Frisco Home Sales and Average Prices...Expectations for Future Foreclosures

Home Sales up
Given what our market has been through, lets think with our common sense and jump to some apparent obvious conclusions about what we would expect. With the enormous number of foreclosures, and short sales that have a negative affect on house prices, and the fact that so many buyers were eliminated from the buying game when mortgage qualification guidelines tightened, we know why and where the drop in home prices on average came from. Right? That all seems like commons sense. Now that value of all homes in America just about are less than they were a year or more ago, anyone buying those homes today would be buying them at a lower amount then before...more common sense. So when we here reports that the number of homes sold in April or May this year is a little from last year, but the average price per home is less, we shouldn't be pessimistic and say, "who cares that the number of homes sold increased cause prices are down". That is not a fair statement because the homes sold today have to be less on average and the number of homes sold increasing is the best first sign we can expect. Right?
CNN reported, "Existing home sales rose 2.9% while the median sales price fell 15.4% to $170,200".

Average Sale price down
Lets not worry so much about the average sale price of homes just yet. America saw too many job losses and pay cuts for us to have a bustling appreciation on sales prices just yet. Let Americans get some placebo going in the right direction and as we start making an extra dollar, we'll get right back on into our good ole American ways...spend and leverage "babe"! Once that happens, then we can focus on home prices. Keep this note on your fridge though, over correction is in the forecast for 2010 and mortgage rates are expected to be in the high 7% range at best...they might have started that assent last week by the way the volatile market is playing out. We had two interest rate "worsenings" just today.

The foreclosure numbers haven't stopped, and there are more to be expected.
Forbes reported that in March the unemployment rate went to 8.5%, the highest in 25 years. Economic forecasters figure that we'll see a continued problem in foreclosures at least through this summer and fall.

Tax Credit Will NOT Be Available for Downpayment

$8000 FTHB Tax Credit Cannot be used For Downpayment As of Today
The SECRETARY of HUD made an announcement Monday and a HUD/FHA letter was published on the website Monday night stating the the $8000 could be used for upfront down payment (although the mortgage letter was vague at best)...the new DIRECTOR of HUD pulled that Mortgagee letter Thursday morning and is no longer even available on the HUD website because it appeared to violate a federal law that became effective October 1, 2008.
Here is the hyperlink to all Mortgagee Letters: Notice ML 09-15 has been pulled.
This theoretical program is now off the table and cannot NOT be used until there is a real concept of how to offer to your borrowers with real answers as to where the money might come from.
Before this happens there would need to be:
1. State agencies approved WITH MONEY for the down payment (Note that Texas IS working on this currently and we will probably (note that I said probably) have more information by June 1, 2009)
2. A Change to the HUD guidelines on the timeframe that is allowable for a loan….currently must be amortized over 10 years with no balloon.
3. A change to the IRS guidelines allowing your refund to be assigned to a state or non-profit entity.

It is also important to know that some mortgage companies in the area have already closed loans in which they allowed the buyer to use the $8000 as their down payment.
The problem is that those loans cannot now get insured or securitized. As of right now (today), buyers cannot close an FHA or Conventional loan using the $8000 as a down payment.

$8,000 Tax Credit Towards FHA Downpayment

HUD Secretary Donovan appeared at a NAR yesterday, and this is an exact excerpt of his remarks:

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly."

Okay - so what does that MEAN? It means that they are about to "officially" put their stamp on approving the process (and authority) on who/where/why/when a first-time homebuyer can get a LOAN for the $8000 tax credit - to be used as part of the required down payment!

THIS IS HUGE! As soon as the "official" announcement is out, we will get it to you. For now, if you are inside the transaction process of buying a home, all you can do is cross your fingers that this happens soon enough that you can take advatage of this if you choose. If you are considering on buying a house, know that this may drag on a month or two...be prepared to wait if you must.