Industry News
Industry News
Cloverleaf Realty, Inc. offers the latest in Real Estate News, Local and Federal, as well as market updates in our area and nationally. Select one of the reports below to gain information on the topic. If you have questions about the housing market that are not answered here, please do not hesitate to call our office.
| – American Recovery and Reinvestment Act of 2009 |
| – The Housing and Economic Recovery Act of 2008 |
| – First-Time Home Buyer Tax Credit – *Update JUNE 2009 |
| – Central Virginia Housing 2009 Market Activity |
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 (Recovery Act) was signed into law by President Obama on February 17th, 2009. It is an unprecedented effort to jumpstart our economy, create or save millions of jobs, and put a down payment on addressing long-neglected challenges so our country can thrive in the 21st century. The Act is an extraordinary response to a crisis unlike any since the Great Depression, and includes measures to modernize our nation’s infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief, and protect those in greatest need. (This statement provided byhttp://www.hud.gov/recovery/)
The bill includes the following provisions:
Homebuyer Tax Credit
FHA, Fannie Mae and Freddie Mac Loan Limits
Neighborhood Stabilization
Commercial Real Estate
Rural Housing Service
Low Income-Housing Grants
Tax Exempt Housing Bonds
Energy Efficient Housing Tax Credits & Grants
Transportation Investments
Broadband Deployment
The Housing and Economic Recovery Act of 2008
Q: How will the law help struggling homeowners keep their homes?
A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property’s current value.
Q: When will the program begin?
A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.
Q: Who is eligible?
A: To be eligible to participate in this program, a borrower must:
- Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.
- Have a monthly mortgage payment greater than at least 31 percent of the borrower’s total monthly income, as of March 1, 2008.
- Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.
- Not have been convicted of fraud.
Q: How will this law make it more affordable to own a home?
A: There are a number of provisions that will make homeownership more affordable:
- Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).
- Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.
- Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state’s residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.
- Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).
First-Time Home Buyer Tax Credit
This tax credit creates such a great opportunity for 1st Time home buyers. Basically the government is providing a credit, to those who apply, for simply buying a home which they will not have to pay back. Here are some brief bullet points that explain the credit and qualifications.
- The tax credit is for first-time home buyers only. (Anyone who has not owned a home in the last 3 years)
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
*Update June 2009 – Now use the Tax Credit towards your Closing Costs!!!
Monetize the $8000 first time homebuyers tax credit
On May 29, FHA released the highly anticipated details of its program to allow lenders who offer FHA-insured mortgages to make available bridge loans, enabling buyers to use up to the full amount of the first time homebuyers tax credit towards closing costs, including the down payment.
VAR released a one page flyer, pictured here, to help you explain the program to your clients. There’s even a space in the bottom left for you to print your contact information on it or attach your business card.
VHDA, an FHA-authorized entity, responded quickly by releasing details of a loan product called Homebuyer Tax Credit Plus, a mortgage with a built-in bridge loan complying with the FHA’s program, to help cover the down payment and closing costs, with zero interest and no payments for the first 12 months.
Buyers must close by November 30 to qualify for the program, so tell them to act now to get their piece of economic recovery money!
Visit VHDA.com for details on Homebuyer Tax Credit Plus
Central Virginia Housing Market Report – First Quarter 2009
Information provided by the Central Virginia Regional MLS
Key Points
- The Richmond metro area’s economy continues to perform better than the national economy, but is still feeling the effects of stalled home sales and unemployment.
- The metro region has seen 3.5% decrease in jobs compared to the same period a year ago. The local unemployment rate has climbed to 7.9%, but remains below the national rate of 8.5%.
- Much attention is being focused on the recovery package elements and all are watching to see how, when, and how strongly the measures that have been taken along with market cycle forces will turn the economy back to growth.
- As long as mortgage rates remain low and mortgage money is being made available more freely, it is anticipated that the spring will bring increased sales activity and further improve the footing of the overall market in 2009.
Sales Activity
- First quarter 2009 sales were down 18% in the CVR MLS compared with the first quarter of 2008.
- In the Richmond Metro Area, sales were down 18%. In the Tri Cities Area, sales were down 16%.
- A total of 1,855 existing homes were sold in the first quarter of 2009 in the CVR MLS.
- 2,685 pending sales were recorded in the first quarter of 2009, down 29% from the first quarter of 2008.
- Monthly data on housing sales in the first three months of 2009 indicates that market conditions are becoming more positive, reflecting the typical spring uptick in market activity. Home sales are trending up across the region in March; these early spring trends are likely indicative of the typical seasonal nature of the housing market and not necessarily indicative of market turnaround.
Home Prices
- Across the CVR MLS, the average sold price was $220,080, down 16% from the first quarter of 2008.
- The average price in the Richmond Metro area was $226,698, down 15% from the first quarter of 2008.
- The average price in the Tri Cities area was down just 5% in the first quarter of 2009, to $152,203.
March 2009 – May 2009 Averages
| Total Listings | 10,066 |
| Pending | 4,063 |
| SOLD | 2,798 |
| Expired | 3,517 |
| Month | Ave. Sales Price | Price/Sq.Ft. | Days on Market (DOM) |
| March 2009 | $211,917 | $113.50 | 79 |
| April 2009 | $216,788 | $111.60 | 81 |
| May 2009 | $243,291 | $122.85 | 81 |
Report Summary:
There is plenty of competition for sellers entering the market. The Richmond area is not short on supply but as you can see from the pending and sold numbers we are a little short on demand. Buyers this period have been looking for the bargains.
For Sellers: The coming months are going to be a more promising time to sell, statistically this is the time of year that real estate sales increase, and this year proves to be no different. When listing you home for sale keep in mind, that it is a buyers market and the negotiations are tight, it is more important than ever to make sure your home is priced for the market conditions. Make sure your home is in tip top shape everytime a buyer comes along, this could mean the difference between a sale and another two or three months of being on the market. To get ready for the buying season you may want to speak with your agent and make sure your home is in selling condition and your price right.
To Buyers: You have plenty to choose from and we anticipate more great deals coming this summer but don’t delay. If you are a first time home buyer now is the time to get serious. As more buyers enter the market in the months to come you will be facing more competition for those great deals, not to mention your opportunity allotted by the tax credit.