Activity has been brisk in the last two months largely due to the “home buyer’s tax credit”.  Inventory of homes is rising faster this spring than a year ago.  Sales growth in townhomes below $150,000 has increased by 24.4 % over the last twelve months compared to an increase of 14.8% and 11.8% for single family and condo homes respectively.  The key to a housing recovery is jobs.   Moody’s Economy.com indicated the Twin Cities area is better positioned than most for economic recovery. 

Short sales may be the hottest thing going in the distressed market after April 5th when lenders can choose to participate in a new program, Home Affordable Foreclosure Alternative (HAFA).  Lenders lose approximately 50% on a foreclosure and only 30% on a short sale as well as getting the property off their books. Short sales are better for the distress borrower because their credit score suffers less.  A foreclosure can knock 200 points off a FICO score, twice as much as the penalty for a short sale.

FINANCIAL BENEFITS TO HOME OWNERSHIP

• Renters vs. homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth for renter was just about $4,000 compared to a homeowner at $184,400.
• Tax Deduction-interest paid on a mortgage is one of the largest benefits.  Exp: $150,000 home at 5.5% interest rate can add up to approximately $8,000 in first years interest.
• Appreciation-Home prices have been correcting to become more affordable for buyers.  It has over-shadowed long term appreciation of home values.  Despite the markets ups and downs, a modes appreciation should increase the value.
• We are in the last weeks of the tax credit of up to $8000 for first time home buyers and $6500 for move-up buyers (lived in home at least five of the last eight years).  Purchase agreement must be written by April 30^th and closed by June 30^th.  Military people may qualify for a special extension.

POTPOURRI

• Garbage Disposal – push a full tray of ice cubes through it while running cold water
• Leaving a bowl of white vinegar out overnight can help get rid of smoke odor
• “In the business world, the rearview mirror is always clearer than the windshield”.  –Warren Buffett
• 2010 Gas Mileage Rate:  Business is at 50 cents a mile, a drop of 5 cents; medical and moving miles is at 16.5 cents a mile, a drop of 8.5 cents; and charitable miles remains at 14 cents
• Get your annual credit report free at “report.com” which is sponsored by the three bureaus and Federal Trade Commission.  If you want to see your actual credit score, there is a fee.  Beware, many sites advertise ‘free” but are actually fronts for companies trying to sell you services, which you don’t need.
• Beware of scams for properties being posted on Craigslist as rentals.  Scammer is advertising properties that are not his.  Than asking for application with deposit and not is the end of the road for the renter.
• FHA Mortgage Insurance Premium (MIP will be 2.25% up from the previous rate of 1.75% on the mortgage amount.  This increases the upfront cost at the closing.  This is effective April 5^th.

REGIONAL MLS OF MINNESOTA 2009

IN CLOSING

Don’t wait for changes. This is the “NEW NORMAL” in the real estate market moving forward. The past market will not return as we work with the housing correction market. Real estate is local, so make sure what you are reading or hearing is local and not national.  I have been certified as a Short Sale and Foreclosure Resource Specialist by the National Association of Realtors. I am able to assist any one you know who is nearing difficulty with their mortgage. It is better to address the issue earlier rather than later.