Real Estate. Economics. Business
The IRS released additional information to help home buyers understand the ways they can file to receive the home buyer credit. It is important for taxpayers to know that they must complete the purchase and close or take up residence in the case of new construction in order to be eligible to file for the credit. Here are the four main options listed by the IRS:
1) File an extension.
2) File now, amend later.
3) Amend the 2008 tax return.
4) Claim the credit in 2009 rather than 2008.
I realize that to the mainstream media and the National Association of Realtors, real estate investors are often seen as vultures but the fact of the matter is real estate investors will play a major role in the recovery of the housing market in many cities.
Right now, many investors are getting involved in short sales. What happens is the investor gets control of the property and then negotiates with the banks who have the mortgages on the property.  They negotiate the debt down and do the best they can to get the debt relieved for the homeowner. This is all legal and all parties involved know what’s going on.
In return for doing the work and creating the short sale, the investor is typically looking to make between 5-10% on the transaction. Often times it may only be 4-8%. The investor actually closes on the property and then immediately resells it to another buyer. The buyer often is buying a home 15-20% under market value so they are getting a great deal. The real estate agents get paid their commissions and the investor makes a spread.
Countrywide now has a policy where they will not sell to a business, but they will sell to an individual. Â Additionally, one of the other items they are doing is making a short sale approval with the condition that they buyer cannot resell the property for 30 days.
The investors are creating value. They are not taking advantage of anyone despite what the various Realtor Associations say. The debtor has no equity so there is no “equity stripping.”  The banks are big buys and they agree to sell at a price…then they try to put conditions on it such as you can’t sell it for 30 days.
This is just more of the same kind of nonsense and duplicitous nature we see from the banks today. They are more than happy to sell their trash paper (commercial paper and mortgage backed securities) to various investors for 40-50-60 cents on the dollar…but oh, that’s right. Those “deals” are going to the Wall Street boys.  The guys on the street who are trying to make an extra 10-20-30k per transaction and are cleaning up the housing market…we can’t have them make any money.
In talking with various investors, Countrywide by far is one of the most difficult mortgage companies to deal with. Perhaps Senator Chris Dodd could make some phone calls to his buddies over there to see if they can back of on their ridiculous requirements.
The Minneapolis Area of Association of Realtors just released its weekly report last night. All I can think of is “Where’s the inventory?”  Yes, that’s probably just a bit of hyperbole given that there are still 25,000 properties for sale in the Twin Cities 13 county metro area. However, that is down from 30,500 a year ago. Overall listing inventory is down about 12% from a year ago. That is significant.
We also continue to see an acceleration in pending sales compared to one year ago. Check out the uptick in the pending sales graph posted below: (Click on graph to enlarge in a new window).
New listings continue to track lower…down 13% compared to one year ago: (Click on graph to enlarge in a new window).
Overall listing inventory remains lower by 12% overall compared to last year: (Click on graph to enlarge in a new window)
Click here for the full report this week.
Calculated Risk speculates on the latest data concerning housing starts across the country. The data showed some improvement for the month of February. He’s looking for a bottom in housing starts in ’09. Perhaps the biggest problem is still the overhang of supply of new construction homes.
The National Association of Home Builders confidence levels didn’t fall any further in the latest reading published March 16, 2009. I guess that’s not hard to do since their confidence level could be considered as just slightly higher than zero.
The New York Times published this story entitled, “Thoughts on Walking Away from Your Home Loan,” on the front page of this past Saturday’s paper.
It was interesting to see this kind of story take such a prominent position in the New York Times. Given all the short sales with people upside down in their homes, it’s not surprising I guess that we would see the Times publish such a story.
Given the millions of people who have/will go through foreclosure and the couple million who will likely go through with short sales, banks and credit agencies are likely to have to figure out how to deal with this period of time when so many people lost their homes.
Many have speculated that at some point in the future, perhaps a foreclosure won’t be quite as big a hit to ones credit scores as it has historically been.
We’ve already seen Fannie Mae modify its mortgage guidelines due to the incredible numbers of short sales out there. If you weren’t aware, last August, Fannie Mae came out and stated that they would allow a borrower to qualify again for a Fannie Mae backed home loan 2 years after a short sale was completed. That’s a big improvement over the foreclosure classification which often times requires 5+ years before they would back a loan again. Be sure to read my post on January 14, 2009 entitled, “Foreclosures, Short Sales and Bankruptcy…How They Affect Your Credit.”
The New York Times article referred to the US Government’s Mortgage Debt Relief Act. On the IRS’ web site they state that if you’ve had mortgage debt relieved, you may likely qualify based upon certain IRS rules to be exempt from paying income tax on that debt relief provided that debt was relieve between 2007-2012.
It’s been a long time since we’ve seen prices like this in Foxberry Farms located in Medina, MN. This is a great property located at 1115 Foxtail Drive, Medina, MN 55340. It’s in the southwestern part of the development on a cul-de-sac street with only 5-6 other homes. It has a beautiful large 1.18 acre level lot that would be perfect for a future pool or sport court. There are 5 bedrooms, 4 baths, and 3 car garage. The back of the home faces south. It has over 3800 finished square feet as the basement is a finished walkout. The home is located in the Wayzata School District.
For more information, feel free to contact me at 763-443-9821 or at John@JohnMurphyHomes.com. Click here for a link to the listing within the MLS.
 
 
 
The latest statistics are out for home sales in Plymouth, MN.  The data is year to date – (January and February 2009) compared to the same period a year ago. The data includes all single family, townhomes, and condos sold. It’s published monthly by the Minneapolis Area Association of Realtors and can be found here.
Key statistics from the month:
(Click on the picture to enlarge in a new window).
It just goes to show that even America’s #1 city to live in isn’t immune to the decline in home prices.
There is a lot of activity going on again in Foxberry Farms in Medina, MN.
If you would like to stay up to date on all the new listings, pendings, and solds, check out www.FoxberryFarmsHomes.com.
For a quick search on some of the articles published about Foxberry Farms and the surrounding developments, click here.
The Minneapolis Area Association of Realtors just updated all of their real estate data through the month of February 2009. This is part of their monthly report called “The 100.”
For cities like Medina, it’s not particularly valuable at this time of year because there have been so few sales so far this year. It’s much more insightful for cities such as Plymouth, Maple Grove, Minnetonka, Edina and St. Louis Park. (Click on the underlined cities to link directly to the February report for that particular city).
What’s interesting to note about these cities listed right above is the overall continued decline in closed sales transactions.
Closed Transactions: YTD ’09 vs. same period ’08
Median Sales Prices YTD vs. same period ’08
The Case-Shiller Index which I report on monthly, shows that the Twin Cities is down 18.4% compared to a year ago. Given that the transactions are skewing in the direction of foreclosures and homes priced under $150,000, it makes sense that that number would be that high.  In many of our second ring suburbs, we tend to see prices down 10-15% depending upon the individual city.
I do think it’s interesting to note St. Louis Park. It likely has the most homogeneous housing stock in the western metro of the Twin Cities. I don’t have the exact numbers, but I suspect the typical 1942-1946 built 1.5 story represents about 75% of the overall housing stock.  St. Louis Park continues to hold it’s own in pricing. The one big concern there is the really significant drop in closed transactions at 37.8%. I don’t know what that’s about, but will continue to monitor that over the coming months to see if that starts to improve.
Jim Buchta of the Star Tribune published this story today regarding the latest sales data being reported for the month of February 2009 by the four area association’s of Realtors.
The Minneapolis Area Association of Realtors released this press release today. Key highlights are as follows:
- New Listings: “the number of new listings in February was 6,648, down 19.4 percent from February 2008. That’s the 14th month of the last 15 to feature fewer new listings than the same month one year prior.”
- Inventory Levels: “alongside the jump in sales seen over the last nine months, this decline in new listings has brought the total inventory of homes for sale down to 25,825—a drop of 13.5 percent and 4,017 units from this time last year. Given the current rate of sales, this amounts to 7.8 months of supply, down from 9.2 months a year ago.”
- Pending Sales: “there were 3,314 pending sales in February, up 7.4 percent from last year. That’s the ninth consecutive month of year-over-year increase. Of these newly signed purchase agreements, 60.5 percent were lender-mediated foreclosures or short sales. Closed sales finished at 2,070, up 3.0 percent.”
- Median Price: the overall February median sales price of $150,000 is 23.1 percent lower than last February. Traditional properties, which exclude foreclosures and short sales, had a February median sales price of $205,875, down 5.2 percent from last year. For the same year-over-year comparison, lender-mediated homes had a median sales price of $125,000, down 20.6 percent.”
60.5% of pending sales in February were lender-mediated (i.e. short sales or foreclosures). Wow!
