“We both had our bills and we knew we weren’t going to be able to (buy a home),” said Michael Sparks, who as a Marine sergeant, completed his second tour of duty in Iraq in June 2007.

So the couple concentrated on paying their bills, which “brought up our credit scores and that helped a lot.”

That is the first piece of advice lenders and real-estate agents tell would-be first-time home buyers, many of whom now are racing to beat a Nov. 30 deadline to find, arrange financing and close on a house to receive an $8,000 credit on their federal taxes.

The credit and other incentives, coupled with tentative signs of an improving economy, have drawn a steady stream, if not a flood, of new home buyers into the offices of lenders and real estate agents, especially in the last two or three months as buyers became aware of the credit and its deadline.

Sales data from the Santa Fe Area Realtors Association show that sales of homes priced below $275,000 — likely the price level for first-time buyers — climbed from 18 in January of this year to 54 in August.

Association president Mary Schroeder said that about 460 homes are currently available in that price range. “There is plenty of inventory, and obviously now is the time to buy,” Schroeder said.

Also demonstrating the increase in first-time sales, said Olga Chavez, an associate broker at Barker Realty and the Sparks’ agent, is the fact that in August 2008 only nine of 38 housing units that sold were under $250,000. A year later, 28 of 39 homes that sold were under $250,000, a 48 percent increase.

Though the bounce in sales is welcome, figures from Alan Ball, a former real estate agent who publishes a monthly newsletter on market trends in Santa Fe County, keeps it in perspective.

In July and August of this year, there were 183 sales in the city and core county area (not including Pecos or Española) of homes $300,000 or less, compared with 168 a year ago and 170 in 2007. But that’s still far from the
337 sales during the same months in 2005 or 391 in 2002 of homes $300,000 or less, according to Ball’s analysis.

Sparks said the couple had been planning on buying a home for some time. “I just got tired of renting,” Sparks said, even though the $1,500 monthly payment is about twice what they were paying in rent. Much of that, however, will be made up through deductions for taxes and improvements, plus the $8,000 credit. Sparks said he wasn’t even aware that he could qualify for the credit until well into the buying process. “That was a big surprise.”

He said the couple will use the money to make major repairs to Felicia’s car, and for home improvements including a new entertainment sound system.

He said they paid $269,000 for the three-bedroom, two-bath, 1,600-square-foot home (with a two-car garage) near Airport Road and the Santa Fe Country Club. As an active member of the military, Sparks qualified for assistance through the Veterans Administration, which eliminated the need for a down payment.

A Marine infantryman, Sparks said he spent much of the time in Iraq, from 2003 to 2007, “kicking in doors.” He is being treated for post-traumatic stress disorder.

He said that the process of buying a house was stressful. Signing the papers, “I kept saying, ‘What am I doing. What am I doing?’ But both he and Felicia find comfort and a sense of permanence in setting down roots in their own home as they begin planning a family.

Sparks said he began the home-buying process by searching newspaper ads and through a home-search Web page on the Internet.

But going it alone seemed overwhelming. “I didn’t know what I was getting into, and how to go about it.” Chavez, referred to the Sparks by Michael’s mother, “made the process a lot easier,” Sparks said.

The Sparks acquired the 5 percent, 30-year-loan from Charter Bank after a six- or seven-month search.

“I didn’t want to jump into anything,” Sparks said. The couple looked at
20 homes before they bought.

Alejandra Seluja, a loan officer and branch manager of Guadalupe Credit Union, said potential buyers often feel that anything a less than sterling credit rating will prevent them from buying a home.

“We look at a lot of different things,” Seluja said. “Maybe something happened a year ago, say a divorce.” She said she looks at what happened before and after that. We will also look at how they have handled (financial) responsibility. Have they been making their car payments?”

Seluja said that in evaluating home-loan applicants, she also attempts to see whether they are really prepared in a number of ways to take on the hefty responsibility of a 30-year mortgage.

“We try to make (first-time home buyers) understand that this is not a two-year loan. It’s long-term responsibility.”

To qualify for a $250,000 home, depending on the amount of the down payment, a buyer generally would need a household income of about $4,000 a month, Seluja said.

Chavez said buyers need to act quickly if they intend to take advantage of the $8,000 tax credit because it normally takes 45 to 60 days to close a loan.

Dennis J. Carroll | For The New Mexican

9/13/2009

Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.

“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.

Realtors®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now.

McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now,” he said.

As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.

“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Washington, September 14, 2009

By Les Christie

NEW YORK (CNNMoney.com) — Sales of existing homes rose in July for the fourth consecutive month, lending support to economists who argue a recovery is near.

Sales of previously owned single-family homes were up 7.2% compared with June and 5% from July 2008, The National Association of Realtors (NAR) reported Friday. The monthly gain was the largest on record for existing-home sales, which NAR has tracked since 1999.

“The housing market has decisively turned for the better,” said Lawrence Yun, NAR’s chief economist. “A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.”

July home sales hit an annualized rate of 5.24 million proprieties, marking the first breach of the 5 million annualized rate mark since last September, when they hit 5.1 million. Since then, they have stayed in a very narrow range, bouncing between between January’s low of 4.49 million and October’s high of 4.94 million.

The July performance far exceeded expectations: A consensus of real estate experts had forecast sales of 5 million.

Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates near historic lows makes the cost of purchasing a home lower than they’ve been in nearly 20 years.

“In some recovering markets like San Diego, Las Vegas, Phoenix and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint,” Yun said.

Overall though, the national inventory rose by more than 7% to 4.09 million units. That will continue to keep prices low, according to Mike Larson, a housing analyst with Weiss Research.

“There’s a bifurcation of the market,” he said. “There’s excess supply putting downward pressure on prices and people respond to the lower prices by buying homes.”

Housing is its most affordable in many years, he pointed out. “Falling prices is not part of the problem, they’re part of the solution,” he said.

Hurting home sales have been stubborn increases in job losses. More than 6.7 million jobs have been lost since the beginning of 2008.

That’s one reason why Robert Dye, a senior economist for PNC Financial Services (PNC, Fortune 500), is keeping his optimism in check.

“I wouldn’t go overboard on this number,” he said. “The economy is still healing and will continue to run into some bumps. But it does bode very well for the future and shows buyer confidence is increasing.”

There is one potential bump, however: The looming end of the first-time homebuyers credit. The credit gave first-time homebuyers an up to $8,000 refund on their taxes if they close on a deal before Dec. 1. That credit has been motivating buyers, and when it expires, demand could dry up.

“Just like with the cash-for-clunkers program, we run the risk of a letdown as the program runs its course,” Dye said.

Regionally, the strongest market was the Northeast, where sales soared by 13.4% to an annualized rate of 930,000. That was 3.3% higher than last July. The median price of homes sold during the month was $236,700, off 15% from last year.

Midwest sales rose 10.9% to a 1.22 million rate, 8% higher year-over-year. Prices there have sunk 5.9% over the past 12 months to a median of $157,200.

In the South, sales were up 7.1% from June and 5.4% from last July to a rate of 1.95 million. Price have dropped 7.1% to $164,500 over the past 12 months.

The only region reporting a slip in sales was the West, where they fell 1.7% to a rate of 1.13 million. That was ahead of last July, however, by 1.8%. The median price there was $202,300, a whopping 28% below what is was a year ago.

Last week’s 3.6 percent increase in pending sales marked the fifth consecutive month of positive news from this key leading indicator, the first time there’s been a string that long since 2003.

Every region of the country saw increases in pending sales in June, according to the National Association of Realtors, which compiles the data based on signed contracts for home sales that haven’t yet closed.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the string of increases in part to first time buyers getting off the sidelines and looking to qualify for federal tax credits.

Another contributing factor is the dramatic improvements in affordability of houses in many markets, sharply lower prices combined with mortgage rates in the mid to lower five percent range.

The national housing affordability index is now 37 percent better than it was just a year ago. The typical family, with a monthly household income at the national median, can now devote just 16 percent of gross income to paying principal and interest on a median priced home financed with a 20 percent downpayment.

That sort of affordability hasn’t been seen for decades!

Meanwhile, there are growing reports of multiple offers on low-priced houses for sale in some major markets, along with the first signs of possible price turnarounds.

For example, in the Portland-Vancouver market, resales in June were up 25 percent from May. But more significantly: the median price of homes sold there gained 2.1 percent, according to MDA DataQuick, a research firm.

On the mortgage front, new purchase applications to buy houses rose again last week, according to the Mortgage Bankers Association. Thirty-year average fixed rates fell to 5.2 percent from 5.4 percent. Fifteen year rates averaged 4.6 percent.

Not all the economic indicators are reading positive for real estate, of course. Unemployment rates in many parts of the country remain in the double digits, consumer confidence is brittle, and gross domestic product, GDP, was down last quarter by one percent, the fourth straight quarterly drop.

But economic forecasters like the Mortgage Bankers’ Orawin Velz, see a bright side on the near horizon: The latest GDP negative number is much smaller than the 6 percent plus loss in the previous quarter.

That suggests “the end is near” for the recession, she says, and that’s got to be good for housing.

Published: August 11, 2009; by Kenneth R. Harney

The sometimes risky sport of home buying is no different.

Those who’ve suffered the agony of defeat in what’s likely the most dangerous consumer game, learned the hard way that sheer fearlessness isn’t enough to become and remain a homeowner — through good times and bad.

With the rules of the housing game changed forever, preparing to just squeak by the home buying ordeal isn’t enough to achieve a decisive and lasting victory.

The idea isn’t just to buy a home. The goal is to keep your own roof over your head.

Preparation is key, according to the National Association of Realtors.

From NAR, here’s how to get ready to be and remain a homeowner.

Create a wish list. Write down housing wants and needs. Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home’s proximity to good schools or public transportation lines.

Browse for housing. Realtor.com and other Web sites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.

Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent, who has uploaded telling photos and videos of their listings and look for agents with good Web sites to market your listing.

Get the complete picture before you visit. You can’t know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values. NAR says talk to a Realtor and go to Realtor.com to explore communities.

Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Realtor.com time stamps listings to help buyers make better informed decisions. Get email alerts and stay on top of changes so you can be first to act.

July 16, 2009; by Broderick Perkins

Existing-Home Sales Increase in May
Existing-home sales experienced their first back-to-back monthly gain since September 2005, according to May data released by the NAR. Housing affordability and the $8,000 first-time buyer tax credit contributed to the 2.4 percent rise in existing-home sales last month, and their seasonally adjusted rate of 4.77 million units. The data, which includes single-family, townhomes, condominiums and co-ops, increased over April’s 4.66 million unit rate, though the totals are 3.6 percent lower than May 2008’s 4.95 million rate.

Government Offers $6 Billion to Buy Foreclosure Homes
State and local housing authorities, and many non-profit organizations, are now eligible to take funds from a $6 billion federal government pool set aside to buy foreclosure homes for middle- and low-income families. The program, called the Neighborhood Stabilization Program (NSP), was created to improve neighborhoods and reduce the number of foreclosures on the market.

Lawmakers Urge Fannie, Freddie to Relax Condo Mortgage Rules
Representatives Barney Frank (D., Mass.) and Anthony Weiner (D., N.Y.) are urging Fannie Mae and Freddie Mac to relax the standards for granting mortgages for new condos. The current tough standards are, they say, contributing to the slowdown of the housing market and affecting the development of new units.

Disagreement Over Consumer Protection for Mortgages, Credit
President Barack Obama’s plan for a Consumer Financial Products Agency, which would protect consumers against bad mortgages and credit practices, is creating intense disagreement in Congress. Key Democrats, including House Financial Services Chairman Barney Frank (D-Mass.), support the creation of the consumer agency, believing that consumer issues have not been part of financial regulation in the past. Meanwhile, Republicans including Rep. Scott Garrett (R-N.J.) say that the agency will be too heavy-handed and impose a “government-knows-best” set of regulations for the financial sector.

The prediction came in a recent story on usnews.com, the Web version of US News and World Report. Researchers said they expect the Santa Fe real-estate market will grow at a rate of 3.6 percent annually through most of 2018.

Most of America’s real estate markets overall will appreciate during the next 10 years, some more than others, Mark Zandi, chief economist at Moody’s Economy.com., said in the report.

Moody’s Economy based its forecast on employment and population data, as well as geographic and industry trends.

Unlike most other cities in the top 10, Santa Fe lacks an industrial base to boost the city’s economy. But other factors could be at work.

Among the reasons for optimism about Santa Fe?

The community’s 300 art galleries and dealers and the estimated 1 million visitors who come to Santa Fe every year, “making tourism a key component of the local economy,” the article stated.

Real-estate brokers were delighted with the prediction, including Mary Schroeder, president of the Santa Fe Association of Realtors, though she was a little cautious.

“That’s actually good news,” she said. “I haven’t seen that about Santa Fe before. The news is usually about Albuquerque. I get tired of hearing about Albuquerque.”

Santa Fe isn’t seeing that 3.6 percent growth rate just yet.

In the first quarter of 2009, according to the Santa Fe Association of Realtors, the rate of growth was about 2 percent in the city of Santa Fe, with the median sales price rising from $301,500 during the first quarter of 2008 to $308,000 in the same period in 2009.

In Santa Fe County, the result was not as good. The median sales price dropped from $480,000 to $440,000, a decline of 8 percent.

“The biggest thing we need to do over the next 10 years,” Schroeder said, “is to reduce the supply of homes for sale. In some neighborhoods, we’ve got several years’ supply. There are thousands of homes on the market. We’ve got to get rid of that inventory. That will make a big difference in our pricing.”

Once that happens, “I think people will wake up,” Schroeder said. “They’ll be wondering, ‘Oh my God? Did I miss the bottom?’ And then go out and buy a house.”

The market also will be affected by the slowdown in new construction, Schroeder said. “If they’re not building anything new, resales are going to go at a higher price. I think that will have a positive impact on the market.”

People also will buy homes in Santa Fe because of the air quality and because they want to live in a town where green building is a priority, Schroeder said. “We could be a model city for those kind of changes.”

Santa Fe also has the advantage of being considered free of such natural disasters as earthquakes and hurricanes. “It’s pretty safe here,” Schroeder said. “The more people realize what a safe haven Santa Fe is will help with people retiring here,” she said.

The only problem is that Santa Fe is not as cheap as other places to live, she added.

One government program helping sales is the federal income-tax credit of $8,000 for first-time home buyers.

“It helps a lot,” Schroeder said. “My son used it to buy a house in Las Cruces. He was thrilled with that.”

Alan Ball, publisher of a quarterly real-estate newsletter and general manager of Southwestern Title & Escrow, also was glad to the forecast for Santa Fe’s real estate. But he was hesitant about predicting the course of real-estate prices over such a long period.

“I might take a stab at one year,” he said. “Much less two or 10 years.”

Ball added: “I can’t imagine us leading anything nationally since we’re such a small MSA (metropolitan statistical area). But I think it’s possible. The good news for us is that we didn’t have the runaway appreciation some cities had and therefore we don’t have the crazy drops in housing values that other places did.

“We also didn’t have the large number of foreclosures. In some markets, 3 to 5 percent of the homes are bank-owned. The stability here is really nice.”

Ball cautioned, however, that trends toward government forcing builders to provide affordable housing are “prohibitive for normal development” and “will put a wall around the city.”

Rising incomes will be necessary if residents are going to buy homes in Santa Fe, and New Mexico personal income growth is expected to be 2.2 percent in 2009, 2.7 percent in 2010 and 4.5 percent in 2011, according to Mark Boyd, an economist with the state Department of Workforce Solutions.

“It’s hard to know how things will turn out,” Boyd said. “But all the forecasts see us getting back on the track we were on” before the recession hit. “Perhaps with a few lessons learned.”

Contact Bob Quick at 986-3011 or bobquick@sfnewmexican.com

PICKED TO UPTICK

A list of cities and projected annual percent change in home prices from the fourth quarter of 2008 to the fourth quarter of 2018:

1. Bremerton-Silverdale, Wash.: 5.22 percent

2. Glens Falls, N.Y.: 4.71 percent

3. Fort Collins/Loveland, Co.: 4.06 percent

4. Corvallis, Ore.: 3.95 percent

5, Anchorage, Alaska: 3.8 percent

6. Duluth, Minn.: 3.74 percent

7. Sandusky, Ohio: 3.66 percent

8. Santa Fe: 3.57 percent

9. Pittsfield, Mass.: 3.51 percent

10. Decatur, Ill.: 3.44 percent.

Bob Quick | The New Mexican