CAAR Blog

 (Courtesy of the National Assocaition of Realtors)

• GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500.  The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009.  The credit is repayable over 15 years (making it, in effect, an interest free loan).  See Chart!

• FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans.  Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value.  Borrowers would have to share 50% of all future appreciation with FHA.  The loan limit for this program is $550,440 nationwide.  Program is effective on October 1, 2008.

• Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members.  This prohibition does not go into effect until October 1, 2008.

• VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

• Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year.  This provision does will be effective from October 1, 2008 through September 30, 2009.

• GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

• Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

• National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs.  In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program.  In out years, the Trust Fund would be used for the development of affordable housing.

• CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

• LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

• Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate).  Federal bank regulators will establish a parallel registration system for FDIC-insured banks.  The purpose is to prevent fraud and require minimum licensing and education requirements.  The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

 

Okay, I confess.  When I first opened this link I flinched when I saw it was from AARP.  I am, like many baby-boomers, in complete denial that AARP should have me on their mailing list.  Argh!  But hey, this was a story about Charlottesville being on the list of Healthiest Hometowns.  That sounded pretty good, so I read on.  Good stuff here - I won’t deny that!

 Healthiest Hometowns  

What goes on in Albemarle, sometimes migrates to other counties. Other counties tend to take advantage of the effort and money that Albemarle puts into an item and then barrows it. Fortunately, this doesn’t happen all the time. I have written about Albemarle’s anti-business/development process and attitude before. It is nothing new, but fortunately for residents in other counties in central Virginia, most other local governments embrace a reasonable process and attitude toward an important part of the local tax base.

I recently read a recap of the Fluvanna Supervisor’s meeting on the Free Enterprise Forum’s Blog and was very pleased to see that Fluvanna was adopting a more transparent (a.k.a., fair, honest, and open) process of considering land use issues. I particularly like the part about staff NOT making a recommendation. The standard procedure in Albemarle is for staff to give a thumbs up or down to a project when they present it to the Planning Commission and that needs to stop for the reasons cited in Fluvanna.

Here is a summary:

Land Use Issues

Planning Director Darren Coffey outlined some new land use application procedures that the supervisors endorsed. To make the process more transparent, and insulated from charges of favoritism, Mr. Coffey announced the following:

• Developers will now participate in a pre-application meeting to have a better understanding of the process and hopefully submit a higher quality application;

• There will be a neighborhood meeting for rezoning applications and special use permits prior to the Technical Review Committee meeting. This would provide for earlier citizen input in the process and more information for both the Planning Commission and Board of Supervisors; and,

• The planning staff no longer will make a recommendation when submitting its staff report. Coffey stated that it was important for the staff to remain credible and neutral throughout the process, and that the staff should not make policy recommendations but rather “accurately and fairly evaluate each application that is submitted�.

NAR has just been set up for failure.  I hope I’m wrong, but history is on failures side.  As I reported in the past, NAR is developing a database of every possible piece of information on every property in the United State.  Jim Duncan, who served on the task force that came up with the idea, first reported on this in December 07.  This project has gone through several names.  It started as the Gateway, then changed to the Real Estate Channel, then to the Library/Archive and now to the final and official name, the REALTORS® Property Resource (RPR).

I’m only half kidding about this – you get to decide which half – but I gave my input along the way as to what name we should use.  I said call it whatever you want, but make sure it does not end up with a 3-letter acronym.  You see NAR has a remarkable failure rate with things that have a 3-letter acronym.  For instance, oldies like PRC and RIN and more recently IDX and VOW.  Now, my definition of failure is debatable, but basically anything that involved a major lawsuit or loss of significant money, I consider a failure.

There have been no NAR initiatives with 3-letter acronyms that have succeeded since MLS and even that has faced many lawsuits.  I still consider MLS a success because it is the number 1 member service NAR has ever come up with.  Essentially, MLS was a killer application that brought order to the marketplace.  Like it or not, MLS has been a success.  I do not know the date MLS was coined, but it was a long time ago in relative terms to this post.

So, now the latest challenger to the 3-letter theory jinx is RPR.  This concept is so BIG in concept that it may be a killer app in its own right.  Time will tell, but I am optimistic that it can become a major resource for members.

Many of us have said “buyers aren’t buying because they can’t get financing.� But, is that true, or are we just guessing based on all the mortgage crisis hype? Here are some interesting soft facts created by the National Association of REALTORS® based on a survey of 2000 members.

Question: “In thinking of your most recent potential buyer in 2008, did the client postpone their home buying decision?”
· 50 percent said no, and said the buyer bought in the end
· 23 percent said the potential buyer did not buy, preferring to wait for prices to fall further
· 6 percent said the potential buyer did not buy because of mortgage difficulties
· 4 percent said the potential buyer could not locate that ‘perfect’ home
· 7 percent said the potential buyer needed to first sell the current home
· 9 percent said the potential buyer changed their mind due to various personal reasons
While this is only soft data, it is better than basing our opinions on NO data. I’d recommend reading the entire post by NAR’s Chief Economist Lawrence Yun.

After releasing the Mid-Year CAAR Market Report last week, we have had requests to provide stats and analysis on some other areas.  We started including the Central Valley (Waynesboro and Staunton) in this year’s reports, so it is only fair that we cover other areas as well.  Although most areas in the Charlottesville area market are down compared to last year, Madison and Culpeper are both surging!

Disclaimers and credits:  These stats come from the Metropolitan Regional Information System (MRIS) and only cover the months of May and June.  The conclusions I draw are based on very limited information and should not be used to conclude long-term market trends.  Simply put, these observations are for entertainment purposes only.

Culpeper has really done well in the last few months compared to 2007.  Sales are up 57% in May and 83% in June compared to the same months last year. The total sales for the two months combined were 120 in 2008 compared to 71 in 2007.  It is interesting to note that this surge in sales coincided with a significant drop in the median price.  Maybe the market has found the price point at which buyers are comfortable.  In May, the median price dropped 26% to $230,000 and in June tumbled 28% to $235,000 compared to the same months last year.  The numbers for Average Days on Market (DOM) were mixed.  In May, DOM was up 40% to 171 and in June DOM was down almost 10% to 128.

Sales in Madison County also increased for both of the last two months.  In May, sales skyrocketed 16% and in June they soared 12%.  This would be a good time to take a deep breath and savor that giddy feeling that reminds you of the boom market of 2005 and 2006 before you read on.  The full story of this sales surge in Madison is that the real estate market is VERY small in this quaint County (and they like it that way).  The two-month sales total in Madison for 2008 was 16 homes compared to 14 homes in that period last year.  Other numbers for Madison are mixed (up one month, down the other) and the low number of total sales makes it impossible to draw conclusions. 

Anecdotally, I have heard that the market in the northern part of the state has been picking up.  If true, that is a possible indication that our area will soon see an increase in sales compared to 2007.  We’ll just have to wait and see what happens, but it is good to see good numbers from these tangential markets.  Visit CAAR Blog in the coming days to see numbers form Buckingham, Orange and other areas that overlap the Charlottesville market area.

The House has approved and the Senate will likely follow suit of another housing stimulus package to rev up the housing market.  This package has some long-range good stuff in it as well as some short-term “go-juice� for the market.  Long-term treats include high loan limits for jumbo loans in high-priced market areas.  I’m not sure Charlottesville will benefit, but the larger markets like San Francisco, northern Virginia, and others will.  Also, the fed is going to add serious backing for FHA loans which now make up only 2 or 3% of the mortgages.  Most expect FHA to account for 20% in the near future.

On the short-term side, there is an $8,000 tax credit for new home buyers.  The senate is stuck on this issue and wants to make it more of a “loan� that first time buyers have to pay back a $1000 a year for 8 years.  What?  That just sounds wrong.  Anyway, as soon as the Senate figures out what to do, it will head to the President for a signature.

The Bush administration is not really in favor of this plan, but is expected to sign-off on it anyway – it is an election year after all.  Treasury Secretary Paulson recently testified at a Senate meeting and clearly stated the administrations feelings on any sort of bail-out. 

Here is a story form Realty Times that covers the Secretary’s comments. 

Local coverage on CBS19.

Real Estate Market is as Hot as ANWR

Just about everything in life is relative to your perspective. Based on that theory, you could say the real estate market in the Charlottesville area is as hot as ANWR (the Alaskan National Wildlife Reserve). If you are not familiar with ANWR, you only need to know that it is a great example of being “relative� to one’s perspective. Depending on which pundit you ask, ANWR is either the last bastion of American wilderness, or the key to returning to $2.00 per gallon gasoline. The high temperature in ANWR in early July 2008 is in the mid 40’s. Using ANWR as a reference point, the local real estate market is hot.

Link to 2008 Mid-Year CAAR Market Report
  Podcast of Mid-Year Report 

 

Just for the fun of it (sorry, but no cash or prizes involved), take the CAAR Market Quiz to test your knowledge of the local Charlottesville real estate market. 

The answers are in the first comment…

1.  What is the top selling price range of homes in the CAAR MLS?

1. $175,000 to $200,000
2. $200,000 to $225,000
3. $325,000 to $350,000
4. Over $1,000,000

2.  Which Price Range has seen the biggest percentage decrease in the number of sales?

1. $150,000 to $200,000
2. $350,000 to $400,000
3. $550,000 to $600,000
4. $2,000,000 and above

3.  Which Price Range has seen the biggest percentage increase in the number of sales?

1. $150,000 to $200,000
2. $350,000 to $400,000
3. $550,000 to $600,000
4. $2,000,000 and above

4.  What is the total dollar volume of homes sold through the CAAR MLS in the first half of 2008?

1. $370 Million
2. $403 Million
3. $800 Million
4. $492 Million

“I know half the money I spend on advertising is wasted, but I can never find out which halfâ€?– attributed to John Wanamaker, 19^th century merchant and politician

As I discussed in my previous post, print advertising is still a vibrant part of the media landscape. In addition to the mistaken belief that print advertising is “dead,� many otherwise savvy marketers avoid print advertising due to the misconception that they can’t measure their return on investment (ROI). Measuring the effectiveness of your print advertising can be done. 

But, the first step in measuring the effectiveness of your advertising is to determine what you want to measure. Are you trying to make your phone ring? Direct people to your Web site? Get people to come to your open house? Generate listings? Once you know what to measure, you can determine how to measure.

There are several ways to do this. One involves enlisting the help of a marketing research firm. Another is using any of a number of formulas involving response rates and advertising campaign costs. Numerous ones such as this are available on the Web. But, the best way may be through creative advertising.

Create a specific URL linked to a specific print ad or campaign.  Offer an incentive to those who respond to your ad. Include a coupon. Track your Web site traffic before, during, and after your ad runs. Or, ask where new customers learned about your company or product.

In searching for ideas on how advertisers track the effectiveness of particular ads, I found that some used car sales operations use different names in different ads to determine which generate calls. For example, the ad may say, “To learn about this great low mileage, low cost cream puff, call Bob at 555-1212.� When people call and ask for “Bob,� it’s clear where they saw the ad. Also, I’ve noted TV infomercials hawking the same product, but with different URLs; for example on one channel it will be www.flab-buster49.com and on other www.flab-bustertv.com.

In the current economy, many advertisers are wisely scrutinizing their ad budgets and demanding a clear return on their investment. But often the advertising medium itself–whether it be print, electronic, direct mail, skywriting, or anything else–doesn’t determine what the return on investment will be. Money is just as easily wasted on the Internet as it is print.

As with most things, in advertising, success depends on proper planning. Because in the words of Yogi Berra, “If you don’t know where you’re going, you’ll wind up somewhere else.â€?