Housing and Economic Recovery Act of 2008 PASSED!

FINALLY SOME GOOD NEWS!!!!!

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:

GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.

GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.

CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

For more information, visit http://www.realtor.org/governmentaffairs.

Supply is Down like Grandma's Comforter

Here's the latest from MAAR:

In the Twin Cities housing market, sales are flat like a New York pizza and supply is down like grandma's comforter. Fortunately for us, the data confirms our kitschy similes. Pending sales for the week ending July 19 are ahead of the same week last year by 3.8 percent, while new listings fell by 13.0 percent for the same time period—all positive signs of a market in transition.

The total number of active listings for sale currently sits at 33,410, (comfortably) down 1,722 units—or 4.9 percent—from this time last year. Since the number of new homes coming on the market remains in decline and sales appear to have hit bottom, we can expect total inventory to remain lower than last year for some time to come.

Less is More in Local Housing Market

Here's the latest from MAAR:

Housing supply in the Twin Cities continues its descent. For the week ending July 12, there were 11.5 percent fewer new listings on the market than there were one year ago. Over the last three months, there have been roughly 4,000 fewer homes on the market than there were during the same period in 2007. The total number of properties for sale currently sits at 33,390—down 4.7 percent from this time last year.

The sales picture is slightly different, as activity has flattened after two years of downward movement. We are showing a slight 1.8 percent increase in pending sales from the same week last year. Over the last three months, there have been roughly 300 fewer pending sales—a decline of 2.7 percent.

Fireworks?!?!?

Here's the latest from MAAR

Prospective homeowners appear to have celebrated our Independence holiday by buying a home. For the week ending July 5, there were 735 signed purchase agreements (pending sales), up 7.3 percent from the same week one year ago. New listings increased by 2.5 percent for the same time period comparison but took the expected dive from one week prior due to the 4th of July holiday.

This week's edition of the MAAR Weekly Market Activity Report features updated figures for several important metrics:

Days on Market Until Sale fell from last month to 147 but is still 13.1 percent higher than a year ago, and the Percent of Original List Price Received at Sale increased to 92.8 percent. Both changes are additional signs that home sellers are beginning to experience some light relief.

However, not all indicators are rosy, as the Months Supply of Inventory increased slightly to 10.6 months, up 11.0 percent from last July, and the Housing Affordability Index dipped slightly to 148 due to another increase in interest rates.

For a full and detailed look at the supply and demand environment in the Twin Cities housing market, take a look at the July 2008 Housing Supply Outlook.

On the Right Track

Here's the latest from MAAR:

For the week ending June 28, pending sales in the Twin Cities housing market dipped slightly from the year previous, posting 43 fewer sales than the same week in 2007. New listings for the same time period comparison were only 6 listings higher, a meager 0.3 percent increase.

Our overall buyer trajectory this year is flat compared to a year ago. For 10 of the last 12 weeks, pending sales have been within 5 percent of 2007, either above or below. New listings, on the other hand, are showing dramatic downward movement. Over the last three months, we've posted 13.6 percent fewer listings than the same time last year.

This week's edition of the MAAR Weekly Market Activity Report features an updated Supply-Demand Ratio (SDR). The SDR for July fell slightly to 8.11, which means there are approximately 8.11 houses for each buyer in July. At 1.6 percent lower than July 2007, this is the first year-over-year decrease in SDR since MAAR began tracking the figure in 2004. Since SDR takes both supply and demand into consideration, this is the surest sign yet that the market is no longer charging headlong into the buyer's favor.