Home Values Rose In November 2009 By Another 0.7 Percent

Reporting on a two-month lag, the government said home values rose 0.7 percent in November.

National home prices are at their highest point since February 2009.

But before we look too much into the FHFA's Home Price Index, it's important that we're cognizant of its shortcomings; the most important of which is its lack of real-time reporting.

According to the National Association of Realtors™, 80% of purchases close within 60 days. As a result, because of its two-month delay, the Home Price Index report actually trails today's market data by an entire sales cycle.

This is one reason why home values appear to be rising even while new data shows that both Existing Home Sales and New Home Sales fell flat last month. The home valuation report is using data from November; the sales reports are using data from December.

The Home Price Index is a trailing indicator and next month, as the Spring Market gets underway, the government will be reporting data from the holidays.

The same is true for the Case-Shiller Index. It, too, operates on a 2-month lag.

All of that said, however, long-term trends do matter in housing and the Home Price Index has shown consistent improvement over the last 10 months. In many markets, home sales are up, home supplies are down, and values have increased. This trend should continue into the early part of 2010, at least.

If you're wondering whether now is a good time to buy a home in Philadelphia , consider low prices, cheap mortgages and an available tax credit as three good incentives. By May, none of them will likely be available.

Less Than 100 Days Left To Claim The Homebuyer Tax Credit

November 6, 2009, Congress voted to extend and expand the First-Time Home Buyer Tax Credit program. There's 100 days left to claim it.

The expiration date of the up-to-$8,000 tax credit has been pushed forward to spring, requiring homebuyers in Philadelphia and New Jersey to be under contract for a home no later than April 30, 2010, and to be closed no later than June 30, 2010.

In addition, "move-up" buyers were also added to the program's eligibility list meaning you don't have to be a first-time home buyer to be eligible for the tax credit. If you've lived in your home for 5 of the last 8 years, you meet the IRS requirements.

Move-up buyers are capped at a total tax credit of $6,500.

In our marketplace, that's a substantial amount of money. Areas with much higher priced homes see onyl a moderate impact from these tax credits, but in our market, which has always been a more balanced market economically, these amounts can mean a significant benefit to the homebuyer lucky enough to qualify and smart enough to take advantage of the program.

The tax credit's basic eligibility requirements remain the same:

• You can't purchase the home from a parent, spouse, or child
• You can't purchase the home from an entity in which they're a majority owner
• You can't acquire the home by gift or inheritance
• All parties to the purchase must meet eligibility requirements

The new law includes some notable updates, however.

First, the subject property's sales price may not exceed $800,000. Homes sold for more than $800,000 are ineligible. And, also, household income thresholds have been raised to $125,000 for single-filers and $225,500 for joint-filers.

And lastly, don't forget that the program is a true tax credit -- not a deduction. This means that a tax filer who's eligible for the full $8,00 credit and whose "normal" tax liability totals $5,000 would receive a $3,000 refund from the U.S. Treasury at tax time.

The complete list of qualifying criteria is posted on the IRS website. Review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.

There's less than 100 days to go.

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• Housing Market Statistics for Philadelphia and Surrounding Counties (c21agvoices.com)

New 2010 FHA Guidelines Give Buyers Reasons to Act NOW!

Securing an FHA mortgage in Pennsylvania and New Jersey is about to get more expensive.

In a statement issued last Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group's portfolio risk while strengthening its overall financials.

For consumers, the changes mean higher costs.

As listed in the official announcement, there are 3 major guideline updates for the FHA:

1. Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%



2. Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent



3. Seller concessions are being limited to 3%, down from today's allowable 6%

Furthermore, the FHA has appealed to Congress to raise an FHA borrowers' monthly mortgage insurance premiums.

To read the FHA's statement, it's clear what the group is trying to balance. On one side, the FHA wants to provide affordable financing to families that need it. That's its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans.

To that end, the FHA is stepping up its enforcement of "bad lenders" in hopes of stopping problems where they start.

Also in its new policies, the FHA is introducing a "termination clause". If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages.

As a result, homebuyers in Philadelphia and surrounding areas should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don't want to do "bad loans". Lenders are incented to turn down at-risk applicants and, already, we're seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.

Some have other guideline overlays, too.

Even with these changes, the issues surrounding conventional loans made by lenders who are risk adverse and being scrutinized by federal regulators make FHA loans a pretty good alternative. Since the FHA's new guidelines don't go into effect until spring buyers have another reason to act quickly duting the next few months. First there was the tax credit program which ends April 30, 2010. Add to that the fact that between now and the spring, the old guidelines will apply. Therefore, if you know you're going to buy a home to take advantage of the tax credit, and you think you may need an FHA home loan in the next few months, consider moving up your time-frame.

If nothing else, you'll save some money at closing.

The Right Way To Make Your Bed When Your Home Is Listed For Sale

Well-made beds aren't just for comfort -- they're for presentation, too. Especially when you're selling your home. A pristine bed conveys an image of cleanliness and order to potential home buyers and that can help you get more of your asking price at the point of negotiation.

When homeowners don't take the time to make a bed, buyers wonder what else around the home is getting neglected.

And there's a proper way to make a bed, too.

In this 15-step video from Howcast, you'll learn how to start with a stripped down mattress, add bedding, pillows and a blanket, and end with the hotel-quality look that today's home buyers expect. The alternative is to leave a bed sloppy, reducing your home's overall appeal.

To make a bed the right way takes less than 2 minutes. When your home is listed for sale, make making the bed a part of your daily routine.

Upon Closer Inspection, The Federal Reserve Isn't 100% Positive About The Future Of The Economy

Both mortgage rates and home affordability took a turn for the better in Philadelphia and surrounding areas last Wednesday after the Federal Reserve released its December 15-16, 2009 meeting minutes.

The Fed Minutes is a follow-up piece to the post-FOMC meeting press release. But whereas the press release is succinct and to-the-point, the minutes are lengthy and often meandering.

As a comparison, December's press release contained 535 words. December's minutes had 6,260.

But these "extra words" aren't superfluous. They're actually very important to homeowners. Because the Federal Reserve's internal debates help to shape Wall Street expectations, it doesn't take much for those conversations to have a trickle-down effect on Main Street.

For example, after the December meeting, the Fed said that economic growth is steady, inflation is in check, and an orderly wind-down of mortgage market support was underway. A look at the minutes, though, showed some disconnect.

Some Fed members believe rising commodity prices could lead to stronger-than-expected, and others think that improvement is housing could be "undercut" by a pull-back in government stimulus.

Overall, the Fed appears optimistic about the economy, but not as optimistic as on December 16. Mortgage markets responded favorably to the minutes and mortgage pricing improved.

Although rates remain higher as compared to early-December, pricing has been on a good run this week. If you're under contract for a home in Pennsylvania or just looking to refinance, now may be a good time to lock.

Home Buyers Get A Green Light : Pending Home Sales Plunge In November

Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November. A "pending" home sale is a home that is under contract to sell, but has yet to close.

The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.

The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to "closed sales" within 60 days, and most of the rest close within 120.

Even with Pending Home Sales down, the Philadelphia housing market should not lose much of its momentum. For today's home buyers, this "lack of slack" can represent both a concern and a terrific opportunity. Though the weather keeps some buyers inside, the tax credit provides a real incentive to get out and participate in the market. Acting now allows you to get a financial benefit and to deal with sellers who have possibly held their homes into the winter.

Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall. The imbalance can also create a sense of urgency that results in over-paying for a home.

When buyers are sparse, on the other hand, the psychology of real estate shifts.

Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can't sell. They also note a lack of general feedback from the market.

It's at this point that seller fear can creep in and it becomes a buyer's best time to buy.

Based on November's Pending Home Sales data, it's clear that home sellers are in abundance right now. Home buyers have leverage.

It may not last.

With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business in Mount Holly and everywhere.

Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.

The market looks ripe for a buy but don't rush it. Take your time and bid right. But when you're ready, be ready -- once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.

2010 FHA Loan Limits Released

FHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn't make loans to New jJersey homeowners -- it insures loans made to homeowners by federally-qualified lenders.

By all accounts, FHA home loans are surging in popularity.

• 2006, FHA insured 3.3% of all mortgages made
• Q2 2009, FHA insured 19.2% of all mortgages made

A major reason for the increase can be tied to guidelines.

As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent for homes in Palmyra and Fannie Mae and Freddie Mac do not, as an example.

Another reason is that FHA home loans aren't subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees. Via the FHA, the fee is zero, making FHA the better "deal".

The FHA published its 2010 loan limits. There's no change from 2009.

The base 2010 FHA loan limits are:

• 1-unit : $271,050
• 2-unit : $347,000
• 3-unit : $419,400
• 4-unit : $521,250

We say "base" because these loan limits don't apply to all areas equally. Higher-cost regions get higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $729,750 in 2010, and there are special exceptions made for Alaska and Hawaii.

The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.

If your home's county is on neither list, use the "base" numbers above.

RealtyTrac's 2009 Foreclosure Report Gives Reason For Optimism

Like real estate, it appears that foreclosure activity is a local phenomenon, too.

As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states:

1. California
2. Florida
3. Arizona
4. Illinois

More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita.

The other states are Nevada, Utah, Georgia, Idaho, Michigan and Colorado.

Versus 2008, foreclosures are up 21 percent nationwide and that's a big number, but a deeper look at RealtyTrac's annual reports reveals a more positive undertone on the housing market.

1. 40 states fell below the national Foreclosures Per Capita average in 2009
2. Foreclosure activity fell on an annual basis in 10 states as compared to 2008

Foreclosures are still prevalent, though, and buying homes in foreclosure in Philadelphia continues to be big business. Having been active in selling foreclosures for over 22 years, our firm sees this activity on a day to day basis in the inquiries from the Lender's web sites sending buyers to us. First-time buyers, move-up buyers, and real estate investors each are bidding aggressively.

Distressed homes account for one-third of home resale activity, according to an industry trade group.

That said, buying foreclosures can be tricky.

First, properties are often sold "as-is" and the cost of repairs may unwind the home's status as a "value buy". Furthermore, a lender may require specific fixes to be made prior to closing and that, too, costs money.

Second, buying a foreclosed home in Pennsylvania isn't as streamlined as buying a "normal" home. Closing on a foreclosure can be a longer process if the sherriff deed is not yet recorded, though many foreclosures can settle much faster. But you need to know the time frame since a 4-month time-frame may not fit your schedule.

And, third, finding foreclosures can be difficult. Despite the growth in foreclosure search engines, it still takes a good real estate agent to uncover the best homes at the best prices. Luckily, being such a vendor, we can make it a little easier. You should still concentrate on finding the best house for you, even if its not a foreclosure.

Read the complete foreclosure report and take a peek at RealtyTrac's foreclosure heat maps. If you like what you see, talk to your real estate agent about what to do next.

There's still good deals in the foreclosure market -- you just have to know where to find them

Retail Sales Dropped In December And Now So Are Mortgage Rates

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The relevance of Retail Sales to home affordability isn't obvious, but it's definitely logical.

Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments.

It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available.

Conversely, the best place to find safety is in the market of government-backed bonds. This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates for people in Philadelphia. Weak economic data puts mortgage bonds in demand.

For rate shopper, this is good news. More demand for mortgage bonds causes mortgage rates to fall. Mortgage rates are lower this morning because Wall Street is shedding some risk.

December's Retail Sales report closes out a year of generally-weak data. 2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago. The other year was 2008.

For home buyers in Philadelphia and around the country, though, today may represent an opportune time to lock a mortgage rate. Housing data is still improving and other economic indicators are showing strength. Soon, Wall Street will shift from a "safe" mentality and move toward risk.

When it does, mortgage rates will rise.

10 Cities For Home Bargains

As the housing market improves across the country, certain cities are emerging as relative bargains. Some areas, like Miami, were hit hard by the recession, and other areas are buoyed by good school systems and strong labor markets.

In this 5-minute video from The Today Show, 10 cities are highlighted for their home prices. And they're not "small towns", either.

Among the featured cities:

• Miami, Florida
• Akron, Ohio
• Tuscon, Arizona
• Minneapolis, Minnesota
• Trenton, New Jersey

Now, this piece is about finding gems on a national scale. They exist locally here in Philadelphia , too. In fact with our traditionally moderate prices combined with the Tax credit, the market place is ripe for buyers. You just need to know what to look for.

With mortgage rates low and tax credits available, it's not likely that bargains will last.

Looking At The 2010 Predictions For Housing Markets And Mortgage Rates

2010 is just a few days old and already the "experts" are making predictions for the year.

Housing calls and mortgage rate predictions run the gamut:

• Home prices will fall in 2010
• Home prices will rise in 2010
• Mortgage rates will rise in 2010
• Mortgage rates will rise by a lot in 2010

Given how varied their outlooks, it's clear that the professionals have no better view of the future than the amateurs. An expert can make an educated guess, but it's a guess nonetheless.

Last year, Wall Streeters predicted a 25% pullback in home prices. 12 months later, we know prices didn't fall. Wall Street also predicted higher mortgage rates for 2009. That prediction was fulfilled.

In a recent article in Real Estate Trends, it was predicted that the Philadelphia market would appreciate at a rate that would make it one of the top 20 markets in the country. And based on the early activity this year, demand for our moderate priced housing may well lead to increased prices.

There's a lot of talk on CNBC and elsewhere about what's coming in 2010. Before you take those predictions to the bank, just remember that analysts do a much better job interpreting data from the past than projecting it into the future.

The only thing that's certain right now is that mortgage rates are historically low, the government is giving tax credits to qualified buyers, and there's a lot of good "deals" in housing. Make the most of what's out there today because it will take 12 months for us to look back and know which predictions were right and which were wrong.

Until then, predictions are just opinions and guesses.

How To Make A Self-Watering Plant Container

Self-watering plant containers are the ultimate in laziness or convenience, depending on your perspective. You can buy them on Amazon.com for $26 a piece, or you can watch this 3-minute, step-by-step video from Video Jug and build one all on your own.

You'll only need a few basic supplies in addition to fresh soil and some tools:

1. Hydroton (also known as LECA)
2. A large pot
3. An irrigation pipe and float from a garden center
4. Porous membrane

The video is broken down with easy-to-follow instructions. You don't need handyman skills or a green thumb to finish the job. Your end-result will be well-functioning self-watering pots and plants that require less time and attention.

Moving To A New City? Check The Local Cost Of Living First.

It's not only the real estate markets that differ from town to town -- the Cost of Living does, too.

Insurance costs, tax bills and just plain, day-to-day living will dent a household budget differently depending on where that household is. It can be a nerve-wracking fact for families moving from New jJersey across state borders.

As an aid for the budget-aware, Bankrate.com keeps a Cost of Living Comparison Calculator on its website. The calculator asks 3 questions: (1) Where do you live now, (2) To where you are moving, and (3) What is your salary. It then spits out a detailed, 58-item cost comparison list between the two cities.

Some of the key costs compared include:

• Everyday groceries
• Energy bills
• Routine healthcare
• Home ownership
• Clothes
• Sporting goods

The Cost of Living Comparison Calculator is thorough, with data culled from the ACCRA. You'll be surprised at how granular the list can get. On the ACCRA website, you can buy a similar report for $5.

On the Bankrate.com site, the data is free.