U r b a n T r e k k e r

How to Access $8,000 Tax Credit for Dowpayment & Closing via VHDA Loan Program

A while back HUD announced that FHA will allow state housing finance arms to provide second mortgage so you can use the 'anticipated' $8,000 tax credit towards your downpayment and closing costs to buy homes with FHA-insured loans. (h/t NAHB)

The big question is "how do you do it?" Yup- that is how. Last weekend I was out with a client. We talked about this tax credit thing. (This client used to work for IRS). She says that "she is familiar about how tax credit works however, she found out that none of the lenders she talked to, know how to do it. If such thing is available, she would like to apply for one."

The thing with tax credit is, you have to file your income tax first before you can get the credit. So, if we're talking about the deadline for the credit, closing by November 30, 2009 - you have a problem here. Because technically, you can't access the credit before you file your taxes. See how it's complicate things a bit..

Don't worry now. We've got the the answer to this "how" can you access the credit for downpayment and closing. It is done through state housing agencies. According to NCSHA (Natl. Council Housing Agencies), a number of state housing agencies offer this kind of program: Colorado, Delaware, Idaho, Kentucky, Missouri, Nebraska, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, Tennesse and Virginia. (if it's not listed here, there's no such thing available in your state).

It's just because I do biz in Virginia, will talk about VHDA program. This is how the program works, via VHDA:

• Eligibility: Borrowers must meet federal First-time Homebuyer Tax Credit requirements as well as VHDA's requirements regarding first-time buyer status, income limits, sales price, etc.
  
• Maximum income: The combined income of all household members may not exceed VHDA's maximum income limit. For example, Wash DC MSA, 2 or fewer can't make more than $86,900. (more about max. income limit, here)
• Maximum sales price: On the 2 or fewer max. income above, the maximum sales price is $408,100.
• Max. sales price/ total loan amount: The combination of 1st and 2nd loans cannot exceed VHDA sales/ income limits.
• Minimum credit score: 620.
• Qualifying ratios: FHA ratios of 31% payment-to-income/ 43% debt-to-income apply. 
• Required borrowers funds: Must have a minimum of 1% of the sales price "VERIFIED" as their own funds to be contributed towards the transaction or have it available as reserves.
• Pricing options: Pricing options are available (think this info is for lenders). Rate on first and second mortgage will be the same (this is good!). No points or origination fee charged on the second mortgage. - emphasis added

So the program is designed to fill the need of first-time buyers. Oh, not all FHA lenders work with this kind of program. Only VHDA approved lenders offer their products.

The catch: you have to take a "free" VHDA homeownership seminars. That's it. Here is where you find out about the classes..in Northern Virginia.

DC Condo Sales May 2009

Since we're in the mood of condo today, might as well take a quick look at condo sales in Washington DC. This is quite interesting. Just by looking at the numbers, DC condo market still struggling, maybe because prices still up. The average condo sales is up from $411,663 a year ago to $433,421. The median price is flat at $360,000. The same from last year.

What's good about condos on the market in DC is this: Inventory drops -3.9 percent from 1,530 to 1.471 units. Other than that, market kinda slow.

On the sales side. The number of condos sold last month declined -20.1% from 259 to 207 units. Year-to-date sales volume dips -23.1% from 1,053 to 810 units. Furthermore, about 79 percent of all condo sold in DC in May are condominium under $500,000!

Break it down into price range, looks like the million dollar (luxury) condos are the winner in this market conditions. Those condos over $1.25M showed some sales improvement. From the range of $1.25M to $1.49M, sales up are 150%  and over $1.5M condo - sales are up 140%. While condos between $150k to $800k are all saw sales in the red. What an interesting trend. This is pretty amazing..

 

click on image for larger view (+)

Who are those million dollar buyers? Obama people?

So, apparently low interest rates and robust buying season (like what Delta Associates condo report showed)  don't help DC condoscape that much..

data: MRIS

DC Region Condo Shortage (possible) in 2010..

Sounds like the tide might be turning in 2010 if sales continue at current (robust) pace. The Washington Biz Journal reports that new report from Delta Associates shows that prices down and sales volume exceeding 600 units for the first time - since 2007. The two factors contributed to the high sales volume are 1) historically low interest rates and 2) tis' busy buying season.

On the other hand, supply might be on the low end come 2010 said Greg Leisch, Delta CEO. Because it takes time to build new condos. So, take note of this.

"Greg Leisch said the dwindling pipeline — now at its lowest in five years — will likely result in a shortage by 2010, causing effective prices to rise. Prices tend to rise when there inventory-to-sales ratio is at three years or less. It is currently at 1.7 years in Arlington and Alexandria and 2.8 years in D.C. For the region, it is 5.1 years."

Remember those condos (Park Crest, Zoso, Io Piazza and more) that were converted to apartments because of market conditions, there's possibility that those apartements be converted back to condos to fill the gap...

[via Washington Biz Journal]

Weekly Roundup

America's Most Expensive Homes

There's been a lot of denial among luxury homeowners. In 2006, it was thought that the luxury market wouldn't suffer the same fate as the broader market.

The State of the Nation's Housing 2009 report gives U.S. market mixed grades

The nation's housing industry should remain mired in an epic slump for the rest of 2009, but the longer-term picture is not all doom and gloom, according to the "The State of the Nation's Housing 2009" report, to be presented on Monday by Harvard University's Joint Center for Housing Studies at the Ford Foundation in New York City. (We'll have more news from the event later this week.)

41 Charged as Mortgage Fraud Hits Condos and Suburbs

Federal law enforcement officials recently announced charges have brought against 41 defendants in five separate cases in Chicago. The cases involve more than $48 million in fraudulently obtained mortgages for dilapidated homes in urban areas as well as deals involving million dollar condominiums in a Chicago high-rise and sprawling homes in affluent suburbs like Wheaton and Glenview. The vice president of a title company, mortgage brokers, loan officers, appraisers, real estate investors and an attorney are among the 37 defendants charged.

What's With All the Moaning About Home Appraisals?

Lately, mortgage brokers, builders, real estate agents and others in the housing business have been moaning about appraisals. On Tuesday, it was the turn of Lawrence Yun, the chief economist of the National Association of Realtors. He lamented that May home sales were “less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”

10 Things Moving Companies Won't Say

The moving industry packs in nearly 55 percent of its business during the summer months, but often leaves a trail of frustrated consumers in its wake. The Department of Transportation receives up to 4,000 household moving complaints annually, mostly about loss and damage, poor service, or overcharging. The Council of Better Business Bureaus, meanwhile, reports that complaints about movers jumped from nearly 3,800 in 1997 to more than 9,200 in 2007.

Additional news from around DC region:

• Q&A: Sally Wilson on the USGBC Headquarters, LEED Fine Print, and Negotiating a Green Lease [Metropolis]
• Montgomery Approves Project Before Moratorium [Washington Post]
• Eastern Market reopens after $22M renovation [Wash Biz Journal]
• Index finds D.C. has best 'brain smarts' in U.S. [WTOP]
• Looking for a rent-free home on a lot of land [Real Estate Wonk]
• "Not Paying the Mortgage Yet Stuck with the Keys" [Hot Property]
• Prince William transfers Silver Lake to Park Authority [DC Examiner]
• Cuts Coming to Community Center Hours [Arlington Gazette]
• Experts: Investment in Green Amenities Pays Dividend [Gazette]
• DDOT Launches Real Time Circulator Mobile App [DCist]
• F.C. Council Unanimous in Bid to Convert City to 'Green Lab' [FCNP]

Friday Fun: Where Credit is Due..

Song parody, via Calculated Risk.

Straw Bale House Built with $50k

This video shows how the owner (a single mom) of this straw bale house built her own with $50,000!

There are a lot of benefits to using this natural building method. First, straw bales provide terrific insulation. They’re also an all-natural material, and it’s usually easy to find a source near you. Finally, building with straw bales can save you money because it doesn’t take a lot of training or special equipment. That means it’s possible to do most of the work yourself.

[via Mother Earth News]

First American CoreLogic: Wash-Arlington-Alexandria Home Prices Decrease..

According to the latest LoanPerformance Home Price Index from First American CoreLogic, even though Washington-Arlington-Alexandria home prices have decreased by -13.84 percent in April, it's an improvement from March. In March, the home prices showed a decrease of -14.09 percent from a year ago. Across the U.S., the national housing price fell -10.2 percent in April compared to a year ago, which represents the smallest year-over-year declined in 2009.

The LoanPerformance HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The LoanPerformance HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 7,649 ZIP codes, 958 Core Based Statistical Areas (CBSA) and 676 counties located in all 50 states and the District of Columbia.

 

for larger view, click here

The top ranking states for 'annual depreciation' this year are Nevada (-26.1%), Florida (-23.2%) took second place from California, California's home situation have improved (-22.7%), Arizona (-20.5%), and Pres. Obama's home state, Illinois in fifth rank (-17.4%).

Mark Fleming, chief economist for First Core Logic, says that..

“There is still a great deal of uncertainty with the housing market and the economy in general. But the rate of change in home price declines is beginning to show signs of not only a bottoming, but an improvement in both nominal and real terms, which is the more important indicator because real prices adjust for the distortions caused by inflation or deflation.”

Furthermore, according to the study, since U.S. home prices peaked in 2006 (over here in DC region, I think it's in 2007), national home prices have declined 21.2 percent on cumulative basis and currently down to the lowest price level in 5 years.

For more details here..   

DC Housing and Transportation Calculator

 Over at the Urban Land Institute, they have a housing and transportation calculator, a neat tool to help you calculate the combined housing and transportation costs in Washington DC region. 

The Housing + Transportation Calculator was developed to help individuals, households, planners, and municipalities understand the true costs of housing and transportation, as well as how these costs can vary from place to place.

Okay so I play around with the calculator using a couple different locations, metro accessible, inside vs. outside the beltway. In my example, I use hoods inside the beltway vs outside. McLean, Falls Church zip code 22043, Arlington's Pentagon City zip code 22202, Columbia Pike (which has no close Metro station but accessible by metrobus) zip code 22204 and Alexandria City for inside the beltway hoods vs. Burke, Reston in Fairfax County and Bristow out in the neck of Prince William County for outside the beltway hoods.

Here's the comps for one person with one car:

click on image for larger (+) view

So you see the two components housing and transportation can make a difference in your living style. Transportation can make a big ding to the total cost of owning a house. The farther out you live, the more you will pay for transportation. (calculator based on $2.4 of gas per gallon).

Think gas back at $4 a gallon..

The other thing is. When you look at Alexandria City vs Arlington, they're pretty close together places. However, because housing cost is relatively cheaper, your money stretch a little bit farther in Alexandria than in Arlington. Reducing the two costs would be the "ideal" situation.

In addition to the two costs, there are other info as well, like the transit connectivity (bad vs good), density, and more - you can find there.

To create your own comparison, you can go here.

Shiller on Commercial Real Estate Declines

The New 2009 Laws, If You are Renting in Virginia

Virginia's new bill HB 2080 covers Landlord and Tenant Laws that will become law effective July 1, 2009 .

• Requires the landlord to give notice for insecticide application. Tenants must follow written instructions to prepare the unit for insecticide application and pest elimination.
• Eliminates the landlord’s obligation to pay for mold remediation when a result of tenant actions.
• Removes tenant’s right to repair or replace damaged items. The landlord may now charge all costs to the tenant, payable on the next rent due date.
• Sets liquidated damages at 150% of the per diem of monthly rent.
• Requires written notice to tenants when a mortgage default or pending foreclosure notice is received.
• Sets 2009 deposit interest rates at 0 percent.

[via Update]

It’s good that the State now requires landlords to let the renters know that there’s the possibility of short-sale or foreclosure – way ahead of time. I've heard too many times renters didn’t know about it until a few days before property got foreclosed!  Just because landlord got foreclosed on, renters  sometime can’t get their deposit back.

Details on renters protection from the Fed for are here, here and here.

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