The Federal Housing Authority is providing life support to the housing market in Boston and across the country.  Yet at the same time, it is enforcing new regulations that will make it far more difficult for working class condo owners to sell their properties to new clients.  So, while the deals are out there, be prepared for lots of paperwork and delays:

THE FEDERAL Housing Administration has been busy lately, propping up the housing market. The FHA’s out-sized role in real estate has earned it intense scrutiny on Capitol Hill, where legislators are already choking on the staggering tab Fannie Mae and Freddie Mac are sticking them with. To its credit, the agency is moving decisively to repair its balance sheet and avoid a government bailout…

…But in Boston, one recent FHA move is sowing some unintended consequences: It’s threatening to wall off entire neighborhoods in the city and close-in suburbs from the working-class homebuyers the FHA serves. These buyers are running into trouble because of a quirk in Boston’s development history that has left a permanent imprint on the city’s geography….

…Scores of double- and triple-deckers have been chopped up into condos over the past decade. In large tracts of Dorchester, Hyde Park, Jamaica Plain, Cambridge, Somerville, and Everett, there are few single-family homes, and even fewer buildings with condo associations that have cared to submit themselves to FHA scrutiny. People would rather not wade through a thicket of red tape, if it can be avoided.  So, essentially, huge portions of Greater Boston are off limits to homebuyers. That’s because, for working-class home buyers, an FHA loan is all there is…

…Boston’s future as a vital and diverse organism lies with post-grads and young families – groups that would gladly take the city over the suburbs, if only someone would give them a mortgage. The longer urban neighborhoods remain closed to them, the more we invite a lifeless fractured split along class lines, with the rich on one side, the poor on another, and everybody else stuck waiting on the commuter rail.

Article by Paul Mcmorrow, from the Boston Globe, June 18, 2010.

For Questions about FHA Financing and Special FHA Offers, Please call Jason Schuster at 617-756-3029.

Many people will say that now is the time to buy, and they would be correct.  Fewer people will say that now is the time rent, and they would be correct as well.  We’ve written a little bit more about the home buying aspect as of late, so now we’ll try and go into how much rents have decreased, why they have declined, and what the recovery looks like.

In 2009 rental reductions averaged 5.8% nationwide.  There are many markets that have not seen a decrease at all, while other have decreased well into the double digits percentage points.

2009 was not the best year for our economy.  Many factors helped the rental market stay strong and not completely and totally die.  In 2009 many borrowers foreclosed on their home, forcing them into a rental situation.  Many people were forced into a roommate situation, or increased roommate situation.  The largest rental age group, 20-34, increased and is expected to increase by about 5 million people over the next 10 years.  Also there was not a gross over building problem in the rental market, or at least as much as there was on the sales side of real estate.  Even with the economy taking a turn for the worse, these factors kept the average decline below the double digits.

As jobs are created and the economy strengthens, many things will change.  Roommate situations will decrease, family members will move back into rental units,  and the demand for rentals will begin to grow again.  Currently vacancy rates are estimated at about 8.8%, and will drop to about 6% between 2011 and 2013.

What should you do about this?  If you know you will be in Boston for more than the next year, you should find your next apartment or resign your lease as soon as possible, before the market begins to fix itself.  5 months from now (when most will make a move if they are going to move in 2010) the market can have a completely and totally different landscape.  Rents may start to increase, and as apartments are taken off the market, demand for the remaining apartments will increase and drive cost up, or keep pricing stagnant.

In order to get the best deal and most effectively negotiate your rent you should first do some research, find out what similar apartments in same neighborhood are renting for.  What is the vacancy rate in that area?.  Decide what you need in an apartment and what you want.  Are you able to sign more than a one year lease?

Although you want to find the apartment of your dreams, many times that does not match up with your financial situation.  Finding an apartment at the right price may come along with a compromise.  You may need to agree on a longer lease term, or pay several months up front.  If you’re unable to secure a rent as low as you would like, many landlords are willing to partially renovate, reduce move in costs such as security deposit and last months rent, or make some other consolation to prevent their property from being vacant an additional month.

Do you have any tips for renters from your experience?  What are some best practices for negotiating a deal on your next apartment?

As always you can contact us at info@ProperRealtyGroup.com with any questions or concerns.  Having an experienced real estate professional on your side will enable you to secure the best apartment at the best price!

If you are looking for for a housing deal, it may be a good idea to wait.  Not too long, not past the April 30th Tax Credit expiration date, but just a few more days and you could find the annoyances of short sales begin to disappear.

Starting on April 5th, 2010 the federal government will start providing financial incentives to banks , and other lending institutions, to complete more short sales.

Currently for a buyer to negotiate a price with a lender the process could last several months.  The buyer would submit an offer, if that offer is less than what is owed the lending institution would then order a Broker Price Opinion or an appraisal.  The lender would then receive this appraisal, compare it with the amount currently owed with the price offered.  The lending institution would then either accept, make a counter offer, or do nothing.  The whole process could last several months, in the mean time leave the potential buyer waiting for something that may or may not come.

On April the 5th things will change.  Lending institution will see financial incentives for short sales.  Under the new rules lending institutions will have Broker Price Opinions and or appraisals done before the distressed property is put up for sale, and share all relevant information about the minimum amount they are willing to accept.  They are also required to accept bids that are equal to or greater than the minimum amount shared within 10 days.

Will this help stimulate the housing market?  If so, how much?

I think this is the question for every piece of legislation, mortgage rate decrease, or tax credit.  We really will not know until after the fact.  The bottom line is this should help lending institutions cut loses, free up credit, and speed up a process that has some buyers weary of approaching.  I know there are some brokerages and agents that have stayed away from short sales as they more often than not lead no where.

Is now the right time to buy?  Believed the be the question without an answer.  We’ve written about home prices raising artificially due to increases in demand because of the Home Buyer Tax Credit.  Is that a nationwide issue, or only in certain communities?  If it is significant, how much exactly?

Interest rates on 30 year mortgages are going to steadily increase from now until the end of the year.  Exactly how much?  No one really knows.  That increase, I believe, is much more important as far as keeping money in your pocket is.  If decide to wait until after the expiration of the Tax Credit you will miss out on either $8,000 or $6,500 in tax credits as well as increases in interest rates.

How much does interest rate cost me?  Well, that really depends on how much you borrow and for how long.  With residential homes, most loans are 30 year and to get a good interest rate you are expected to put 20% down.  So for a residential home, on a $250,000 loan a one percent variance in interest rate could mean an additional $70,000 over 30 years.  That is quite a bit.

Does this mean I should buy now?  Yes, and no.  If you’ve found the home that is right for you, it may be beneficial to roll up your sleeves and make sure you’re able to go under contract before April 30th, and secure the best possible interest rate.  If you haven’t done so, it could be a mistake as finding the right home for you is the most important part of home buying.  This is a 30 year major financial commitment.  It would be wise not to take the decision lightly.

With mortgage rates near a 50 year low why are there not more borrowers taking advantage of the low rates and refinancing?  With many borrowers able to drop their rate by a full percentage point, and more than half able to drop their rates by three-quarters of a point it would seem the time is right.  It seems with house values plummeting and incomes falling equally as fast that a full percentage point (or even three-quarters) would be the thing to turn things around for many home owners in need.

Tightening credit restrictions, sky rocketing fees, and lacking equity, that’s not going to happen.

In 2008 Fannie Mae and Freddie Mac began instituting fees that, even for borrowers with good credit could face fees equal to 1% of the loan amount, or more.

On Monday the Obama Administration extended a year long program started in April to help borrowers who owe between 80% and 105% of the value of their home to refinance.  In September that program grew to include borrowers who owe up to 125% of the value of their homes.  The plan was thought to save millions when first launch, but less than 2,000 home buyers have taken advantage.

The Administration is looking into creating additional help for home owners in need.

Have you had a similar experience with securing refinancing?  Do  you know someone who has?  If you have any questions about any of the information feel free to contact us or feel free to discuss!

Taking a look over at Bloomberg.com we see Fannie Mae will be seeking 15.3 billion in aid after their 10th straight quarterly loss.  This is coming shortly after the Treasury lifted a $200 billion dollar bail out limit on Christmas Eve and has decided to back them unlimited until 2012.  Smaller rival to Fannie Mae, Freddie Mac saw a much smaller negative last quarter and will not be seeking additional aid from the government.  Fannie Mae’s net worth is currently at around negative $15 Billion.

Both sides of the political spectrum have been arguing about how to fix the housing crisis.  Should we continue to fund a company with 10 consecutive quarters of huge losses with tax payer money?  Should the system be totally overhauled?  Should Fannie Mae, Freddie Mac and other similar institutions be shut down and become a thing of the past?  If so, what will replace them?  How can we bring the same security of home loans and still have funds available for potential home buyers?

This week (ending Jan 22nd) the average 30-year fixed-rate mortgage dropped to 4.99% from last week when it was at 5.06%.  30-year fixed-rate mortgages at the same time last year were 5.12%.  This is great news for potential home buyers as this 3 week in a row drop is great when paired with the Tax Credit for new home buyers that is being offered until April of 2010.

Today Barney Frank said he looks to abolish Fannie Mae and Freddie Mac saying, “The remedy here is, as I think the committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” said Frank, chairman of the House Financial Services Committee. “That’s the approach, rather than the piecemeal one.”

Frank, along with the rest of The Financial Services Committee, is just starting its work on the issue and plans to move slowly. The committee’s first step is to talk to groups like the Center for American Progress and the National Association of Realtors, both who have prepared documents with reccomendations for the overhaul.

David Min, an associate director for the Center for American Progress, said that whatever new structure the mortgage lenders would take, any entities receiving government backing would need to be more heavily regulated to limit risk, with greater product restrictions on mortgage-backed securities and higher capital than what Fannie and Freddie had. The Center argues that reforms should apply to both public and private markets.

You can read more on Boston.com:  Barney Frank to Abolish Fannie Mae and Freddie Mac

Students (well not JUST students), you’re about 7 and a half months away from your next move.  Although that may seem like a long time, apartments in and around Boston are already renting!  September first is approaching and it will be here before you know it.  Proper Realty Group would like to take a few minutes to offer a few helpful tips to help with this process (Don’t worry, we’ll refresh your memory closer to the actual move).

Start your search EARLY!

Do not think for  a second it’s too early.  The most desirable apartments are the first to go, and they go immediately.  If you have an eye on a location or even a particular building CALL US TODAY!  We will have  all of the proper updates and your next move will be into a place you love, not whatever was left over.

Prepare EARLY!

Is your lease ending before the next one starts?  Do you have a place to put all of your stuff.  It’s very likely all of the storage units that are convenient will be full and will fill up quick.  If you know when you’re moving in and out make sure you reserve your storage unit as soon as possible!

Allston – www.yellowbrickselfstorage.com

Brighton – www.extraspace.com

Boston – www.doorstepstorage.com

Boston College – www.BrightonSelfStorage.com

Northeastern – www.bostonselfstorage.com

How are you planning to move?

The great majority of people in Boston do not have cars, let alone a truck big enough to move your bed, dresser, giant TV, etc.  To an even greater degree moving trucks and movers fill up FAST.

www.gopenske.com

www.uhaul.com

www.budget.com

Call Cable and or Internet Provider

It can be relatively annoying, but call your cable/internet service provider and ask about specials for current and old customers.  Often times it is much more advantageous to consumers to disconnect and reconnect (very easy with roommates) as a “new customer”,  or let a competitor know you are thinking of changing and see what offers are available then.

Retail Me Not

Retailmenot.com is probably one of the best websites when it comes to most everything.  I personally saved about $200 on a budget rental truck when first moving to Boston.  It’s full of coupons and deals for stores with an online presence.  This is anything from Budget Rentals to PapaJohns.com.  Great deals to be had!

What to do now?

If you’re interested in starting your search send us an E-mail!  info@properrealtygroup.com

Any questions, comments, concerns let us know, we’re here to help!

From Boston.com:

It seems the good news for first-time home buyers continues.  The Obama Administration has unveiled a plan that will help local agencies finance mortgages for first-time home buyers.

So far this year local agencies have sold about $4 billion in tax-exempt bonds which are used to finance such mortgages.  This is only 25% of what is typically sold per year.

Fannie Mae and Freddie will packages mortgages together from theses agencies and sell them as bonds to the Treasury Department.  One very important piece of this plan is that the assumed cost to the government will be zero, as any losses will be paid for by fees to the local agencies.

Although agencies only aid between 100,000 and 200,000 first time home buyers a year, every little bit helps.

Read the entire Article Here

The Boston Globe is reporting a slow down in home sales from month to month in August.  This snaps a 4 month consecutive increase in home sales.  The good news is that even though the month to month has dropped, there is still a gain of 3% from the same time last year.

“I’m not alarmed by the softening in sales,’’ said Celia Chen, a housing economist at Moody’s Economy.com.  “The trend is still very strongly up.’’

Home sales have been edging higher over the last few months as lower prices, affordable mortgage rates, and a tax credit for first-time home buyers have drawn buyers back to open houses.

A very good point that the author makes is that even with the home buying increasing 3% from last year, the average rate on a 30 year fixed mortgage has dropped from 6.09% to 5.04% last week.  With interest rates still very low, and the extended $8,000 first time home buyer tax credit makes this a great time to buy.