buyers in the run-up to the expiration of the tax credit. Many of these homes were foreclosures and short sales (mortgage owed is greater than the home value). In fact, foreclosures became objects of bidding wars. Short sales require bank approval, but because they are not yet bank-owned the period of time for bank approval is much longer (2 – 3 months or more). It is possible that some first-time buyers established multiple short sale contracts before April 30 2010 in order to satisfy that deadline and once one of the contracts is accepted by the bank, they will drop the others causing these homes to come back on the market (this is my theory right now and I am trying to develop the data which supports this view). In any event, there are still plenty of short sales available and the removal of the tax credit deadlines might make these a more attractive package than a foreclosure.
3. Take advantage of lower Mortgage Insurance premiums. Mortgage insurance premiums currently stand at 2.25% upfront and 0.55% monthly. Until just recently the upfront premium was 1.75% and there is talk of the monthly 0.55% premium rising in the future.
4. Take advantage of low interest rates. There is some debate as to whether home prices have bottomed. Who knows? There is also a lot of discussion about possible rate hikes. This is much clearer to predict. The amount of stimulus money which has been put to work coupled with a gradually improving economy point to rate hikes as a matter of when not if. If a $200,000 house were to drop another $10,000 the savings at a current interest rate of 5.25% would be just under $20,000 over the life of the loan ($10,000 upfront and $9,879 in interest over the loan life. However, if the interest rate for the same $190,000 house increases by just ½% the savings are erased. Which way do you want to bet?
5. Take advantage of 6% closing cost credit for FHA loans before it is reduced to 3%. Currently buyers can receive up to 6% closing cost credit from the seller which can be used to pay for transaction costs, upfront mortgage insurance premiums and interest rate buy-downs.
Capping all of this discussion is the fact that it is currently substantially less expensive to own a home today than it is to rent (see Rent vs. Buy) and there are compelling reasons to act now and buy a home.
Saturday, May 8, 2010
Thursday, May 6, 2010
Wednesday, May 5, 2010
Property Taxes - 'Tis The Season to Be Wary
Have you received and reviewed your property tax bill recently? Was it a happy event? Not likely. It is especially painful to see your property tax bill grow when property values have been falling over the past few years. Errors or incorrect information in your property tax file can cause you to pay more taxes than necessary so it is important to review your bill for accuracy. Here are some common sources of errors:
(a) An imposition of an incorrect, erroneous or illegal tax rate that resulted in assessing or collecting excessive taxes.
(b) An incorrect designation or description of the use of property or its classification.
(c) Applying the incorrect assessment ratio percentages
(d) a valuation that is based on an error that is exclusively factual in nature or due to a specific legal restriction that affects the subject property and that is objectively verifiable without the exercise of discretion, option or judgment and that is demonstrated by clear and convincing evidence such as:
(e) A mistake in the description of the size, use or ownership of land, improvements or personal property.
(g) Clerical or typographical errors in reporting or entering data that was used directly to establish valuation.
(h) The existence or nonexistence of the property on the valuation date.
(i) Any other objectively verifiable error that does not require the exercise of discretion, opinion or judgment
If you would like to learn more about the property tax appeal process or to have a free property tax evaluation, visit:
www.dupagetaxappeals.com
I won every appeal for my clients last year and was able to save an average of just about $2,000 each (your actual results may vary).
(a) An imposition of an incorrect, erroneous or illegal tax rate that resulted in assessing or collecting excessive taxes.
(b) An incorrect designation or description of the use of property or its classification.
(c) Applying the incorrect assessment ratio percentages
(d) a valuation that is based on an error that is exclusively factual in nature or due to a specific legal restriction that affects the subject property and that is objectively verifiable without the exercise of discretion, option or judgment and that is demonstrated by clear and convincing evidence such as:
(e) A mistake in the description of the size, use or ownership of land, improvements or personal property.
(g) Clerical or typographical errors in reporting or entering data that was used directly to establish valuation.
(h) The existence or nonexistence of the property on the valuation date.
(i) Any other objectively verifiable error that does not require the exercise of discretion, opinion or judgment
If you would like to learn more about the property tax appeal process or to have a free property tax evaluation, visit:
www.dupagetaxappeals.com
I won every appeal for my clients last year and was able to save an average of just about $2,000 each (your actual results may vary).
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