Will Foreclosures Flood The Northern Virginia Market This Spring?

April 22, 2009

forsalebybankJust in time for the annual Spring Home Buying Season, Fannie Mae and Freddie Mac are expected to begin filling the store shelves with a brand-new stock of foreclosed homes. Without fanfare, on March 31 they both ended the four-month moratorium on foreclosure sales and evictions they had imposed on servicers of the mortgages they own.

Fannie Mae said in a brief statement from spokesman Brian Faith that “Fannie Mae’s suspension of foreclosure-related evictions concludes as of March 31, 2009. The company has in place special foreclosure sale requirements that take into account the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.”

Brad German, a spokesman for Freddie Mac, said he was “mystified” as to how anyone could be surprised by the ban’s expiration. The idea behind it was to give the government time to create homeowner rescue plans, and that’s been done, he said. Neither agency also expects a flood of homeowners out on the street because the ban is being lifted, he added. “For all practical purposes, people will be in their homes for a while,” despite the ban’s expiration, German said. Fannie and Freddie will need time to approach tenants and homeowners and figure out whether they are qualified for help, he said.

Still, this raises the possibility of a sizable influx of such homes coming to the market beginning as early as the end of this month. I’ve been noting in my recent posts (here and here) that the local inventory is shrinking when one normally expect it to be rising – perhaps this is one reason why, and we may see increases in inventory soon.

Here are some other comments about the situation:

From a post by Ben Martin today on VARBuzz.com (Virginia Association of Realtors):

Anecdotally, we’re hearing that because of the dearth of foreclosure activity, there’s actually very little inventory in the DC metro area. We hear there are buyers galore, many of them incentivized by the dramatic reduction in prices, low interest rates, and the first time homebuyer stimulus package. But the foreclosure activity is so low (and many sellers are unwilling to list their properties for sale, knowing that they can’t sell for what they need to make from the sale) that there’s very little out there for buyers to choose from.

Many industry experts are expecting a dramatic rise in foreclosures over the coming months as Freddie and Fannie have recently halted their foreclosure moratoriums. As this action trickles down to the field, six months worth of foreclosures could flood the market.

About a month ago, Cindy Jones on VaRealEstateTalk.com:

Last fall Freddie Mac along with other lenders put a moratorium on new foreclosure proceedings until the economic stimulus packages worked their way through Congress. Only those properties that had already been through the foreclosure process made their way to the MLS and not even all of those have been listed.

For example one agent in my office who handles Freddie Mac foreclosures has just now received the go ahead to list a few of the properties that had been through the foreclosure process last October and November. Even more interesting is that in one case the owner of the property is still living in the property five months after the foreclosure. A quick look through RealtyTrac.com shows a few hundred properties with the title transfers to a lender, yet none of them have made it to the market. A recent Friday Washington Post showed close to 300 Trustee Sales at the PW Courthouse alone and those properties haven’t hit the market yet either.

From a comment from “Brooks” on a post from Frank Llosa about the problem on FranklyRealty.com:

washpostToday’s [4/21] Washington Post is actually kind of fat for a Tuesday edition. Then you realize that it sports a rather hefty Classified ads section. The “G” section is a solid 20 pages. But, almost all of it is real estate property foreclosure public notices. They start on page G1 and staggeringly run to page G19. They take up almost as much space as the 24-page “A” news and business section. However, employment ads take up less than one column on G19.

I saw this also, and today’s was pretty thick with them as well. Is this the start of a Sick Newspaper Alleviation Program (SNAP)?

My neighbors and I are all pleased to see that a foreclosed home on our little street sold early this week. Better to get them on the market and sold quickly than to have them sit empty for month after month.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com

It’s Good To Have A Friend In The Business®
samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!


March 2009 Northern Virginia Sales Info

April 15, 2009

chartMarch 2009 home sales activity for Fairfax and Arlington counties and the cities of Alexandria, Fairfax and Falls Church and the towns of Clifton, Herndon and Vienna (this sounds like a weather alert, doesn’t it?):

A total of 1,384 homes sold in March 2009, an increase of 11% over March 2008. That’s great, but look at this – pending home sales, based on signed contracts, are 2,306, up a fantastic 33% from last year!

Active listings – homes on the market – decreased by 20% from last year, with 8,069 active listings in March, compared with 10,123 homes available in March 2008. Fewer homes on the market usually means prices are poised to start rising. The supply of homes has again fallen into the under-six-months “seller’s market” range.

Another sign of strong activity – the average days on market (DOM) for homes in March 2009 decreased by 18% to 89 days, compared with 109 days in March 2008.

Sales prices continue to remain lower than those realized last year. The average sales price in March fell 17% percent from March 2008 to $395,512, while the median price was $335,000, also a decline of 17%. Interestingly, though, the average and median sale prices are both about 5% higher than last month.

Agents are reporting a considerable number of multiple-offer situations on foreclosures, and on attractive well-priced homes in good condition, particularly in price ranges under $425,000. If you are looking for such a home, be prepared to act decisively – and, if the home is right for you, don’t let yourself be outbid.
statsmar1

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com

It’s Good To Have A Friend In The Business®
samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!


Looking For Mortgage Money? Might Get Tough.

April 2, 2009

Here’s an article from this morning’s Washington Post:no_moneytransp

Lenders Struggle to Find Cash to Quench Growing Demand for Refinancing

By Dina ElBoghdady
Washington Post Staff Writer
Thursday, April 2, 2009; A15

Now that mortgage refinancing is popular again, one big concern is that there won’t be enough money to keep up with the demand.

Mortgage bankers say the money they borrow to finance home loans — called warehouse lines of credit — has dried up and that borrowers may pay the price in artificially inflated interest rates and maddening delays in loan closings.

Interest rates are at record lows. The average on a 30-year, fixed-rate mortgage fell to 4.61 percent for the week ended March 27, according to a survey released yesterday by the Mortgage Bankers Association. But many capital-starved bankers said rates could be 0.25 to 0.75 percentage points lower if they had better access to warehouse lines.

These credit lines provide bankers who are not licensed to take deposits with the money they need to close a mortgage. The bankers then pay down the credit line after the mortgage is sold to Fannie Mae, Freddie Mac or other investors.

But the amount of available credit has plummeted to about $25 billion from $200 billion a year ago, according to the mortgage bankers group. Many of the large financial institutions that extend credit to the bankers have left the business, imposed tough restrictions or capped existing lines as they try to shore up their own capital. In the past few weeks, National City Bank, J.P. Morgan Chase and Guaranty Bank have announced plans to end warehouse lending.

Mortgage bankers say the supply of money available to them is shrinking just as demand for loans is taking off, blunting the Obama administration’s efforts to loosen consumer lending. Last week, loan applications were up 3 percent from the previous week and almost 69 percent compared with the previous year, the mortgage bankers’ survey found.

“When demand outstrips supply, lenders manage that by raising rates” or slowing the pace of lending, said John Courson, chief executive of the mortgage bankers group. “The end result is that borrowers are not enjoying the full benefit of these lower rates.”

Mahesh Swaminathan, an analyst at Credit Suisse, said he agrees that lending volume might be higher and loans might be processed more quickly if there were no credit-line problems. “But at the same time, it is not the case that activity is stalling because of that,” Swaminathan said.

The new mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae totaled $172 billion in March and could reach nearly $200 billion by June, he said. That’s more than the monthly high of $190 billion in 2003, suggesting that lending activity is robust, driven mostly by refinancing.

Still, some borrowers are watching their mortgage deals fall apart at the last minute. For instance, Greystone Financial’s sole warehouse line was pulled in February. The Las Vegas company has shut down its operations in the District and 17 states, including Maryland and Virginia.

“We had 500 loans in the pipeline, and we had 30 loans that were signed and ready to go, but we could not fund them,” said Michael Sweeney, Greystone’s chief executive. “It caused a tremendous amount of headaches for the buyers, and we’re not sure how much longer we can continue doing business this way.”

The Warehouse Lending Project, a coalition of independent mortgage bankers, and the mortgage bankers association are working with the regulator that oversees Fannie Mae and Freddie Mac to devise a plan to bolster warehouse lending.

That regulator, the Federal Housing Finance Agency, said in a statement that it is aware of the effects of the decline in warehouse lending and that it has met with industry and administration officials to “try to develop solutions.”

The warehouse-lending coalition estimates that non-depository banks supply roughly 40 percent of loans and contends that the mortgage market would suffer if they went out of business.

“Think about it: If all of a sudden there was a big demand for gasoline and 40 percent of the gas stations went out of business, you’d have chaos and disruption and higher prices. That’s the situation we’re drifting toward in the lending arena,” said Glen Corso, a principal at the Warehouse Lending Project.

I think the situation for the lenders I work with – such as Wells Fargo, Prosperity, and First Savings – is better than for most mortgage brokers because they rely on their own funding rather than on “warehouse” lines of credit. But the overall tightness could still serve to increase rates.


The Fed’s Buying – How About You?

March 22, 2009

Info from this week’s Mortgage Market Guide:

ben_s_bernanke

Last week, the Fed used their regularly scheduled meeting to make a blockbuster announcement.

Over the course of 2009, the Fed will purchase an additional $750 billion of mortgage-backed securities, as well as $300 billion in long-term Treasuries, primarily to help shore up the housing market and keep home loan rates low. On the announcement, bonds exploded higher, leaving bond prices within whiskers of the best levels ever.

How does this really impact home loan rates?

While the Fed’s actions may keep mortgage rates from moving higher, they may not cause them to move dramatically lower. The Fed’s actions create demand for mortgage-backed securities, which should help keep the ceiling on home loan rates from moving much higher in the foreseeable future. That’s good news for homebuyers who are seeing the bargains out there and understand that now is the time to act.

But – and this is very important – what actually happens to mortgage rates depends on which bond coupons the Fed purchases. If they purchase higher rate coupons – as they have done so far this year – their continued purchasing will likely keep a lid on rates, but not necessarily push them significantly lower. Additionally, due to many understaffed lenders and investors currently working at maximum capacity, we could once again see that improvements in pricing may not all be passed through to borrowers.

usamcashAnother factor that could impact whether mortgage rates see significant improvement are concerns of future inflation brought on by all the recent aggressive moves by the Fed. While we know there is little inflation at the present time, chatter about future inflation could have a negative impact on home loan rates, or at least stifle any improvements.

Although the media is already spinning it differently, this is not a time to stay on the fence, hoping and waiting for lower rates. Home loan rates remain within inches of all-time historic lows, but may not necessarily move significantly lower, so waiting could be a risky move.

Also, an update on Mark-to-Market – the accounting rule which has had a devastating impact on the financial markets: The Financial Accounting Standards Board (FASB) agreed that it will propose to allow companies to use more “leeway” in applying the accounting rules they use to value their assets, and planned a final vote for April 2. If this rule change is approved, it could result in better first-quarter financial statements for companies that have been affected by this rule. Stocks have been moving higher lately in the hopes that Mark-to-Market will be fixed, and a resolution could help stocks further improve.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com

It’s Good To Have A Friend In The Business®
samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!


Tips for First-Time Northern Virginia Buyers

March 20, 2009

pricedownReductions in Northern Virginia home prices, and unprecedented low interest rates for mortgages, have combined to offer tremendous opportunities for renters to become homeowners. The prospect of making the change may be exciting, but also overwhelming.

Here are a few common mistakes to avoid:

hud-logoNot understanding the home buying process. Educate yourself. Find a homebuyer seminar that you can attend, or research online. The U.S. Department of Housing and Urban Development has an entire section devoted to first-time homebuyers, information on mortgage programs, downloadable tools such as a “wish list” and home-shopping checklist, tips on selecting a real estate professional, and so on. Another good source is a solid lender such as Wells Fargo or  Prosperity Mortgage whose websites offer consumers a variety of tools and resources on purchasing a home.

housequestionNot asking questions. There are many intricacies to the home buying process, and even though you can gain a basic knowledge on your own, you will still have questions. Be sure to tell your real estate professional that you are new to the process. Choose an agent (like me!) who is willing to spend time with you and walk you through the entire process. A good agent will expect you to have questions at each step – from house-hunting, to making an offer, to the closing (such as, “What the heck is a closing?”). This is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on at all times.

Looking outside your price range. Before beginning your home search, get pre-approved by a mortgage professional – preferably one you know or one recommended by your agent – to get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, and maintenance. Don’t go out looking at homes before you have a firm idea of your range.

Buying on impulse. Don’t feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection, then narrow the prospects to a select few and return for a closer look. When you decide to make an offer, work with your agent to get all of your questions answered first. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

storkNot planning ahead. Think about personal changes you are planning in the next five years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If you think you’ll be relocating in a few years, you’ll probably want to pay closer attention to potential appreciation and resale value. If two incomes are needed to qualify for financing or to make your payments, do your plans include the ability to sustain those incomes?

Failure to consider location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and whether new construction is planned on vacant land in the immediate area. Also consider the potential market for resale in the future. Your agent can also help with that.

    Above all, remember knowledge is key. No question is silly. Your agent and your mortgage professional are invaluable assets throughout the process, and they want you to succeed. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.


    February 2009 Northern Virginia Sales Info

    March 15, 2009

    graphFebruary 2009 home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon and Clifton:

    A total of 1,067 homes sold in February 2009, a 10 % increase above February 2008 home sales of 969.

    Active listings decreased by 18 % from last year, with 7,811 active listings in February, compared with 9,497 homes available in February 2008. The average days on market (DOM) for homes in February 2009  to 109 days, compared with 116 days in February 2008.

    The average sales price in February fell by 21 % from February 2008, to $380,077, compared with last February’s average of $479,320. The median sales price of homes sold in Northern Virginia in February was $318,000, which is a decline of 23 % compared with February 2008’s median price of $410,500.

    The February pending home sales data, based on signed contracts, is bucking the national trend – 1,817 contracts are pending compared to February 2008 when 1,526 were pending, an increase of 19 %.

    febstats


    It’s Big Johnson Basketball Time Again !!

    March 11, 2009

    It’s once again that time . . . bigjohnson

     . . . when people all over the country stop doing what they are doing and feverishly consider their picks for the NCAA Basketball Tournaments so they can enter the SEVENTH Annual Big Johnson COED College Basketball Tournament Classic, sponsored by yours truly. 

    newshuffleStick It To The Man – that’s me! A NEW 4GB Apple iPod Shuffle (in your choice of silver or black ) awaits the winner of EACH of the Men’s and Women’s Big Johnsons! (YOUR gender is irrelevant. I am referring to the separate basketball tournaments.) If you win, and you happen to already have an iPod – or other music player (ptui!) – I’ll give you the equivalent in iTunes credit, if you prefer. I would suggest that you check out the NEW Shuffle carefully before you decide. And as usual, anyone who gets more points than The Man will win something. Last time it was a king-sized Snickers bar. Can’t beat chocolate . . .

    ti82It won’t cost you anything but your sanity . . . and not even that, if you just choose the higher-seeded team in each matchup, and then pick the eventual Final Four winner based on their mascot or school colors. How difficult can this really be? Well, there might be upsets. Or not. And gee, there are only – uh, lessee, 64 teams in each tournament, where’s my TI-82? – okay, 126 total games.

    And it takes a special kind of person to enter BOTH the Men’s and Women’s tournaments. Yes, I mean you!

    The brackets are being set by the NCAA (Men’s Sunday March 15; Women’s Monday March 16). The men’s first round games start on Thursday March 19 (we don’t do the men’s “play-in” game on Tuesday), and the women’s on Saturday March 21 – and the brackets are locked shortly before the first game of each tournament. That doesn’t leave you much time, so GET GOING!

    The Group Name on ESPN is “Big Johnson” for each tournament, and the group password is: kimsentme. That’s right, kim sent me, one word.

    espn_logo

    You can get there through the following URLs:

       Men’s Tournament Challenge:  http://games.espn.go.com/tcmen/frontpage

       Women’s Tournament Challenge:  http://games.espn.go.com/tcwomen/frontpage

    I know some of you like to fake out ESPN with an alias and throwaway email, but please be sure I can identify you from your name or the name of your entry. Otherwise I will keep your iPod, ha ha. 

    After you create your entries, be sure to join the Big Johnson group in each tournament! And, if you create your entry before the brackets are set, be sure to return in time to choose your winners before they lock. Most people will wait until March 17 or 18, but don’t forget! ESPN tracks your points as the tournaments progress. I will weigh in every now and then with a Big Johnson update note.

    FRIENDS ARE WELCOME, so you can forward this if you wish. Just be sure they identify themselves to me!

    Best of luck to everyone!

              Kim

    Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
    Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com

    It’s Good To Have A Friend In The Business®
    samson-realty-and-bird

    If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

    4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!