Keller Williams Realty Atlanta – Peachtree Road

This Month in Real Estate Newsletter for U.S. Market – September 2010

Each month, This Month in Real Estate provides expert opinion and analysis on real estate trends across North America. The aim of the consumer-oriented segments is to help Keller Williams Realty realtors combat the “doom and gloom” messages of the national print and television media with real information on the state of the real estate market.

Market Update:

The housing market was off to a rocky start as the second half of the year began. Much of the volatility, however, was anticipated and attributed to the now-expired tax credit. Despite softened sales this last month, home prices continued to gain – thanks in part to record low jumbo loan rates, which are fueling more interest and activities in the higher end of the market.

Meanwhile, the economy still has a lot of ground to cover before achieving its full, sustainable recovery. Consumers, while remaining on the cautious side, have increased their spending, which is supported by a gradual improvement in income. The stagnant job market continues to be a cause for concern, but overall, financial conditions have improved.

For the first time in fourteen months, home sales fell below year-ago levels. Although the drop exceeded expectations, it is undoubtedly due to the expiration of the tax credit. Lawrence Yun, NAR chief economist, said, “given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.”

July’s median home price was virtually unchanged. Home values have been stable for the past 18 months due in part to the tax credit. Experts believe that home prices will continue to be stable going forward.

The total number of homes on the market remains stable but the number of months worth of inventory has jumped due to lower home sales and fewer buyers in the market. This represents a great opportunity for buyers who have not yet purchased or who are considering a second home or investment property. Important to note is that experts anticipate stable prices and do not expect this to be an ongoing trend.

Source: National Association of Realtors

Interest Rates:

Mortgage rates continued to set new record lows in August, providing real savings in interest and monthly payment for buyers and refinancers. As economic activity picks up, rates will rise to keep inflation in check.

**Rates as of 9/2/10

This Month in Real Estate Video – September 2010

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This Month in Real Estate Video Report for U.S. Market – September 2010

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JUST LISTED: Renovated Cottage in Decatur

• Renovated kitchen and baths
• 1-Car Garage
• Walk to Downtown Decatur
• Great Floorplan
• Full Unfinished Walk-Up Attic
• Beautifully Landscaped
• Wonderful Lounging Backyard
• FMLS #4118307

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Keller Williams Realty Atlanta – Peachtree Road

JUST LISTED: Virginia Highland Tudor Home For Sale

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Keller Williams Realty Atlanta – Peachtree Road

What Is Changing in the FHA World?
 
Effective October 4, 2010, FHA will be making changes to their Mortgage Insurance Premiums.  As you know, borrowers currently pay 1.75% of their loan amount upfront which is called Upfront MIP.  Additionally they pay .50% to .55% of their loan amount annually (actually paid in 12 installments with their monthly payment).
 
The new MIP structure will require an Upfront MIP of only 1% of their loan amount.  The downside is that their annual MIP will increase to .50% to .90% paid on a monthly basis.
 
Give Me An Example of How This Impacts The Wallet
 
Here is an example of how the changes will impact FHA borrowers:
 
Loan Amount:  $250,000
 
Upfront MIP:   Currently                     $4,375
                        As of October 9, 2010 $2,500
                        Upfront cost is $1875 less BUT when the homebuyer sells or pays off the loan, part of this cost is refundable to the borrower
 
Monthly MIP:  Currently                     $115 per month
                        As of October 9, 2010 $188 per month
                        Cost is $876 more per year
                        No portion of this monthly MIP is refundable to the borrower
 
What Is The Real Impact?
 
When an FHA homeowner sells their home, they are entitled to a refund of the unused portion of their Upfront MIP.  The borrower is not entitled to any refund from the Monthly MIP they pay to FHA each month.  So shifting the revenue stream paid to FHA from the Upfront MIP to the Monthly MIP is actually a win for FHA as less of the MIP paid by the borrower will be entitled to a refund.
 
The IRS allows homeowners to write-off the cost of mortgage insurance as long as their income is less than $110,000 per year.  Shifting some of the MIP from Upfront to Monthly will actually give the homeowner a greater write-off on their tax return.
 
Higher monthly MIP will increase the borrower’s Debt-To-Income ratio and, in theory, make it slightly more difficult to qualify for the loan.
 
Net Effect:  I believe the net effect to the borrower is negligible.  Basically, these changes shift revenue within the government.  FHA will enjoy higher revenues to offset their tremendous losses while the IRS will decrease their revenues as homeowners have greater mortgage insurance write-offs.

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Keller Williams Realty Atlanta – Peachtree Road

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Real Estate Legal Tip

Presented By:

 New Georgia Law changes Property Tax Assessment Procedure

 
 
Georgia recently passed “The Property Tax Assessment and Appeals Reform Bill” (Senate Bill 346) on June 7, 2010.
 
Highlights include:
1.     Every property owner will receive an Annual Notice of Assessment and the right to appeal;
2.     Every Notice of Assessment must contain the estimated property tax (in dollars);
3.     Appeal period has been extended to 45 days;
4.     Alternative streamlined appeal option for properties valued over $1,000,000;
5.     Automatic taxpayer victory on appeals when government fails to respond within 45 days;
6.     Requirement that all relevant sales, including distress sales, be included when determining Fair Market Value (FMV);
7.     Requirement that only “current use of property” be used in determining FMV;
8.     Taxpayer must be given access to all data used in determining FMV;
9.     Sales price establishes FMV for next tax year.
 
Remember that a reduction in the assessment does not always reduce the actual bill.  Other factors such as the millage rate, homestead exemption, and other exemptions will also affect the final tax bill amount.
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA 30324
lenox@neelandrobinson.com  404-705-3690  fax 404-705-3697  

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Thinking About Buying a Distressed Property in Atlanta? 

Read Our Distressed Property eBook

 

 

Distressed Properties eBook

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Video Report on U.S. Real Estate Market for July 2010

This Month in Real Estate PowerPoint for U.S. Market – July 2010

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