There have been a few interesting real estate stories and announcements around the nation this week. But first, the changing seasons along tree-lined Farmington Avenue in West Hartford Center.
Today’s Wall Street Journal has a piece on Shadow Inventory (Subscription Required), which are homes that are not currently on the market but are expected to be listed for sale in the near future. They focus on foreclosures, and found about 1.5 million mortgages currently in the foreclosure process and an additional 1.2 million delinquent enough that banks could initiate foreclosure proceedings. To put this in perspective, a recent National Association of Realtors press release announced that the seasonally adjusted rate of existing home sales was about 5.24 million in July. So lenders could potentially take ownership of enough homes (2.7 million) to represent more than 6 months of inventory at the pace of sales today. Presumably this would impact other areas more than Greater Hartford. However, it’s difficult to track distressed properties until they are listed for sale, so we can’t be sure.
The Mortgage Bankers Association (MBA) reports that mortgage rates have been falling. Their latest survey shows that rates for 30 year fixed mortgages have fallen below 5.00% nationally for loans with 20% down. Our local rates seem to be just above 5% when looking at the annual percentage rate (APR), and have also been falling.
Money Magazine wrote a quick piece about the basics of FHA mortgages. We’ve been seeing a lot of buyers using these types of mortgages since it’s just about the only way to buy a home with less than a 10% downpayment (you’re allowed to do 3.5%). Specifically, they touch on the more difficult home inspection and the increased fees/expenses associated with the program. Both are important considerations, though for buyers that don’t have the cash to qualify for a conventional loan they are just another part of the cost of buying.
Finally, there is much speculation and debate about whether or not Congress will extend the First Time Buyer Tax Credit. Financial blog Calculated Risk gathered up the opinions of various economists, painting the program as a poor use of taxpayer resources. The essence of the argument is that many of the people claiming the credit would have bought a home anyway, so also giving them $8,000 is a waste of money. Supporting the position is a National Association of Realtors press release stating that of the 1.8 million to 2.0 million that will claim the credit this year, only 350,000 of them would not have purchased without the credit.