San Antonio Real Estate - Christina Whipple

San Antonio home sales dropped 24 percent in May, the biggest single-month dip so far this year. But sellers tended to get more for their homes, with the median home price rising 4 percent, according to new data.

"We're still in our fourth-best year," said Bob Leonard, chairmand of the San Antonio Board of Realtors. "We look more like 2005, but we continue to show good, strong price appreciation."

San Antonio owners sold 1,821 homes last month, compared with 2,388 in May 2007 - down nearly a quarter - according to the data from the Real Estate Center at Texas A&M University. The previous months this year have seen a drop of 10 percent to 21 percen compared with the same month in 2007.

But while it is getting harder to sell homes, successful sellers are getting higher prices in San Antonio. The median sales price was $155,100 last month, versus $149,100 in May of last year, according to the Real Estate Center.

Other parts of Texas are faring better in sales but not prices. In Houston, sales of existing homes were down 13 percent compared with May 2007, according to the Real Estate Center. In the Dallas-Fort Worth area, sales were down 12 percent.

Home prices in those cities did not appreciate, though. Houston's median price was flat, and the median price in the Dallas-Fort Worth area was down 2 percent.

Leonard says would-be San Antonio home buyers are sitting on the sidelines in fear that the national foreclosure rate will continue increasing. In other cases, people who have just moved to the area are struggling to sell homes in other parts of the country, and so can't afford to buy a home in San Antonio yet.

Sales will continue to dip based on the continued decline in pending sales in May, said Jim Gaines, housing markets research economist are the Real Estate Center.

"March through June of 2007 had the biggest pending sales, so it's not a surpricse that sales are down and that we will see lower sales going forward," Gaines said.

In May, San Antonio homes spent an average of 90 days on the market for the sixth month in a row. That's up significantly from most of 2007, which saw average days on the market in the mid-60s.

Despite fewer homes selling — and taking longer to do so — San Antonio still is appreciating because of strong sales of higher-priced homes, Gaines said.

“It makes sense because in the mortgage market, fewer entry-level homes are getting sold because they are having more trouble getting financed,” he said. “A lot of the easy terms and easy credit that benefited the entry-level consumer are gone.”

Foreclosure sales on the courthouse steps may be a thing of the past. Effective September 1, 2007, special rules were added to the steps required for Texas foreclosures. The new law gives the commissioner's court greater latitude in selecting a place for the foreclosure sale.

Previously, the trustee or trustees were required to conduct the sale at or near the courthouse. Now, commissioners may designate another location as long as it is public, reasonably near the courthouse, and easily accessible. New sales may not occur at the designated location until 90 days after the notice of sale is recorded.

The complete six page revised special repot, "A Homeowner's Rights Under Foreclosure" is available at:
http://www.christinawhipple.com/AHomeownersRightsUnderForeclosure.pdf

Christina Whipple

www.ChristinaWhipple.com

Christina@ChristinaWhipple.com

In a reaction to the mortgage credit cruch, as of January, 2008, Fannie Mae and Freddie Mac are changing their pricing models for high LTV (loan to value) loans. Any loan with a loan to value over 70% will be impacted by these changes. The amount of the price increase is dependent upon the borrower's credit score:

No credit score - add 2.00 discount points
Less than 620 - add 2.00 discount points
620-639 - add 1.75 discount points
640-659 - add 1.25 discount points
660-679 - add 0.75 discount point

This applies to all loans with terms greater than 15 years. In other words, lenders won't be able to quote a rate until they have an application with a credit report.

Another big change, all of the private mortgage insurance companies have announced that they will no longer insure loans above 95% loan to value if the credit score is below 620. This means that a large segment of the borrower population that has previously been able to obtain 100% finance loans will now be ineligible. Anyone with a credit score between 585 and 620 will now have to pay a minimum of 5% down payment. Keep in mind that for most conventional programs, the first 5% down must come from the borrower's own funds (no gifts). The My Community and Home Possible loans will still allow for gift funds.

Also, all PMI rates for LTVs over 95% have gone up, increasing the borrower's monthly payment. This is another disincentive to put less than 5% down.

FHA has not yet implemented these changes but Keep in mind that FHA also has big changes coming right around the corner. The proposed rule is due to go into effect January 1st. With it we will have credit scoring and tiered mortgage insurance premiums that are tied to the credit score.

Christina Whipple
www.ChristinaWhipple.com

With rising foreclosure rates comes a new scam that targets homebuyers looking for relief from financial woes. Some predatory lenders now offer what they call 'rescue loans,' but homebuyers are neither rescued nor do they actually receive loans." Homebuyers who purchased homes with subprime loans are especially vulnerable and predatory lenders are targeting subprime borrowers who have some equity built up in a home but who are having difficulty meeting monthly mortgage payments.

Homebuyers with impaired or nonexistent credit histories often turn to subprime loans and ARMS (adjustable rate mortgages) despite the higher interest rates and rising rate risks that comes with them. Once in financial trouble, it is difficult for these borrowers to refinance their mortgages to an affordable rate fixed mortgage.

Here is how the scam works. The homebuyer gets behind on mortgage payments. The predatory lender offers a "loan to get caught up" on the delinquent mortgage payments. In exchange for the rescue, the homeowner signs over the title to the predator, who promises that the homebuyer may remain in the home while paying rent.
The predator then sells the house to someone else, and the original homeowner gets an eviction notice and no longer owns the home. About a dozen states have passed laws designed to deter rescue loan fraud, but Texas is not one of them.
The scam is called a loan, but it is not. It really is a buy-out with a leaseback.

Charm pricing is very prevalent in our society.  A product is advertised at $9.99 rather than $10 or $97.50 rather than $100. When sellers back off the rounded number by a few cents or few dollars to make something look less expensive, it's referred to as "charm" pricing.

Such pricing make sense for items sold at retail for a set price. But what about real estate pricing? Does a seller gain anything by setting the listing price to seem lower than it actually is, such as $149,900 instead of $150,000?

Marcus Allen of Florida Atlantic University and William Dare of Oklahoma State University did the research. They studied a large sample of home sales and discovered that when charm pricing was used, homes tended to sell closer to the listing price than those offered at a rounded price.

They concluded that when sellers use charm pricing, buyer perceive that the listing price is close to their reserve price (the lowest amount they will accept). Sellers appear to indicate the price is fixed, and they will accept a minimum amount of bargaining.

On the other hand, sellers who list homes with a rounded price seem to be indicating there is more room for bargaining.  They expect this price to be a mere starting point for negotiation. They need a round figure only to position the property in the range of comparable properties.

Christina Whipple
www.ChristinaWhipple.com