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Category Archives: news

Gwinnett County Homestretch… Again…

Friday, 26 August 2011 08:00
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I wrote a post a few months ago about the Gwinnett County Homestretch Program.  It is a REALLY cool program for buyers with qualified incomes.  The actual caps change regularly, but follow HUD limits.  Buyers also have to go through a financial counseling class.

But the end result is that buyers get $7,500 in Down Payment Assistance.  This is money that does NOT need to be repaid, as long as the buyer stays in the home at least 5 years.

Earlier in the year, when I wrote the post, funds were available even for existing home owners, not just first time home buyers.  Since that time, Gwinnett County has changed that… they ran out of funds for existing home owners.  But they still have plenty of funds available for first time home buyers (remember, to qualify as a first time home buyer, you can’t have owned a home for the last three years).  BTW, please don’t think that there is a way around that by not having a spouse on the title or something.  It doesn’t work…

In order to qualify, the buyer needs to have $1000 in the deal.  I recently was asked what qualified as part of the $1000…  Did the inspection count?  Did the earnest money count?  I wasn’t asked about the appraisal…  Here are the short answers.

  • The inspection doesn’t count.  I ALWAYS recommend that buyers get an inspection, but it isn’t part of the $1000 that the buyer has “in the deal.”
  • The appraisal DOES count.  It is a requirement, and it is a closing cost.  The funds CAN be used to pay closing costs.
  • The earnest money is actually like a security deposit.  It is money credited toward the closing and/or down payment, so therefore it DOES count.

One thing to keep in mind… money can NOT flow back to the buyer at closing.  Even if they overpay closing costs, they can’t be refunded at closing.  Ken Cook (of America Home Key) and I have been through the rules and know how the program works.  If you want to see if YOU qualify, contact us.

 

We’d love to help you buy a home.  There are great deals on the market right now, and interest rates are exceptional.  For more info, click here. There are other Down Payment Assistance programs available around the Metro Atlanta area.

Here is my video from the original post.

Mortgage Rates Lowest in 50 Years… according to Freddie Mac

Friday, 19 August 2011 08:00
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Freddie Mac

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Freddie Mac issued their Primary Mortgage Market Survey yesterday, and the rates are unbelievable.  Let me click off a few quotes from the Press Release.

30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.7 point for the week ending August 18, 2011, down from last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.42 percent.

15-year FRM this week averaged 3.36 percent with an average 0.6 point, down from last week when it averaged 3.50 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week, with an average 0.5 point, down from last week when it averaged 3.13 percent. A year ago, the 5-year ARM averaged 3.56 percent.

1-year Treasury-indexed ARMaveraged 2.86 percent this week with an average 0.6 point, down from last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

I guess that is the upside of economic stagnation.  And when combined with the amazing prices on homes in the market right now, it makes for a GREAT time to buy property.  Assuming that you don’t have to sell first.

And that is the flip side.  Many would be buyers are sidelined because they can’t afford to sell their current home.  The best they can hope for is to re-finance with the low rates… of course, that isn’t helping those that have a need to relocate.

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Mortgage Interest Deduction… Good or Bad?

Monday, 15 August 2011 10:16
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The NAR building and the U.S. Capitol in the b...

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There is a lot of discussion in the real estate world about the Mortgage Interest Deduction (MID) on Income Taxes.  The National Association of REALTORS® (NAR) is virtually flipping out with just the thought that it could be eliminated by Congress as they look for more “revenue enhancements” (they are unwilling to say “tax increases”).

The NAR position is that with a weak housing market, and the fact that homeowners have benefited form the MID for decades, this is NOT the time to eliminate it, increasing taxes on mostly middle class taxpayers/homeowners.  I can’t argue against that position very forcefully.  It isn’t that I want to agree with the NAR, because I don’t.  And, in fact, my reasoning is much different from theirs.

Opponents of the MID argue that homeowners shouldn’t get special treatment v. renters in getting a tax credit for a portion of their mortgage.  And that IS  a strong argument, but there is one HUGE flaw…

Renters might not get a tax credit, but Landlords DO.  They may or may not pass that savings along to the renter (depending on the competitiveness of their rental market), but as a business, interest is a deductible interest expense.  So, in effect, a homeowner would be penalized for occupying a home that they own.  And with all of the talk of “fairness” coming out of Washington, DC, taxing the Mortgage Interest for Owner/Occupants, while not taxing it for investors seems kind of dumb. 

Also, this would be going after the heart of the middle class.  Many opponents argue that upper middle class families benefit more from the MID than those with lower incomes… although, the truth is that income isn’t as much of a determinant as is mortgage debt.  BUT, those with higher incomes might have a tool available that those with lower incomes may not.  Many are already business owners.  And, it wouldn’t be that tough for them to incorporate, transfer the ownership of their home to their business, and rent the house. 

This would give them the tax deduction for the mortgage interest as a business expense.  Homeowners with smaller mortgages and/or smaller incomes might not be able to swing the same deal… meaning that they would be more adversely impacted by the change than higher income and/or higher debt homeowners. 

One other thing, which I personally think is important, but a back burner aspect of the debate, is the benefit of a home-ownership society.  Simply put, home owners are a more stable group than renters.  They have a stake in their neighborhoods, schools and communities.  Renters want nice neighborhoods, schools and communities, but have a much easier time escaping if things go sour.  They won’t pay a financial penalty for getting out… in fact, if demand increases for a specific area, they might actually end up having to pay more.

BTW, I DO consider business deduction of interest to be something that should NOT be taxed.  It is a legitimate business expense.  And since I don’t think businesses should have to pay taxes on the interest THEY pay, I don’t think it would be right to force owner/occupants to pay interest for the exact same thing.

What do YOU think?  I’d love to hear your thoughts.  Add a comment.

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Wayback Wednesday… THIS Should be the Centerpiece of What the NAR Does for Consumers!

Wednesday, 10 August 2011 08:00
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Logo of the National Association of Realtors.

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To begin with, the NAR is the National Association of REALTORS®.  Their “job” is that they represent real estate agents legislatively.  For lack of a better phrase, they are our trade group and kind of like a trade union.  I’m not fond of everything that they do, but I do feel that they have a place.

One of the stated missions of the NAR is to protect consumers.  There are a few ways that they go about this, including requiring members to live up to a Code of Ethics.  And while I think there are some weaknesses in the Code of Ethics, it is something.  Another thing that the NAR does is provide (often self-serving) market stats and interpretations to the public… through the media.

Also along the lines of consumer protection, the NAR sometimes mentions… seemingly in passing… cases of Eminent Domain abuse by various federal, state and local governments.  Governments abusing their Right of Eminent Domain is something VERY basic…  It goes to the heart of Property Rights, that when we purchase a piece of property, we OWN it and can enjoy it as we wish.

Four years ago I had a post about Eminent Domain abuses that were going on at that time.  I wish I could say that things are better, but they aren’t.  In fact, some localities are looking at their tax base and wondering how they can tweak it in order to bring in more revenues.  Unfortunately, for many politicians, that means pushing people out of their homes in order to bring about some grand new plan.  And in some cases, there are politicians that are on the receiving end of some generous “thank you notes” from the developers hired to bring about the grand plans.

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Norcross, GA, Market Report, June 2011

Monday, 08 August 2011 08:00
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DSCN0584

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Market stats for Norcross GA, June, 2011 indicate that there were 360 properties on the market (385 for May). Overall, there is about a 5.8 month supply of properties (7.2 months last month). This year has been very strong so far… although it has slowed the last two months… it hasn’t slowed much.  June saw 85 sales, WAY above the 52 for May and the 62 for last June, and with the decrease in listing inventory the Absorption Rate (AR) built more strength.  This is one of the few market areas in Gwinnett to post five strong months in a row.

In the sub-$200k arena, there were 208 listings (225 last month), with about 4.1 month supply (5.4 for May).  Sales are up sharply from a year ago in this segment, which is the main driver of sales in this area (68 v 38).  For the last three months, the AR has been tilted in favor of sellers… it got a little more so, this month.  This looks like the strongest price/area segment in Gwinnett County, GA.

Between $200k and $400k, there were 152 listings for sale (120 in May), and about 18.2 months of supply (last month it was 18.0).  As strong as the under $200k segment is… this one is weak.  The 15 sales were a drop from last year’s 18 sales, but a good bump from last month’s 7 sales.  Of course, this segment has always seemed to lag.

From $400k to $600k, there were 44 homes on the market (34 last month). The absorption rate is around 16.5 months (8.5 in May).  The Absorption Rate has been dropped for 5 months, then shot WAY up this month.  June’s 1 sale is down from 5 the month before and last year’s 4 sales… and the inventory increase didn’t really help.

In the $600k to $800k arena, there were 8 listing on the market (1 last month).  Inventories had decreased as sales have increased compared to last year.  The absorption rate is at 12 months of inventory (1.5 last month, but only 1 listing)… but with only 4 sales last year and then the sale in March and another each in May and June, obviously it is easy to bump one way or the other. The ONLY reason for the strong looking Absorption Rate last month was that there was only 1 listing.  

The range from $800k to $1m, there was 1 homes listed on the market and no sales… seemingly forever.

Above $1m, there were 4 properties listed.  But because of the smaller numbers of sales, the absorption rate could be significantly impacted by just a couple of sales.  The single sale in January (first since October) has pushed the Absorption Rate down to 24 months of inventory.

Norcross, GA is a suburb of Atlanta in Gwinnett County. The population is 2000 was 8,41, but that only included the area inside the city limits, and it has seen tremendous growth since that census. The City of Norcross revamped their old town a long time ago, and it has served as a model for other towns in the area. It is also home to Meadow Creek and Norcross High Schools. One of the things that Norcross is known for locally is the beautiful older homes in the downtown area. They have maintained their historic flair quite successfully.

I have a page dedicated to Norcross Market Data.

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