What Does The Government Shutdown Mean For Real Estate?

With the shutdown, some federal housing and mortgage programs have been suspended or slowed until funding is restored. At this point, the effects are minimal for the majority of real estate deals, but some types of transactions will be significantly impacted. Here's a quick rundown: Mortgage Rates - With the shutdown and declining consumer confidence, mortgage rates fell to their lowest levels in 4 months. The average 30-year rate was 4.22 according to Freddie Mac. Federal Housing Administration - FHA will continue to endorse new single-family home loans as part of its loan guarantee program, but it will not make new commitments for multi-family properties. Expect delays in FHA loan processing, which usually runs around 45 days. Veterans Administration - VA will continue its loan guarantee program, but like FHA, expect delays in VA mortgage processing. Department of Agriculture Rural Housing Loans - Lenders and buyers must wait until funding is restored before USDA rural development loans will be approved. You may not think Tallahassee qualifies, but there are several areas on the outskirts of town, including Killearn Lakes where these loans are used. Government Sponsored Enterprises Big Bad Freddie Mac and Fannie Mae, who currently buy the vast majority of mortgages originated by banks, are not affected since they do not operate on funds appropriated by Congress. Department of Treasury - Homeowner assistance programs such as Homes Affordable Modification Program (HAMP) and Homes Affordable Refinance Program (HARP) are not affected since they are funded through mandatory spending not discretionary spending. Internal Revenue Service - Most lenders require an IRS Form 4506T Request for Tax Transcript in order to process a loan application, short sale request, or loan modification. Since the IRS has stopped processing all forms, expect delays in processing these requests. Many lenders are adopting flexible policies to allow mortgage closings followed by income verification when the service becomes available again. Federal Emergency Management Agency - The National Flood Insurance Program is not affected because it's funding comes from premiums. However, those required to carry flood insurance should be aware of the significant changes taking place to coverages and premiums this month. Check with us if you would like more info 850-445-2476.

Ox Bottom Price Reduction and Sale Price Trends

One statistic used to gauge the strength of the real estate market is the list price to sale price ratio. The thinking goes that the closer the ratio is to 100% - sales prices matching list prices - the stronger pricing power a seller has. But this can be misleading. More on that in another blog. A more useful measure is simply to look at the frequency and size of price reductions - the difference between the original list price of a property and the final list price when the property went under contract. In Ox Bottom, the general trend has been toward fewer and smaller price reductions before a home is sold. There are two factors that contribute to this trend: 1. Tallahassee sellers and agents are more accurately estimating true market values 2. Sellers are gaining more power as prices improve and housing inventories tighten In 2010, the average Ox Bottom price reduction needed before a home sale was $20,685. In 2013, that number has shrunk to $7,497. Clearly, home sellers are gaining some ground after several years of strong buyers markets. Curious about how much pricing power you would have as a seller? Contact us through one of our forms on this website, or call 850.445.2476. We'd be happy to help.

Distress Sales in Ox Bottom Still Remain

Northeast Tallahassee and Ox Bottom experienced low levels of short sales and foreclosures during the housing crisis. Yet distress sales still remain part of the real estate landscape well into 2013. Distress sales in Ox Bottom averaged just over 1 home per quarter during 2010-2012. In 2013, there were 2 sales in the first quarter and 3 in the second. There are no distress sales in the current third quarter, and there will probably not be any in the fourth quarter. However, there are still homes that are behind on their mortgage and potentially could become distress sales in the future. National research indicates that distress sales will continue to decline through 2014 as home prices appreciate and fewer borrowers remain underwatwer on their mortgage. Tallahassee will follow this trend. If you would like more information on how much your home has gone up in value this year, please contact us through our web forms on this page, or call 850.455.2476.