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In my previous blog post, I estimated that in 2014, home prices were expected to rebound. 2012 however surprised all of us with sharp price increases. What is causing this price increase? A number of factors may play into it but one of the main variables is the lack of supply thus increasing demand and prices. It is a seller's market and will probably remain until the latter half of this year. However, I don't believe this will last.

Based off our research, there is a artificial lack of inventory meaning, home prices may very well halt its increase and decline for some time. Let's explore why short selling now would be in your best interest.

What will the status of the housing market be in the next couple of years? Only time can tell. What we can investigate are the factors that led to the volatile home prices.

We are seeing large hedgefund investors like blackstone and other cash investors, buy out most of the inventory. Concurrently, new legislation as seen in California, Oregon, Nevada, and Washington, are slowing down the foreclosure flow in those areas which according to Daren Blomquist, VP of RealtyTrac, will result in a backlash of foreclosure activity at the end of this year and into 2014. RealtyTrac is still expecting to see about 600,000 REO's enter the market in 2013. This indicates a hit on home prices to come.

At the same time, homeowners are vulnerable to a large tax liability at the end of this year. The mortgage forgiveness debt relief act is set to expire Dec. 31, 2013. For more information, please read our previous blog post.

A short sale is when you sell your home for less than what is owed. The remaining balance owed is negotiated so if home prices decrease, the difference between the sale price and the amount owed will only grow meaning you have a higher risk of owing more to your lender after you short sell your home.

Moral of the story, no one can fully time the housing market but the uncertainty should create urgency this 2013 year.

Hope this helps

Peter

 www.seattleshortsaleblog.com

     If you are a Realtor or short sale negotiator who has done a short sale with Fannie Mae as the investor during the last few months, this blog post will likely raise a question or two.  For everyone else, it will definitely also raise an eyebrow or two. Government conspiracy theorists are certainly not a rarity in this day and age. Depending on who you speak to, many of our fellow citizens can come off as paranoid and irrational when speaking about all the secret plans they seem so sure our government and those in power are plotting and planning. While the theory I'm proposing on here is certainly not up to par with the New World Order, Illuminati, One World Government folks, it is certainly some concerning and valid food for thought, especially for those of us in the Real Estate and Mortgage industry.  Take a few minutes to read this blog post, and you'll likely agree and come to find that this really isn't about a conspiracy theory, but a very real and disturbing trend that is happening in our housing market right now.

     Lets take a step back here and set the stage.  Over the last five to six years, we have seen real estate prices plummet in virtually every market across the country. This reality of the depressed housing market is certainly no secret. In many areas, prices have declined to as low as thirty cents on the dollar. Several years ago, As things became more and more depressed, our government stepped in.  Both Fannie Mae and Freddie Mac, who back the majority of our residential mortgage loans, were completely bailed out by the US government.  This forced overtaking was something that our government had to do, as the imminent collapse of Fannie and Freddie would have meant the complete collapse of the housing and finance industry, likely permanently.  This was extremely important, as instead of giving bailout loans to Fannie Mae and Freddie Mac, like the auto industry or the banks, they actually took complete control of these organizations.  Our government then established the Federal Housing Finance Agency (FHFA) to "oversee" these organizations which are now referred to as Government Sponsored Enterprises, or GSE's.  Since then, the FHFA consistently dictates policy to these Government Sponsored Enterprises that still back most residential mortgage loans and completely control the secondary mortgage market.

     Now back to the present.  Fantasic news headlines in much of the country that in many of the markets that were hardest hit, prices now seem to get going up almost as quickly as they were once declining. Inventories are low, demand is high, properties are getting multiple offers from buyers paying over list prices the minute they come on the market.  But for those in the industry such as myself who are active in the short sale and distressed property niche, an interesting and disturbing practice that has been taking place.

     In very recent times, just in the past few months, short sale agents across the country have been having difficulties with Fannie Mae short sales.  To be more specific, the difficulty has been with wildly inflated appraised property values that Fannie Mae has been insisting on for short sale properties. For those who may not know, we are not talking about regular appraisals, traditionally ordered by a buyers lender in order to justify a purchase price.  In this case, we are talking about appraised values that Fannie Mae places on properties, ordered by them and completed by their own appraisers, utilizing their own appraising and property valuation methods.  Utilizing these over inflated appraised values, Fannie Mae then demands more money for these short sale properties from patient buyers.  Anyone starting to smell the stink yet? Does this stink smell a little similar to the stink we all experienced several years ago with inflated buyer appraisals from before the housing market collapse?

     For the most active short sale agents across the country, the past few months have produced quiet a few headaches with Fannie Mae.  It seems virtually every property valuation and appraisal done by Fannie Mae for a short sale is at least 10% or more above current market value.  Values so inflated, that there are typically no comparable sales at all to come remotely close to justifying their prices.  Prices so high, that it most cases it would be virtually impossible for a buyer to find a loan and get an appraisal that would match the property values and prices that Fannie Mae is demanding.  The ironic part, is that these same buyers' loans who are purchasing these properties would of course eventually be sold off to... You guessed it, Fannie Mae! Because of the massive number of loans backed by Fannie Mae, this is widespread and is effecting a very high percentage of current sales.  And when it comes to disputing these inflated values, it can be quiet a challenge for real estate agents and short sale processors to convince Fannie Mae to change their mind and sell the properties for actual market value.

     Put two and two together, read between the lines, and it makes perfect sense that this is just Fannie Mae's and our policy dictating governments' valiant and likely effective attempt at mass, government controlled real estate price fixing.  Control the supply (market inventory), control the demand (interest rates ect), and then control prices and force up property values by demanding more money.  Fannie Mae and Government controlled real estate price fixing.  The tail wags the dog, and the dog has no clue what is going on.  A perfect example of the reality that housing has become completely socialized, but with the illusion that its just all part of the market cycle.  Just my two cents, for what its worth.
Click Here for my original article on Government Real Estate Price Fixing

Although home prices have not returned to the average of $196,000 like it was last year, it is getting close. When comparing home prices at different tiers, Madison is staying ahead of the rest of the state in all three tiers.  The following charts are from Zillow.  This first chart points out two facts.  First, the average price for a home in Wisconsin in the upper tier is around $232,000.  However, for Madison the price is approximately $295,000.  This points to the continued growth in the Madison area.  Secondly, while the average price in this tier only increased 0.2% for the state of Wisconsin, in Madison the price improved by 1.6% 

May 2012 Could Signal a Turn Around for Housing Market

There is some hope for the real estate market. According to a report published by the Commerce Department the number of homes purchased in May of 2012 was the highest number in over two years. The number of purchases increased from April to May by 7.6%. That number is the best increase since April of 2010 when the tax credit for purchasing a home was still in effect.

Areas of Highest Growth

The places that saw the largest increases were the South and Northeast. The number of homes purchased in the South grew by 12.7% while the growth in the Northeast was 36.7%

Although the total number of sales across the country seems to be off pace from the 700,000 transactions favored by economists, the market is showing other signs of improvement.

Strong Signals from the Market

First and foremost, builders have begun to increase production. More construction is always a positive sign, no matter how small the increase. Second, interest rates for mortgages are still at historically low levels making it easy to afford a home. Third, and this is important too, is the stabilization of home values. Most regions around the country have noticed home values finally holding steady. All of these factors have lead to people buying up existing homes, paving the way to build more properties.

More than Just Statistics

The main reason why economists and financial analysts pay so much attention to new construction comes from their overall economic impact. Building a new home normally produces about three new year-long jobs. It also leads to an increase in taxable revenue by an average of $90,000. Although new homes are only 20% of the entire housing market, the numbers above show how constructions helps the economy thrive.

Supply is Down

At the end of May it was reported that a total of 145,000 new homes were on the market throughout the entire country. Based on current sales numbers the market should go through the existing inventory of new homes in about 4.5 months. Economic experts feel that a 6 month supply of new homes keeps the economy healthy. With a lower than average supply it is possible that home prices could go up simply because demand will be higher.

Prices Already Higher

Speaking in general averages, the price of a home bought in May of 2012 was down ever so slightly from the average price in April. However, when looking at sales from one year ago shows that average prices have gone up by 5.6%.

From January to February prices fell 1.6 percent on a seasonally adjusted basis, according to the monthly House Price Index published by the Federal Housing Finance Agency.  The previously reported 0.3 percent decrease in January was revised to a 1.0 percent decrease.  For the 12 months ending in February, U.S. prices fell 5.7 percent.  The U.S. index is  18.6 percent below its April 2007 peak and roughly the same as the February 2004 index level.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.  For the nine Census Divisions, seasonally adjusted monthly price changes from  January  to February  ranged from  -3.7 percent in the Mountain  Division  to  -0.6 percent in the  East  South Central Division.

 FHFA Press Release

Craig Roberts, President of Pennsylvania First Settlement Services LP, is a Certified Land Title Professional (CLTP), past-President of the Pennsylvania Land Title Association, and is a licensed title agent and real estate broker in the Commonwealth of Pennsylvania.

Pennsylvania First Settlement Services is a full-service title insurance agency serving the greater Pocono area of northeastern Pennsylvania.  Its services include title searches, title insurance, real estate settlements, foreclosure research, documents services and short sale assistance.  www.pafirstsettlement.com

Brentwood Governors Club Seeing More Distress Sales
Well Known Gated Brentwood Tennessee Neighborhood Experiencing Increased Short Sale and Foreclosure Activity

Per my previous blog posts, Financial Distress Hitting Affluent Towns and Neighborhoods, Brentwood Distressed Sales Activity Increasing and Franklin Distressed Sales Activity Increasing, it is clear that exclusive, affluent, executive, luxury, gated, high-end and golf course neighborhoods are experiencing increased levels of Distress Sales (short sales and foreclosures). However, even with this information it is still surprising to such a prominent Brentwood Tennessee neighborhood like the Governors Club be hit with so many distress sales. Please consider the following sales figures which I obtained from the Middle Tennessee RealTracs MLS:

• There are currently 35 Active Listings (i.e. homes that are actively being marketed for sale) in the Governors Club. Out of those 35 Active Listings 4 are Distress Sales (i.e. short sales and foreclosures account for over 11% of the Active Listings in the Governors Club).
• There are currently 4 Pending Sales (i.e. homes that are under contract with buyers and are probable to close) in the Governors Club. Out of those 4 Pending Sales, 1 is a Distress Sale (i.e. short sales and foreclosures account for 25% of the Pending Sales in the Governors Club).
• Since 1/1/2010 there have been 31 Closed Sales in the Governors Club. Out of those 31 Closed Sales, 4 were Distress Sales (i.e. short sales and foreclosures account for almost 13% of the Closed Sales in the Governors Club).

While the numbers above are not staggering when compared to other parts of the country and even other parts of the Nashville Tennessee, for a neighborhood like the Brentwood Governors Club to have 11%+ distress sales in every sales category is really bad. It is clear that even ultra exclusive, affluent, executive, luxury, gated, high-end and golf course neighborhoods are not immune to the economic and housing market collapse, and, as a result are seeing increased levels of short sales and foreclosures. I highly recommend that these homeowners seek qualified professional real estate, legal and financial advice right away to avoid foreclosure. Since I understand that many homeowners do not want their neighbors to know about their financial hardship, I generally do not use For Sale signs on my listings. I also use short sale pre-qualification techniques to minimize the marketing period of my short sale listings by thoroughly researching the financially distressed homeowners' loan type and actual lender (i.e. the loan owner or loan investor) and communicate with my clients via their cell phone (calls and text messages) and personal email to avoid embarrassment. In short, I market my listings as the "Discreet Short Sale and Foreclosure REALTOR and Real Estate Expert".

Free* Short Sale and Foreclosure Help and Assistance for Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Murfreesboro, Smyrna, La Vergne, Columbia, Mt. Juliet, Springfield, Gallatin and Middle Tennessee Financially Distressed Homeowners and Property Owners. Stop the Bank from Foreclosing with a Quick Cash Offer or Short Sale. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee or La Vergne Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact Jim to discuss a short sale (when the real estate sale proceeds are not sufficient to pay off the mortgages and liens on the property). Jim helps sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in any Middle TN County (Rutherford, Williamson, Davidson, Maury, Sumner & Robertson). If you need to short sell your house or property, or you need a quick sale to stop a foreclosure sale, you can Get Free* Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor. (*Free: In a real estate short sale, the bank or mortgage company usually approves and pays all of Jim's commissions and fees.)

Per my previous blog posts, Brentwood Distressed Sales Activity Increasing and Franklin Distressed Sales Activity Increasing, there are now larger numbers of short sales and foreclosures in wealthy areas as such as Brentwood Tennessee and Franklin Tennessee (both are located in Williamson County Tennessee). Both of these affluent towns were previously immune to the effects of the failing economy and housing market decline. The primary cause of these increased real estate distress sales are homeowners suffering from financial distress (i.e. job layoffs, and long-term unemployment). Recently, I have been contacted by two financially distressed homeowners who previously were earning in excess of $100,000 per year working in the health care industry. I say "previously" since both homeowners were recently laid off from their high paying jobs in an industry that was once thought of as a safe haven for employees. This is proof that almost no job is really "safe".

I think many financially distressed homeowners who are well educated and were formerly high income earners try to handle their mortgage delinquencies without the help of a real estate professional since they think that the bank will work with them at first. Of course, many will find out the unfortunate truth about how little the banks will do for them despite their once stellar payment history and credit. I think embarrassment is another reason why financially distressed homeowners who live in executive, luxury or otherwise high-end towns and neighborhoods delay seeking out professional real estate assistance from a short sale expert. In short, they do not want their neighbors to know about their financial hardship. This desire for discretion is fully understandable. The good news is that I am keenly aware of this concern. For example, several short sale sellers have asked me not to use a For Sale on their home. As a result, I don't use For Sale signs on my short sale listings. I also use short sale pre-qualification techniques to minimize the marketing period of their home by thoroughly researching their loan type and lender. Another way I keep the circumstances of my financially distressed seller clients as quiet as possible is communicate with these clients via their cell phone (calls and text messages) and personal email. In short, you can call me the "Discreet Short Sale and Foreclosure REALTOR and Real Estate Expert".

Free* Short Sale and Foreclosure Help and Assistance for Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Murfreesboro, Smyrna, La Vergne, Columbia, Mt. Juliet, Springfield, Gallatin and Middle Tennessee Financially Distressed Homeowners and Property Owners. Stop the Bank from Foreclosing with a Quick Cash Offer or Short Sale. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee or La Vergne Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact Jim to discuss a short sale (when the real estate sale proceeds are not sufficient to pay off the mortgages and liens on the property). Jim helps sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in any Middle TN County (Rutherford, Williamson, Davidson, Maury, Sumner & Robertson). If you need to short sell your house or property, or you need a quick sale to stop a foreclosure sale, you can Get Free* Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor. (*Free: In a real estate short sale, the bank or mortgage company usually approves and pays all of Jim's commissions and fees.)

Missing a mortgage payment (i.e. defaulting on your mortgage loan) creates a lot of personal and financial stress. This stress is even worse if the financially distressed homeowner and borrower receives a foreclosure notice, Notice of Default, or Notice of Trustee's Sale (or Notice of Substitute Trustee's Sale) from the mortgage lender or bank, or an attorney representing the mortgage lender or bank. This stress is absolutely legitimate and understandable since foreclosure severely damages a borrower's credit, and, in many states, will leave the borrower open to the mortgage lender/bank pursuing the borrower for the deficiency balance (essentially, the amount of the mortgage loan owed by the borrower, but not recovered by the mortgage lender/bank upon the sale of the foreclosed property). Declining housing prices have left many homeowners in a situation where they owe more than the market value of their home. The deficiency balance is a serious issue since when mortgage lender forecloses and resells the property the amount they recoup can be substantially less than the amount owed by the borrower. However, there is some good news for homeowners in foreclosure. If the property is the borrower's home (i.e. principal residence / primary residence), the borrower obtained a Federal Housing Administration (FHA) Insured Mortgage Loan (either when they purchased the home, or when they refinanced the mortgage loan), and the borrower wants to sell the home, there is a way to possibly avoid foreclosure altogether and to ensure that they are never pursued for the deficiency balance. Since the FHA is part of the U.S. Department of Housing and Urban Development's (HUD), financially distressed homeowners can request help under a HUD Loss Mitigation Program known as the HUD Pre-Foreclosure Sales Program (aka HUD PFS Program). Some valuable information about the HUD Pre-Foreclosure Sales Program can be viewed here: HUD Pre-Foreclosure Sales Program Facts Sheet and HUD Pre-Foreclosure Sales Program Mortgagee Letter 2008-43. As these documents suggest, the HUD Pre-Foreclosure Sales Program has certain borrower financial and hardship requirements as well as property type, use and market value requirements. If a financially distressed homeowner is not sure if they qualify for the HUD Pre-Foreclosure Sales Program they should seek out the advice of an experienced short sale and pre-foreclosure real estate broker who has been through the HUD Pre-Foreclosure Sales Program before. If the financially distressed homeowner is not sure if their mortgage loan is FHA Insured, they can find out by looking at the Settlement Statement (HUD-1) from when they purchased the property, or refinanced the mortgage loan. In the first box on the top left hand side of the HUD-1 there is a box titled "B. Type of Loan". In that box the type of mortgage loan will be checked. If "FHA" is checked then the borrower's loan is FHA Insured, and, therefore, they may be eligible to participate in the HUD Pre-Foreclosure Sales Program. If the financially distressed homeowner does not have a copy of the HUD-1 then they should contact an experienced short sale and pre-foreclosure real estate broker since they should be able to look up this information, or at least help find out if the mortgage loan is FHA insured. If the mortgage loan is FHA insured then the borrower should apply for the HUD Pre-Foreclosure Sales Program. If the borrower is accepted into the program, they are protected from foreclosure for a period of not less than 4 months and will never have to worry about a deficiency balance. That alone is worth the time and effort spent on the HUD Pre-Foreclosure Sales Program application process. here again, an experienced short sale and pre-foreclosure real estate broker who has been through the HUD Pre-Foreclosure Sales Program before will be a great help to a financially distressed homeowner since they will be able to assist in the application process.

Free* Short Sale and Foreclosure Help and Assistance for Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Murfreesboro, Smyrna, La Vergne, Columbia, Mt. Juliet, Springfield, Gallatin and Middle Tennessee Financially Distressed Homeowners and Property Owners. Stop the Bank from Foreclosing with a Quick Cash Offer or Short Sale. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee or La Vergne Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact Jim to discuss a short sale (when the real estate sale proceeds are not sufficient to pay off the mortgages and liens on the property). Jim helps sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in any Middle TN County (Rutherford, Williamson, Davidson, Maury, Sumner & Robertson). If you need to short sell your house or property, or you need a quick sale to stop a foreclosure sale, you can Get Free* Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor. (*Free: In a real estate short sale, the bank or mortgage company usually approves and pays all of Jim's commissions and fees.)