20% of homes underwater

Real estate website Zillow.com says one of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter.  The percentage of American single-family homes with mortgages in negative equity rose to 21.4% in the fourth quarter from 21% in the third quarter, according to the Zillow Real Estate Market Reports.  U.S. home values declined again in the fourth quarter, as the Zillow Home Value Index fell 5% year-over-year and down 0.5% quarter-over-quarter, to $186,200. It was the 12th consecutive quarter of year-over-year declines, the reports showed.  ”The prevalence of markets in or near a double-dip situation shows that we are not yet at the bottom, in terms of home values,” Stan Humphries, Zillow chief economist, said in an interview.

The pace at which homeowners are falling behind on their mortgages is declining, however, the overall delinquency rate hit another record.

Now is the time to purchase a home!

There are a number of factors leading up to the concept that a bottom may be forming in many housing locations.   The notion is that unless a metropolitan area has not dropped at least 40% in value than they have not seen the bottom yet.   Well, that may be true for many areas of the country that had rapid expansion and lot’s of speculators.  But, I am not sure this theory holds thru across each and every community.

Here are some tidbits to chew on:

Record drops in home inventories

Inventories could drop by 600,000 in 2009 depending on extent of household formation.

Mortgage Market’s gains stick

Rates are dropping, refi’s are up, and mortgage backed securities are trading well.

As the builders sell off their standing inventory the demand for new homes will increase.  This will be good for home builders that have not filed for Bankruptcy and closed their doors.  Also, the standing inventory of unsold existing homes will decline as well as various areas of the country hit a bottom and the homes are sold.

With the very low interest rates on the market today and the great deals to be had from banks and short sales is it any wonder that buyers see this as a golden opportunity to purchase the home of their dreams.

Credit Suisse has estimated the the mortgage payment on a median priced home is now 16.7 percent of median household income.  Compared with 21% just this summer.  It is also below the average of 23% between 1981 and 2007. During 2006-2007 the average mortgage payment went as high as 37% of the median income.

Also, they have noted that foreclosure prices in the heaviest hit areas have stabilized possibly indicated a bottoming out in those areas.

Sharply lower rates boost home affordability

So, all this adds up to:    Fill in our form below to find out how much home you qualify for.  There are 1st time and move-up buyer loan programs available.   FHA is the hottest loan right now for purchases while a VA loan is appealing to Veteran’s who don’t want to put any money down since a VA home loan is a “zero down payment” loan.   Also, we have the 102% USDA loan program which has income restrictions and geographical restrictions, however, it is more liberal than you might think.  So, check out that program as well.  For instance, all of Ridgefield and Battle Ground is elibible for the USDA loan program.

The National Association of Homebuilders is pushing for aid to the housing industry.   A major component would be a $22,000 tax credit for people who purchase a home before the end of 2009.

It’s kind a like shootin’ fish in a barrel nowadays with so many bailouts, tax credits, lowered rates, loan modifications, loan workouts, incentives, foreclosures, short sales, reo’s, and so much more.. It’s getting hard to keep track of all the handouts.   Each week more new announcements are made I’m wondering how the Fed’s are going to keep it all straight.  Not only will they have to create a department for each bailout or incentive package they’ll need a department to keep track of the list of bailout departments they are keeping track of.

Hey, just so long as we end up with a piece of it rather than the bankers being the only ones lining their pockets!

Washington is a Deed of Trust State.  Meaning that there are 3 parties to home loan transaction.    The Beneficiary, Trustee and the Trustor.    The beneficiary is the lender,   the Trustee holds bare or legal title, is usually a title company and has the ‘power of sale’ in the event of default and also issues the reconveyance deed upon full payment of the deed.  The Trustor is the borrower.

In the event of default on the loan the trustee makes public notice for a 90 day period of the default.  Afterwards is a 21 day publication period in a local newspaper of the pending Trustee Sale.  At the trustee’s sale the home is sold on the courthouse steps to the highest bidder.

1 out of 6 Homes are in Foreclosure!

Can you imagine?  If the statistics are correct that would mean on average walking up and down any street in America that 1 out of each 6 homes you see are in foreclosure.  That would mean that 1 out of 6 families would be looking for a rental home soon.     Of course, you must realize that some states are far worse off than others – so the idea of 1 in 6 homes in foreclosure in every neighborhood is not true.

For example Foreclosures in Vancouver Washington are much much lower than they are in Sacramento California.  Vancouver Washington Foreclosures are a problem and getting higher but not nearly so many of the formerly “hot spots” like Florida, Colorado, California and other areas.

The root of the problem is that too many homeowners are “under the water” on their home mortgages. They simply owe more than the home is currently worth.  According to Mark Zandi, chief economist at Moody’s Economy.com  at the end of 2006 there were 3 million homes in foreclosure.  By the end of 2006 there were 6.6 million and right now there are 12 million homes in foreclosure.

According to Zillow.com nearly every homeowner who purchased a home in 2006 in Stockton California is now under water.

Statistics show that on a nationwide basis out of every home purchased since early 2003 1/3 of them now have negative equity.

Almost 1/2 of home purchases from 2006 are under water (negative equity).

Even though underwriting guidelines were more stringent in 2008 mortgage originated this year are either on par or worse than those originated in 2007 and 2006.  Their equity is not as you would expect.

According to Zillow.com in some areas or neighborhoods of the country foreclosed homes are upwards of 50% of the homes for sale on the market.

Folks we’re not out of the woods yet.

But, what does this mean?  Is it a good time to buy a home?  In my opinion: Yes.  You just have to buy it at the right price.

In Detroit, Michigan a home sold for $1.00.    According to the news report the home was purchased for $65,000 in 2006 and foreclosed on last year.

The bank was so desparate to sell the property that they lowered the price to $1.00 and it took 14 days to sell.  The home had been stripped of it’s copper plumbing, light fixtures, fencing, siding and kitchen sink.  At one point the home was boarded up and those boards were stolen to board up a home down the street.

You think you got it bad?

Vancouver Home Buyers should be motivated by this morning’s news.   House prices have dropped for the sixth month in a row and prices are dipping according to a report by Fox News

There are plenty of 1st time homebuyer mortgage loan programs on the market which enable a home buyer to purchase a home with zero or a low down payment.

Also, with the recent influx of foreclosed properties there are opportunities to get real good deals while negotiating with the banks who own the properties.   They won’t “give” the property away but they are business people and will consider reasonable offers.

Home Selling:  If you are selling a home than read these 9 tips to a successful home sale.  If there are 20 homes for sale in the neighborhood and you do all these 9 steps you are ahead of your competition.

1. Small things are important.

This falls under “home staging”.  Sometimes just moving a couch across the room and removing silly posters makes a difference.   See the home thru the eyes of a prospective purchaser and not thru your desires.  Remember, you won’t be living there.  The buyer will.  Anything odd or strange should dissappear immediately.  Get rid of all clutter.    Put some plants and flowers in various places and especially in the little flower beds around the house.  New bark is also very very helpful.

2.  Give the home emotional appeal.

Make sure that when you do your repairs, painting, cleaning that you do it in a way that creates emotion.   You want the buyer to “feel” the paint job not just see it.

3.  When advertising the property don’t give all the details at once.  Get the buyers attention and interest and desire  (AIDA) to take action by coming to view the entire home.

4.  Be prepared for drive-bys and sudden visitors wanting to see the home.

Yup, that means as much as possible have it always in tip top shape.  This is difficult for some folks with busy schedules, etc.. but, it will make all the difference in the world.

5.  Get rid of plants and rocks and shrubs that are ugly.

Really, red0 or make little garden areas or flower beds as this will help with street appeal, esp. with a new paint job.  Have you ever seen a home with a new paint job that has old overgrown and ugly shrubs and planter areas.  Not very appealing is it?

6. Get Sensual – no not what you think

Make sure gentle music is playing in the background, scented candles burning, low level lighting, perhaps the smell of some fresh baked bread or cookies on the counter for the visitors. Make them feel “at home”.  After all, it may become their home.

7. Dress up the exterior of the home properly.  Don’t overdo anything but think of hanging flower baskets, flower pots in key areas, accenting trim on the home, etc..

8. Spend money on your home.

Make sure to update bathrooms, kitchen, trim, flooring, etc.. make the home look like something people would want to live in.  A nice home.  A lovely home.

9. Advertise to the demographics of buyers that will be buying your home.

For instance if your home is a small older home in an area of rentals and perhaps it is in the lower 20% price band of homes for sale in the community that you would not want to put the listing in a magazine for over $1,000,000 homes.    Nor, would you want to put a $1,000,000 listing in a magazine that may serve neighborhoods of homes under $500,000.