November Update....a bit long but worth the read. Feel free to call us regarding anything in this update or for any of your other Real Estate needs. 702-274-1068 Can you still do a short-term house flip using federally insured, low-down payment housing finance money? Thats an important question for buyers, sellers, investors and realty agents whove taken part in a nationwide wave of renovations and quick resales using Federal Housing Administration-backed loans during the last four years. The answer is yes -- you can still flip and finance short term. But get your rehabs done soon. The federal agency whose policy change in 2010 made tens of thousands of quick flips possible - and helped large numbers of first-time and minority buyers with moderate incomes acquire a home - is about to shut down the program, FHA officials have confirmed. In an effort to stimulate repairs and sales in neighborhoods hard hit by the housing crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling - flipping it - to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA residential loan - provided that you followed guidelines designed to protect consumers. Since then, according to FHA estimates, about 102,000 homes have been renovated and resold using the waiver. The reason for the upcoming termination? The program has done its job, stimulated billions of dollars of investments, stabilized prices and provided homes for families who were often newcomers to ownership. However, even though the waiver program has functioned well, officials say, inherent dangers exist when there are no minimum ownership periods for flippers. In the 1990s, the FHA witnessed this firsthand when teams of con artists began buying run-down houses, slapped a little paint on the exterior and resold them within days - using fraudulent appraisals. Their buyers, who obtained FHA-backed loans, often couldnt afford the payments and defaulted. For these reasons, officials say, its time to revert to the more restrictive anti-quick-flip rules that prevailed before the waiver: The 90-day standard will come back into effect after Dec. 31. Paul Wylie, a member of an investor group in the Los Angeles area, says he sees more harm than good by not extending the waiver. There are protections built into the program that have served [the FHA] well, he said in an email, Entry-level consumers will be harmed unnecessarily. Bottom line: Whether fix-up investors like it or not, the FHA seems dead set on reverting to its pre-bust flipping restrictions. Financing will still be available, but selling prices of the end product - rehabbed houses for moderate-income buyers - are almost certain to be more expensive. Source: Ken Harney, The Nations Housing Existing-home sales bounced back in September, surging to the highest annual pace of the year, according to the latest report from the National Association of Realtors®. Low interest rates and price gains holding steady led to Septembers healthy increase, even with investor activity remaining on par with last months marked decline, says Lawrence Yun, NARs chief economist. Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline of choices due to the fact that inventory generally falls heading into winter. Existing-home sales rose 2.4 percent in September, reaching an annual rate of 5.17 million. Sales are at the highest pace of 2014 but remain 1.7 percent below the 5.26 million reported last September, NAR reports. Here is a snapshot of housing indicators for September: Home prices: The median existing-home price was $209,700 in September, 5.6 percent higher than a year ago. It is the 31st consecutive month for year-over-year price gains. Days on market: Homes stayed on the market longer in September - 56 days, compared with 53 days in August. Short sales remained on the market for a median 116 days in September, while foreclosures sold in 59 days. About 35 percent of homes sold in September were on the market for less than a month. Inventory: Total housing inventory dropped 1.3 percent to 2.30 million existing-homes for-sale, representing a 5.3-month supply at the current sales pace. Unsold inventory is 6 percent higher than a year ago. All-cash sales: Sales involving all cash made up 24 percent of transactions in September, down from 33 percent compared to a year prior. Distressed homes: Foreclosures and short sales rose slightly in September to 10 percent, from 8 percent in August. Distressed sales, however, are down from 14 percent a year ago. Foreclosures and short sales in September sold for an average discount of 14 percent below market value. Source: National Association of Realtors
Posted on: Thu, 13 Nov 2014 18:51:42 +0000
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