Keeping You Updated on the Market for the week of May 26, 2009

MARKET RECAP
As the economy sputters and putts along, many economists continue to look for signs the housing market is climbing out of the chasm dug by the subprime mortgage meltdown. Given the sentiment from homebuilders, some may say the housing market is finally making progress on scaling the chasm's often-slippery walls.
On that front, the National Association of Home Builders/Wells Fargo Housing Market Index rose by two points (to 16) in May, reflecting greater confidence in the newly built residential housing market. The fact that the May index continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke.
Despite growing optimism in the new-home market, many economists remain less sanguine on the prospect of an overall housing-market recovery, given that the number of new housing starts declined 12.8% last month to a seasonally adjusted annual rate of 458,000 units, the lowest pace on records dating back 50 years. But it is worth noting that much of the decline was concentrated in apartment construction, which tumbled 46.1%. On a brighter note, single-family home construction actually climbed 2.8%.
Mortgage-market trends, on the other hand, offer a promising, tangible sign that a sustained recovery is possible. The Mortgage Bankers Association’s index of purchase applications, though falling slightly last week, continues along a higher long-term trend, thanks to investors and home buyers taking advantage of lower home prices and stable, historically low mortgage rates. On the latter, the 30-year fixed-rate mortgage remains near record lows reached at the end of March.
Not to repeat ourselves on one theme too often, but mortgage rates are unlikely to go significantly lower. Many of the government's recent economic stimulus initiatives have increased the odds of more inflation down the road. And that's not just us talking: Federal Reserve Bank of Philadelphia President Charles Plosser said prices may rise 2.5% in 2011, a rate well above central bankers’ preferred range, and cautioned against complacency on inflation – another reason we remain convinced that there is no time better than the present for getting a mortgage or for buying a home.

Bad News as Good News
There has been no shortage of media coverage on the foreclosure market over the past six months. In fact, the foreclosure market seems to be the only growth market left in the country, if you listen to some accounts. The bad news is that foreclosure activity is up 32% from last year, with one in every 374 US housing units receiving a foreclosure filing in April, the highest rate yet seen by RealtyTrac, which has tracked activity since January 2005.
The good news is that demand for these homes is growing. Indeed, Housingwire.com ran an article that basically stated foreclosed homes are becoming the “hot-ticket” item in real estate. In a survey by Trulia.com and RealtyTrac, 55% of survey participants indicate they are at least somewhat likely to consider purchasing a foreclosed home in the near future, compared to the 47% who said the same in November 2008.

Home Buyers Can Use $8,000 Tax Credit For Downpayments on FHA-Insured Loans

HUD Secretary Shaun Donovan's decision to allow consumers to use the $8,000 first-time home buyer tax credit to help cover their downpayment and closing costs on FHA-insured mortgages will be a big boost to the housing market, according to the National Association of Home Builders (NAHB)."The biggest obstacle for first-time buyers is coming up with a downpayment," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We commend Secretary Donovan for acting decisively to enable buyers to access the tax credit at the time of closing. This will help to stimulate home sales, stabilize housing and get the economy back on track."The measures announced by HUD would allow FHA-approved lenders; federal, state and local government agencies; and FHA-approved non-profit organizations to supply home buyers short-term or "bridge loans" up to the amount of the $8,000 first-time home buyer tax credit.Longer term loans secured by second liens can also be used by government agencies and FHA-approved non-profit organizations to facilitate home sales. Several state housing finance agencies have introduced such programs and a number of agencies are considering that possibility. More information about these programs can be found on the National Council of State Housing Agencies Web site at www.ncsha.org/section.cfm/3/34/2920.Previously, the home buyer would have been unable to access the tax credit until they filed their next annual tax return or an amended 2008 tax return and received the refund from the IRS. Robson and others NAHB leaders discussed this matter and other housing-related issues with Secretary Donovan last week."Secretary Donovan shares our view on the need for a housing and economic recovery," said Robson. "We appreciate his leadership in moving swiftly to help first-time home buyers to access the tax credit up-front at the time of closing. The timing could not have been better as we are in the midst of the crucial spring home buying season."The next step is to see how FHA-approved lenders use HUD's new guidelines to actually monetize the tax credit for first-time home buyers and structure the payback provisions of the loans. NAHB encourages lenders to act promptly to put these provisions into place. To qualify for the tax credit, first-time home buyers must actually close on their home purchase by Dec. 1, 2009. Buyers can take the credit on their 2008 or 2009 income tax return.For further information about the tax credit - including a detailed question and answer section and a number of home-buying resources for consumers - log on to NAHB's consumer Web site at http://www.federalhousingtaxcredit.com/.Source: http://www.nahb.org/

Vote for St. Jude in Target's Bullseye Gives campaign

Thanks to a special Target promotion, Bullseye Gives, Facebook users have a new opportunity to help the kids of St. Jude. Target has earmarked $3 million to be distributed to St. Jude and other charity partners, and Facebook users will determine how much of the $3 million each charity receives.
Here’s how it works: For two weeks starting May 10, Target will feature St. Jude and nine other national charities on the Target Facebook page. Facebook users who visit www.facebook.com/target can vote once a day for the charity of their choice. All votes and the dollars allocated for each charity will be updated in real time on the Target Facebook page during the campaign.
On May 26, Target will announce the final donations to each charity, based on the percentage of the vote each charity received. So if St. Jude receives 50 percent of the votes, the Target gift to St. Jude would be $1.5 million.
Since 1946, Target Corporation has donated 5 percent of its income to support charities in communities throughout the nation. Today, that giving equals more than $3 million a week.
The Bullseye Gives promotion runs from May 10-25 ... go to www.facebook.com/target every day to cast your vote for St. Jude. Tell a friend and help the kids of St. Jude.

May 2009

Realtors Support HUD Financing in Obama Budget

The following is a statement by National Association of Realtors® President Charles McMillan:
“As the leading advocate for housing and homeownership issues, NAR is pleased that President Barack Obama’s 2010 budget, released today, includes increased funding for the U.S. Department of Housing and Urban Development and many of its important programs. HUD helps millions of families obtain affordable housing and makes safe affordable financing available to even more people.
“The president’s budget provides necessary funding that will allow HUD and its agency, the Federal Housing Administration, to fulfill its mission of increasing homeownership, supporting innovative and sustainable community development and increasing access to affordable housing. FHA is the workhorse of the administration’s housing and economic recovery efforts, and now more than ever, it is serving a critical purpose in helping move our nation out of the economic turmoil by providing safe and sound mortgage products to millions of Americans.
“FHA continues to fund its programs by the mortgage insurance premiums it collects. The president’s fiscal year 2010 budget shows that FHA continues to operate without requiring a credit subsidy. At a time when many financial institutions are requiring assistance from the federal government, FHA continues to play a significant role in the recovery of the U.S. economy at no actuarial expense to the American taxpayer. It does not rely on taxpayer dollars and does not add risk to our nation’s financial infrastructure. We look forward to working with the Obama administration to continue to improve FHA and the products and services it offers.
“Progress has been made in starting to bring stability to the housing market and we must all work together to continue moving forward. Our members are committed to assisting the president and his administration in these efforts.”