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FHA Raises Loan Limits until December 31, 2008
The new limits are as follows:
|
JUNE 2008 HOME SALE STATISTICS FOR HOWARD COUNTY
Source: Metropolitan Regional Information Service (MRIS)
|
|
2007 |
2008 |
% Change |
|
Total Sold Dollar Volume: |
$ 192,140,693 |
$ 125,731,402 |
- 34.56 % |
|
Average Sold Price: |
$ 487,667 |
$ 426,208 |
- 12.60 % |
|
Median Sold Price: |
$ 420,000 |
$ 379,000 |
- 9.76 % |
|
Total Units Sold: |
394 |
295 |
- 25.13 % |
|
Average Days on Market: |
72 |
99 |
37.50 % |
|
Average List Price for Solds: |
$ 505,859 |
$ 455,000 |
- 10.05 % |
|
Avg Sale Price as a percentage of Avg List Price: |
96.40 % |
93.67 % |
|
WASHINGTON METRO AREA (Maryland, D.C. Virginia) IN TOP 10
METRO AREAS WITH THE HIGHEST NUMERICAL GROWTH
Data from the US Census Bureau shows that our area is in the top 10 for growth nationwide:
The 10 U.S. Metro Areas With Highest Numerical Growth: April 1, 2000-July 1, 2006
|
Location |
Numerical Growth |
|
Atlanta-Sandy Springs-Marietta, Ga. |
890,211 |
|
Dallas-Fort Worth-Arlington, Texas |
842,449 |
|
Houston-Sugar Land-Baytown, Texas |
824,547 |
|
Phoenix-Mesa-Scottsdale, Ariz. |
787,306 |
|
Riverside-San Bernardino-Ontario, Calif. |
771,314 |
|
Los Angeles-Long Beach-Santa Ana, Calif. |
584,510 |
|
New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa. |
495,154 |
|
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va. |
494,220 |
|
Miami-Fort Lauderdale-Miami Beach, Fla. |
455,869 |
|
Chicago-Naperville-Joliet, Ill.-Ind.-Wis. |
407,133 |
What's Up with Sub-Prime Lending?
When a homebuyer wants a home loan and their credit score is under 640, most lenders place them into what is termed a sub-prime loan. This means that these consumers are able to qualify for a home loan, but they are charged an interest rate which is greater than the market rate (sometimes twice as much). This is because the banks are taking a bigger risk lending money to anyone with a history of bankruptcies, foreclosures, late payments, delinquint accounts, no cash down, etc. Sub-prime loans, however, have enabled more people to realize the joys of home ownership.
In recent years, because of the real estate boom, with homes increasing in value by 10% per year or more, even riskier loan programs evolved which let buyers into a home for little or no money down. Now that the market has stabilized to more normal levels (in 2006, home prices in Howard County increased 4.5% over the previous year) no longer can the increase in value (equity) of a home balance the negative amortization loans (which leave homeowners owing more than they purchased their home for) and/or ARMs that have switched to higher rates (which means a sudden increase in monthly payments). Hence, the increase in foreclosures all over the country which has in turn increased the number of sub-prime lenders that have gone out of business (32 since 2006). The result of this is now there are fewer sub-prime lenders out there, and those who have remained have pulled back and seriously limited their criteria for sub-prime loans. For example, 100% or no down loans are quickly becoming a thing of the past with most sub-prime lenders now requiring 5-10% down -- stated-income loans (no verification of income is required) where the income is from wages or salaries are no longer available for sub-prime borrowers -- buyers must now qualify for ARMS (Adjustable Rate Mortgages) at the rate the loan will most likely adjust to, not the initial discounted rate as before.
In addition, this has caused a domino effect in other loan sectors. Alternate-A (an intermediate classification between prime and sub-prime) and prime loan underwriting requirements are also tightening up. Some prime loans will now fall into the Alt-A sector -- some Alt-A loans will fall into the subprime sector -- and some sub-prime loans will simply be rejected.
The emerging rule of thumb for conventional sub-prime mortgages is if you cannot put at least 5% down, do not have a credit score of at least 620, and cannot document enough income to qualify for a fixed-rate loan, you might not qualify. The good news is that FHA has some wonderful loan programs out there which will fill the gap. If you suspect that you may fall into the subprime or Alt-A sector, talk to your mortgage broker or loan officer about FHA loan programs.
NAR The National Association of Realtors data for December 2006:
Existing-Home Sales:
Home resale activity fell 0.8 percent in December to a seasonally adjusted annual rate of 6.22 million.
The inventory of homes also fell -- to a 6.8-month supply, the lowest level in six months.
New-Home Sales:
New-home sales increased 4.8 percent in December to a seasonally adjusted annual rate of 1.12 million units. This is the fourth increase in the past five months.
Housing Starts:
Housing starts rose for the second straight month after declining for most of 2006. In December, the
seasonally adjusted annual rate of housing starts was 1.64 million units -- up 4.5 percent from November.
Housing Affordability:
The Housing Affordability Index slipped 1.4 percent in December to 109.2. The decline was due primarily to an incrase in the median home price and a slight rise in the income necessary to qualify for a 30-year fixed-rate mortgage.
Mortgage Rates:
The 30-year, fixed-rate mortgage inched up 8 basis points in January to an average of 6.22 percent.
Rates are expected to rise and hover around 6 percent through 2007.
Purchase Applications:
The Mortgage Bankers Association purchase application index surged to its highest level in 12 months
to 438.4 in December.
Employment:
Payroll employment rose by 111,000 jobs in January, and the unemployment rate was 4.6 percent.
Inflation:
The Consumer Price Index (CPI) increased 0.5 percent in December -- 2.5 percent ahead of the same
month a year earlier.