Real Estate Information

     Investors breathed a sigh of relief Wednesday when Federal Reserve Chair Ben Bernanke told Congress that interest rates are likely to remain low for an extended period. The economy, he said, "still requires support for recovery."  Investors see these low rates as a boon to a recovery of employment and business.  Bernanke's announcement also took the edge off the news Wednesday that housing sales hit a new low in January.  "Even though nothing he said was particularly new, it was just enough to calm the ruffled feathers that were out there," said Jim McDonald, chief investment strategist at Northern Trust in Chicago.

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Despite signs that the real estate market might be lurching forward, prices are expected to fall further this year and next.  The average home price in the United States will fall by about 6% by September 2011, according to a joint report between Fiserv and Moody's Economy.com. And that's after plunging more than 27% in the past three years.  Most of the projected home price decline will occur during the usually slow summer months of 2010.
 
After that, prices should begin to stabilize, according to Fiserv, and stay almost flat through fall of 2011.  The main reason for continued decline, according to Mark Zandi, economist and co-founder of Economy.com, is foreclosures -- the same thing that's plagued markets for the past three years.  "Foreclosure sales will pick up this spring as mortgage servicers figure out who can qualify for a modification and who can't," said Zandi.
 
The end of two federal programs, which have been propping up markets, will also tamp down prices.  The Federal Reserve has been purchasing mortgage-backed securities since early 2009, scooping up as much as $1.25 trillion worth. That has dampened rate increases by providing a ready market for the securities. But the Fed's program lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates.  Any resulting rise in rates will cause some buyers to withdraw from the market and others to look for lower priced homes. Either way, demand for homes drops and so do prices.
 
A month after the Fed bows out of the mortgage-buying market, the homebuyer tax credit will start to expire.  In a broader sense, home prices are ultimately decided by employment. "If [the job market] improvement is stronger than expected, prices will get better. If it's weaker than expected, prices will be worse," Zandi said.
 

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Kane Schaller

kane@schallers.net

530-550-5009

     This article appeared in Real Trends regarding the growth in mortgage fraud particularly in California.  I thought I’d pass this along to my readers for their awareness.   It seems that when the economy gets bad, we also have emerging fraud to contend with as well.

    Interthinx's quarterly Mortgage Fraud Risk Report indicates that most fraud types are on the rise, with increases in the risk index for occupancy fraud, employment/income fraud, and property valuation. The latter is up more than 100 percent from two years ago.
Major findings include the following:
· California has the highest mortgage fraud risk. Nevada, which had the highest index for the previous five consecutive quarters, drops to second place and is closely followed by Arizona. Florida remains in fourth place and Colorado is in fifth place. 
    The occupancy fraud risk index rose 16 percent since last quarter - the first significant increase in the index since Q4 2006. The magnitude of the quarter-on-quarter increase suggests that occupancy fraud risk will be a serious issue going forward, as continuing price declines and get-rich-quick schemes lure investors back into the market and as builders face continuing difficulty in moving unsold inventory.
       Despite a slight (4 percent) quarter-on-quarter decrease, the property valuation fraud risk index is up 40 percent over last year and up more than 100 percent from two years ago. Schemes involving short sales, REO inventories, wholesale flipping, and refinancing by borrowers whose equity has been impaired by falling real estate values continue to drive this index.

Don Schaller
Broker/Owner
Schaller Family Realtors
Dickson Realty, Truckee
dschaller@suddenlink.net

WE WELCOME YOUR REAL ESTATE PROBLEMS with enthusiasm.    The Schaller Family Realtors truckeehomefinder.com   Since 1987

A discussion on finding the price for your home. Your comments are always appreciated!

Kane Schaller

kane@schallers.net

530-550-5009

     The administration announced a new initiative to help the nation's hardest hit housing markets. President Obama has allocated $1.5 billion in aid for states where unemployment is high and home prices have fallen more than 20 percent in the aftermath of the housing bubble.

 
    The president is setting up an "innovation fund" for state housing agencies to develop assistance programs for underwater, as well as unemployed homeowners in their communities. There will be a formula for allocating funding among eligible states based on home price declines and unemployment rates.
 
    According to House Speaker Nancy Pelosi, the money will go to support homeowners in California, Nevada, Arizona, Florida, and Michigan.  The Treasury must approve each Housing Finance Agency's (HFA) program design, which can include direct assistance for the unemployed and borrowers who owe more than their home is worth, as well as programs that address the challenges of second liens.  The Treasury is expected to announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs.

Don Schaller
Broker/Owner
Schaller Family Realtors
Dickson Realty, Truckee
dschaller@suddenlink.net

EXPERIENCE  -  IT TAKES YEARS TO GAIN.  55 collective years selling Tahoe Donner homes, the Schaller Family has experience.    truckeehomefinder.com

Some thoughts on setting a price to sell your home. Your comments are always appreciated.

Kane Schaller

kane@schallers.net

530-550-5009