In a recent edition of Time magazine there is a featured article about some services that help home owners negotiate new rates with their banks, or even walk away from their homes.  Some of these services package information for homeowners in distress and in some cases help advocate for the home owner.  Other services simply repackage and sell publicly available information.

Companies like the Walk Away Plan provide home owners who are in distress some counseling as well as assistance in negotiating with their bank for a new loan at a current interest rate, or renegotiating the loan all together. Other services, like Short Refi Me,  try to work with your bank to refinance your home based on current value.

CNN Money reports about the US subcommittee efforts to bring together a relief package, or legislation reform to help the ailing housing market in Ohio and other states. The article sites some numbers from Realtytrac and some are good for Ohio, and some are not so good.

Across the country foreclosures surged 48% in the month of May which is not encouraging. However Ohio saw a 7% drop in foreclosures compared to the same month in 2007. Hopefully this is the beginning of the reversal of a trend that sees Ohio’s foreclosure rate growing every year since 2000.

At some point all of the adjustable rate mortgages will have reset and the home owner will either refinance a fixed rate they can afford, negotiate with the bank, sell their home, or foreclose. The question we in the real estate and mortgage profession is when will we hit bottom, when will we have moved past a point when all of the crisis mortgages have been flushed from the system and we can slowly begin to rebuild the housing industry based on sound lending principals and appropriate risk / reward tolerances. The end goal is to attract investors to buy up relatively bland, and previously dependable residential mortgage backed securities. Only then will we know the depth of the damage to the reputation of the housing industry as an investment vehicle.

Everyone I know has been asking us “So how is the market doing … really.” The honest answer is that it is not as bad in Cincinnati as other place but of course, we would like it to be better. When we pulled up numbers and took a statistical look at both sale price and units sold the number show a decline, but not the catastrophic drop some other parts of the country have seen.

Hamilton County saw a decrease in sales of 14% (3137 to 2697) in the first five months of 2008 compared to the first five months of 2007. In the same time period sale price fell slightly by 11% ($169,617 to $152,360). The challenging part about these numbers, particularly the sale price is that there are so many bank owned homes being sold now at a fraction of their market value. With fewer overall sold properties, the higher volume of bank sales is having a greater impact on the average sale price in Hamilton County.

By far the best explanation I’ve heard of the Housing Mortage/Credit Crisis is — improbably — a podcast from the motherlode of story-telling on NPR, This American Life. This podcast is a bit different from their usual slice-o-life stories in that they try to explain something extremely complex and abstract — through personal stories.

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The episode is called The Giant Pool of Money and it’s worth at least an hour of your time on your next commute. Hearing the agents all along the “chain” of events describe what they thinking in their own words is about 100 times better than reading about it.

CNN Money published a study today on the future value of homes all over the nation. After looking through the home value tool, the outlook for Cincinnati is fairly similar to that of Ohio.  The state will see about a 5% drop in home values over the course of 2008 with the depreciation slowing to a less than 1% fall in 2009.

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What this means to the average home buyer is that if you are looking to move up market, it is time to take a look and make a move. Moving upmarket in a housing slowdown is a financially rewarding thing if you are in a position to take advantage of the value changes.

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If you are moving from a $150,000 home to a $250,000 that is a $100,000 jump. If both homes sell for 5% less due to the market you are moving from a $142,500 home to a $237,500 home in a $95,000 jump. Same homes in question. $5,000 savings. Moreover the new house property tax will be assessed at the 5%  lower sale price.

The Office of Federal Housing Enterprise Oversight announced Wednesday that it has cut the government-sponsored mortgage investors’ surplus capital requirement to 20 percent from 30 percent for Fannie Mae and Freddie Mac.

The office estimates that this reduction, in combination with the release of portfolio caps announced last month, should provide up to $200 billion of immediate liquidity to the mortgage-backed securities market, and allow Fannie Mae and Freddie Mac to purchase or guarantee about $2 trillion in mortgages this year.

This could mean significant news to our local real estate market. Credit is harder to come by due to more stringent lending practices in the wake of the sub-prime mortgage melt down. With the changes to Fannie and Freddie they will have more liquid capital to purchase more mortgages hopefully resulting in more credit being offered to home buyers.

All of these changes are a directed effort by the leadership of Fannie and Freddie to add liquidity to the mortgage market while keeping up both investor and home buyer confidence in the system. Both agencies have seen significant changes in the last few months including the clearance to purchase larger loans (jumbo) up to $729,250 in some areas. These changes are designed to help stimulate home sales and keep the economy moving forward.

In an amazing work of art, someone has managed to explain the entire sub-prime loan debacle with stick figure art. Please follow this link to one of the most straight forward, and comical explanations of what has created this mortgage crisis.

Aiming to invigorate a stagnating housing market, Dutch ING Bank is helping potential buyers bid on houses that aren’t yet for sale.

The bank’s WoonWaarUWilt (”LiveWhereYouWant”) initiative, which launched yesterday, lets clients make an
offer on the house they’d love to own. ING is partnering with online real estate firm iBlue. After potential buyers fill in a form on www.woonwaaruwilt.nl, including their dream home’s address and the initial offer they’re willing to make, iBlue contacts them to discuss whether the offer is reasonable, and adjusts it if necessary. A mortgage consultant also determines whether the buyers would be able to finance the purchase.

iBlue then sends a preliminary offer to the property’s current owners, explaining the situation and inquiring whether they’d consider selling. As with other ‘Intention Economy’ real estate ventures we’ve covered before (in Finland and elsewhere), the reasoning is that many homeowners aren’t actively interested in selling, but
can be persuaded to do so if the right offer comes along. By declaring their intention and backing it up with a lender’s financial approval, buyers can help eliminate the uncertainty associated with putting a house on the market.
Meanwhile, the concept is a smart way for ING to get a head start on other banks
when it comes to financing the transaction.

Making an offer is free for clients, but if the owners are interested in
pursuing the offer, iBlue acts as the buyer’s agent and charges a commission
once the deal is done. The Intention Economy was first described by Doc Searls as follows: “The
Intention Economy grows around buyers, not sellers. It leverages the simple fact
that buyers are the first source of money, and that they come ready-made. You
don’t need advertising to make them.” Which offers exciting opportunities for
businesses who are willing to shift from marketing to buyers, to facilitating
their intentions.

Part of being a good real estate agent is understanding how to price a home to sell. The facts are that if your home is initially priced correctly it will sell and not languish on the market. Looking at the inventory within our office we saw a significant disparity between Days on Market between the sold / pending and what is active. SALABLE properties spent an average of just 88 days on the market while properties waiting to sell average 143 days on the
market - and they’re NOT SOLD YET! Look over the chart at our sample data from our office:

Information has not
been verified, is not guaranteed and subject to change.
Copyright ©2008 Rapattoni Corporation. All rights reserved.

As home sellers it is important to always remember that you home is worth what the buyer is willing to pay for it. In a slower market sellers must balance their desires for maximum price with an understanding that an overpriced listing could sit idle for well over a year, and will most likely sell only after numerous price reductions. If you are looking to move up in this market read our November post on the price and inventory of the Cincinnati housing market. You will learn how moving into a larger home makes financial sense in the long run if you do it is a slower market.

Need some extra money for that a downpayment on a new home or household repairs?

Starting this May, the IRS will be sending the economic stimulus rebate checks to households who file their 2007 tax returns. In order to determine if you are eligible for this rebate the only requirement is to file your 2007 return and the IRS will take care of the rest of the paperwork. Some individuals and families who file early and electronically will receive their rebates as early as May and the final rebate checks for those who file later will be sent out until December 2008.

In most cases the maximum amount of the rebate check will be $600 for individuals and $1,200 for taxpayers who file a joint return. Eligible taxpayers who qualify for a rebate check will receive an additional $300 for each child who qualifies for the child tax credit. Per the IRS website, qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. Depending on your source of income, some of these people may not be normally required to file a tax return because they do not meet the filing requirement. Please remember that this year if they want to qualify for the rebate, the IRS emphasizes they must file a 2007 return in order to receive a rebate check.

Rebate checks to higher income taxpayers will be reduced by 5 percent of the amount of adjusted gross income above $75,000 for individuals and $150,000 for those filing jointly. For more information on your specific eligibility for this rebate please click here.