Keeping our contractors busy

It appears that the construction trades will have a new project to work on and the elderly will have some more housing options. The Boston Business Journal reports that the Nuestra Comunidad Development Corp. has just received $5.3M to develop a parcel on the corner of Blue Hill Ave and Quincy Street in to affordable housing units for the elderly. The project is still awaiting approval from the city and will consist of 40 units and 5,000 sq ft of commercial space.

WHAT IS HOPE FOR HOMEOWNERS? (from FHA’s Website)

When the subprime mortgage crisis reached its peak in the fall of 2008, the federal government took steps to help stabilize the American housing market. The Emergency Economic Stabilization Act of 2008 was signed into law on October 3, 2008. Part of that new law includes a requirement to help qualified homeowners avoid foreclosure through federal loan guarantees and credit enhancements.

The HOPE for Homeowners act is designed to prevent qualified home owners from defaulting on their loans, and avert foreclosure. This is done through refinancing into affordable, fixed-rate mortgages.

If you are in danger of defaulting on your home loan, it's very important to contact your lender immediately and request an evaluation of your situation. If you are able to qualify, your loan officer can help you begin the paperwork to prevent foreclosure. If you are already in discussions with the bank, your loan officer may suggest HOPE for Homeowners as a way to proceed.

AM I ELIGIBLE?
Homeowners may be eligible for HOPE for Homeowners program if they meet the following criteria as specified in the HOPE for Homeowners act 2008:

• The original mortgage is dated on or before January 1, 2008
  
• The homeowner did not default on the original loan intentionally
  
• The homeowner is not invested in multiple home loans
  
• All information on the original mortgage is true (including income sources and job details)
  
• The homeowner has not been convicted of fraud
  

HOPE for Homeowners is not a simple refinancing program. While it does allow qualified borrowers who are stuck in variable-rate mortgages to refinance into affordable, fixed-rate mortgages, there is a trade-off known as equity sharing.

WHAT IS EQUITY SHARING?
Those who apply and are accepted for the HOPE program must agree to an equity sharing program. Equity is the difference between the amount of your original loan and the actual value of the home; if you sell or refinance your home after entering the HOPE program, under the terms of HOPE you are required to share any equity with the FHA. How much the government receives depends on how long you wait to sell or refinance. If you sell in the first year of your participation in HOPE, the government receives 100% of the equity. There is a sliding scale after the first year;

• Year two—homeowners can keep 10% of the equity, FHA gets 90%
  
• Year three—homeowners keep 20%, FHA gets 80%
  
• Year four—homeowners keep 30%, FHA gets 70%
  
• Year five—homeowners keep 40%, FHA gets 60%
  

After year five, homeowners split the equity from sale or refinancing 50/50 with the Federal Housing Administration. If there is no equity or negative equity at the time of sale or refinancing, the FHA receives nothing.

WHAT ARE THE BENEFITS OF HOPE?
The benefits of participating in HOPE for Homeowners include;

• Keeping your home
  
• Getting a 30-year fixed-rate mortgage (extendable to 40 years in some cases)
  
• Lower monthly mortgage payments which do not change
  

The 30-year loan is extendable in some situations. Extending the terms to 40 years is helpful in cases where the homeowner has a large amount of debt; the 40-year term reduces mortgage payments further. There are requirements and restrictions on these extended loans. Check with your lender to see if you qualify for the 40-year loan terms under the HOPE program.

The HOPE for Homeowners program runs until September 20, 2011

Small tid-bit

Every day I receive a newsletter containing real estate industry news. In this morning's newsletter there was an article about foreclosures, how agents can help those being foreclosed on and some tips for those in foreclosure. Most of it was sales pitchy and same-old, same-old.

But I did learn something. Buried in the end of the article there was a mention that many foreclosures are happening illegally because mortgage documents often have errors or looked-over provisions that the lender missed. Especially if the loan has changed hands several times and the servicing company has not kept up on it. The article suggests that one should contact an attorney that specializes in consumer law (but not a real estate attorney). The attorney may be able to find something in the document that the lender overlooked. And that may give a homeowner some time to sort it out with the lender before losing their home.

Market Snapshot

Here is a quick peak at the market. This represents all Multi-family properties sold within the past 90 days in Dorchester.

Price Range	# ofListings	Avg. Days on Market	Avg. Sale Price	Avg. List Price	Sale:List Ratio	Avg. Orig Price	Sale:Orig Ratio
$0 - $49,999	0	0	$0	$0	0	$0	0
$50,000 - $99,999	3	46	$86,333	$105,900	96	$127,567	85
$100,000 - $149,999	6	277	$138,108	$157,008	89	$228,750	66
$150,000 - $199,999	17	165	$165,891	$173,847	96	$245,763	76
$200,000 - $249,999	15	72	$229,046	$235,033	99	$255,013	93
$250,000 - $299,999	16	95	$265,709	$275,119	98	$310,419	90
$300,000 - $349,999	15	121	$313,433	$336,613	94	$359,313	90
$350,000 - $399,999	1	163	$380,000	$399,900	95	$429,900	88
$400,000 - $449,999	1	35	$445,000	$449,000	99	$469,000	95
$450,000 - $499,999	0	0	$0	$0	0	$0	0
$500,000 - $599,999	1	38	$500,000	$525,000	95	$525,000	95
$600,000 - $699,999	0	0	$0	$0	0	$0	0
$700,000 - $799,999	0	0	$0	$0	0	$0	0
$800,000 - $899,999	0	0	$0	$0	0	$0	0
$900,000 - $999,999	0	0	$0	$0	0	$0	0
$1,000,000 - $1,499,999	0	0	$0	$0	0	$0	0
$1,500,000 - $1,999,999	0	0	$0	$0	0	$0	0
$2,000,000 - $2,499,999	0	0	$0	$0	0	$0	0
$2,500,000 - $2,999,999	0	0	$0	$0	0	$0	0
$3,000,000 - $3,999,999	0	0	$0	$0	0	$0	0
$4,000,000 - $4,999,999	0	0	$0	$0	0	$0	0
$5,000,000 - $9,999,999	0	0	$0	$0	0	$0	0
$10,000,000 - $99,999,999	0	0	$0	$0	0	$0	0
Total Properties	75	Avg. 123	$234,951	$247,542	96	$287,182	86
Lowest Price: $75,000
Highest Price: $500,000
Median Price: $245,000
Average Price: $234,951
Total Market Volume: $17,621,345

Happy New Year!

Whew! 2008 was quite a year here are some of my predictions for 2009.

• Historically low mortgage rates will be available for certain borrowers in Q1
• Mortgage rates will increase as the year progresses getting close to 7%
• Foreclosure inventory will dwindle
• Prices will start to bottom out but certainly not increase.
• The rift between prices of REO and non-REO condos will continue. SF and MF prices will have less disparity between REO and non-REO.
• Location and condition will become more and more important factors in price.
• Rents will decline/remain flat as more rental units come into the market as foreclosed properties are renovated and condo owners decide to rent vs sell.
• Renters will dictate the fee structure and will demand a no-fee rental inventory.
• Foreclosures will continue but will slow down, not because of lack of properties but rather legal wranglings and procedures, bank mergers and forced borrower work-outs that will ultimately fail but in the meantime delay the inevitable.
• Short sales will become easier as lenders focus on this low-cost alternative to foreclosure.
• Local lenders will become the power players in the mortgage market, mortgage brokers will have a tough time competing against direct lenders.

Some of these are no-brainers some are certainly a hunch. Let's see in 2010 how we did.

Our Big Data Project

I have mentioned here and there that I am working on a huge data analysis for Dorchester property sales through MLS. I finished the condo segment and am moving on to multi-families. I decided to do something really cool with the condo data and import it into mapping software. This is just a jpeg of the overall map, but in the software I can zoom in and see the address, sale date and sale price. Wicked cool if I do say so myself. It's interesting to see where the bulk of the condo sales are. Maybe in a next post I will break it down by year and give a snapshot for each year. Stay tuned.

Nice Touch

I had a closing yesterday and it was fairly routine (except the fact that it was a foreclosure and took a month longer than it should've). But the closing attorney was great. Aside from being a great attorney, he spoke Spanish and Portuguese. This enabled him to go over very important documents in my client's native tongue. Really a life saver because unless you are familiar with these documents it can sometimes be tough for a family member or friend to translate. All in all it was an excellent transaction and the family is very happy, thanks to some special people that made it happen and helped with the translations. I would have been lost without Ted Silva (the attorney who spoke Portuguese) and the daughter-in-law of the buyer. Thanks guys!

A nice touch from the attorney, he took a picture of everyone at the closing. I will definitely start doing that at my closings. For many it is a very special occasion and I think it will be nice to have a photo of it.

Cheers!

Some notes about the news.

There are quite a few people out there following the market and relying on the Case-Schiller Home Price Index, as reported by every major news outlet. What we need to be mindful of is that it only tracks single-family homes. So it is a poor reflection of many urban areas where the bulk of the properties and transactions are condos, such as the South End.
We are currently working on getting the year end sales stats so I should have some good data soon.

Let me know what neighborhoods you would like some sales stats on and I'll get on it.

Schools

We have had several inquiries lately into what public schools apply to which properties. In most suburbs, this is an easy task. But in Boston there is a whole process and no child is guaranteed a particular school, but rather they are guaranteed a seat within their school zone. For the definitive answer to schools, visit the Boston Public Schools Student Assignment Policy by clicking here.

Rainbows over Savin Hill Ave

I hope the pot'o gold is nearby....

Beware on Craigslist

It appears that the Craiglist scammers have choosen one of our properties to use in their plot to extort money from unsuspecting renters. Please note that all of our rentals require a RHA Rental Application along with a form permitting us to check your credit, employement and landlord history. Without those items being complete, returned to us and presented to a landlord, we will not execute a lease. Anyone on Craigslist promising to rent out an apartment without having you fill out those forms is not acting on our behalf. If you have any questions about any of our rentals, please call us at 617-265-3500. Also, please call us and let us know what listings are being misrepresented so we can have them removed and reported to Craigslist's management.
Thanks!

Looking forward to the winter

I am sure that most of you have been reading the headlines and seeing that foreclosures are up and prices are down. I am asked quite frequently if that is hurting business. And it is definitely slowing down the arms-legnth transaction of undistressed sales. But, we are busier than we were last year with most of our transactions being foreclosures or short sales. We are receiving quite a bit of interest in multi-families under $200k. Condos are selling under $100k in some areas and every now and then a great single family comes up.

There is some discussion about whether or not it is a good time to buy. Only you can make that decision for yourself. Right now quite a few investors are contacting us and looking to purchase a deal. Rents are inline with prices, it's just gotten to the point where the rents will actually cover the expenses.

I think prices may still decrease in some areas and it will be impossible to call the bottom until we are on the way back up. As always hindsight is 20/20. Do what is right for your individual situation, speak with an agent who is intimate with the market you want to be in and make sure your financial house is in order.

I think there are some great deals out there and several of us in the office have personally purchased property this past year. There are some buyers however, that should not buy right now, as the market is not very forgiving at this point.

And I guess that is the difference between now and a few years ago. There are bad deals now and there were bad deals then, but the difference is how forgiving or not the market is.

Pricing it right

Right now we can find many examples of why pricing it right from the get-go is ever more important in today's market. With prices falling rapidly and lending getting tighter, the need to price it well and move it quickly is paramount.

Someone I know priced their unit too high about 6 months ago. I offered some advice and they decided that they would "try it out" at the higher price and they could lower it if after some time it did not sell.

Here's the problem. It was priced too high and no one was interested. Let's say it was $275k. At the time they listed it, they could have sold it for $225k according to local comps. But now, after the market has fallen apart and the listing has become stale I would guess it would fetch $190k. They are chasing the market down with no end in sight and potentially lost roughly $35k due to not pricing it right.

My advice to them now is to take it off the market and if they can and are willing, re-list it in the spring at an appropriate price.

Fraud of another kind

One of my clients has given me license to use a term I haven't heard in a while. "Carpetbagger." Having been born in the south and grown up with many southernisms, I should explain that this is one that is akin to a swear word. Used for the foulest of opportunists that don't care who they hurt. And they have started to rear their ugly head in Dorchester. Who are they?

They are agents from afar places such as Worcester, the 495 belt, the south shore, the north shore, etc... that are representing foreclosures and are pricing property at way below market value, not providing access to cooperating brokers and not presenting offers to the sellers in an effort to keep the deal all to themselves and/or turn these properties quickly. They do not normally work in this market and have only showed up when the easy money came. They have no clue what neighborhoods command value and which ones don't. Yet, they are determining the value of your neighbors' house.

It is truly the wild west and these carpetbaggers are decimating values and ruining other property owners chances of refinancing or selling at market value. Preventing an open bidding process to buyers other than their own. Or outright fraudulently withholding offers from their sellers who are 2000 miles away and their only contact is through a web-based management system.

The sellers(banks) of these properties are losing money and with lower property values the neighborhood is losing equity and the city is losing tax revenue.

Don't call your agent...but these may be great deals for some

The city of Boston has a first-time home buyer program that has some nice, new-construction homes. They have been advertising on Craigslist, but you won't see them on any of the MLS feed sites (such as Boston.com, Realtor.com or Ziprealty.com) as they are not looking to work with real estate agents, even those that have buyers that might be a good fit. In fact, when you call, that is the first thing out of their mouth. I am a little stunned at the City's unwillingness to work with a larger pool of buyers, but I understand. Their margins are tight and the city is laying out cash for downpayment assistance in an already tight budget.

The units are typically in slower to sell areas and are new construction with generic but decent amenities and fixtures. If you are interested check out the website.

50,000 foot view

The TARP (Troubled Asset Relief Program) launched by the government last week has come out with it's game plan and update. It is a large scale view (what the corporate world calls the 50,000 ft view) It is a broad and general overview and update of the plan.
I think everyone should read these updates and know what is happening with our $700B.

Signs of trouble...?

There is some thought that some of the higher-end markets are weathering our real estate downturn better than others. And for the most part I agree. But something came across my email tonight that caused me to perk up my ears a bit. I received a request for a BPO (broker price opinion) for a distressed condo in the South End. It hasn't foreclosed yet according to masslandrecords.com, so I am assuming that it has not been recorded yet or it is being sold in a short sale or bankruptcy. This condo was purchased in 2006 for $1.26 Million with 80/15/5eq. mortgage. Meaning the seller only had 5% down.

It could be for many reasons that it is distressed; loss of job, heathcare costs, or any other unfortunate event. But in a stable or increasing market, one should have been able to sell the unit and at least break even. We can't pretend to know all of the circumstances to this particular distressed property, so I'll try not to make too many assumptions.

This is not a sign that the end is near, or even that the South End market is in trouble. But, it does cause me to look a little more closely.

The clock is ticking...

This doesn't affect too many of the buyers here in Dorchester but it does affect our clients looking in higher priced areas.

The temporary increase in conforming loan limits is set to expire on Dec 31st. Check out HUD's website to see what the conforming loan limit is in your area.

New Stuff

Just In Boston is pleased to announce that we are implementing a new web based transaction center. With this new application buyers or sellers can login and see what needs to be done, what has been completed and have access to all of the documents relating to the sale. We will be working on giving that access to all members of the buying team, attorneys, lenders etc...The system uses SSL encryption to protect sensitive data too.

It really is just so cool... We have been working on it and rolling it out to some of our clients to test drive and so far so good.

The Summer of Dead Offers...

It's a real estate agents version of a horror movie or what I experienced this summer. As we close out the summer and move on to our fall market, I'll recap, very breifly, what happened.
I wrote lots of offers, and worked with lots of buyers. The problem seemed to be two-fold and on opposite sides of the coin.

I had buyers that were writing offers and were out bid by other buyers. The properties were priced competitively in great locations and it just didn't happen for them. Many of them were foreclosures.

Other buyers were writing good offers on overpriced properties and the sellers refused to budge.

This seems to be the M.O. of the market and it can be particularly frustrating.

My hope is that this fall sellers and buyers realize that they both need to meet at a price that works.