Declining Dollar Brings Foreign Investors

Falling prices for real estate and the declining value of the dollar are luring investors from all over the world to purchase properties for as little as half what they might have paid four years ago.

“This could be a once-in-a-generation opportunity for real estate investment,” says Arthur Wong, whose Calgary, Alberta-based U.S. Real Estate Fund has invested $5 million in properties in the U.S. Southwest and plans to buy millions more.

Buyers from countries like Brazil, Canada, France, and the Netherlands, whose currencies are particularly strong against the dollar, are spending millions on luxury condos in New York City, Las Vegas, and Miami. Foreign buyers also find the warm climates of California, Texas, and Arizona attractive.

Peter Zalewski, a principal with Miami-based Condo Vultures, says he has sold foreign condo buyers seven bulk deals in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela.

Fannie Mae: New Affordable Housing Options

Fannie Mae announced Tuesday that it has launched several initiatives designed to stabilize neighborhoods and promote purchases by owner occupants and low-income buyers.

Fannie Mae’s “First Look” initiative offers buyers who intend to live in the home, particularly low-income buyers, an opportunity to make an offer during the first 15 days the property is on the market. Investors can only make an offer after the first 15 days have passed.

Other programs aimed at stabilizing neighborhoods include:

• Deposit Waivers. Fannie Mae will waive the earnest money/deposit requirement for public entities using public funds to purchase a Fannie Mae-owned property. Individual home buyers who have qualified for public funds and want to purchase a Fannie Mae-owned property do not have to meet the usual earnest money/deposit requirement either. Deposits for these buyers can be as low as $500.
• Reserved Contract Period. Upon receipt of an acceptable offer, buyers have the ability to renegotiate their offer after obtaining an appraisal.
• Extra Time for Closing. Buyers receive up to 45 days to close – 15 days more than is usually permitted for purchases of Fannie Mae-owned properties.

Source: Fannie Mae (11/24/2009)

Some Cities Unaffected by Recession

Some U.S. cities with stable housing and diversified employment have been virtually untouched by the Great Recession.

Analysts say cities that are most likely to leave the recession in the same or better condition than they started it are those where home prices didn’t fluctuate wildly, which spared them the devastating effects of foreclosure, lost jobs, and lost productivity.

If there is a lesson to be learned, experts say, it is that families looking for long-term economic stability should settle in locales with diverse employment and minimal shifts in housing values.

To identify these cities, Forbes magazine ranked the 100 largest Metropolitan Statistical Areas by employment rates, the conventional mortgage home price index, and the average days on the market for properties currently for sale.

The top cities on Forbes list were:

• Omaha/Council Bluffs, Neb.
• San Antonio, Texas
• Austin-Round Rock, Texas
• Pittsburgh
• Harrisburg/Carlisle, Pa.
• Dallas/Fort Worth
• Rochester, N.Y.
• Houston
• Raleigh/Cary, N.C.
• Baton Rouge, La.

Source: Forbes, Francesca Levy (11/19/2009)

One-Fourth of Borrowers Are Underwater

More than 23 percent of people with mortgages owe more on their properties than they are worth, according to a report released Tuesday by research firm First American CoreLogic.

Another 2.3 million homeowners are within 5 percent of being underwater, bringing the total of those who are upside down or close to it to about 28 percent.

About 5.3 million U.S. households have mortgages that are at least 20 percent higher than their home’s value, the First American report says. Borrowers owing more than 120 percent of their home’s value are the most likely to default, First American calculates.

The majority of underwater mortgages are in the following states:

1. Nevada: 65 percent of home owners are underwater
2. Arizona: 48 percent
3. Florida: 45 percent
4. Michigan: 37 percent
5. California: 35 percent

The report also notes that most U.S. homeowners have home equity, and nearly 24 million owner-occupied homes don’t have any mortgage at all, according to the U.S. Census Bureau.

First Time Homebuyers Tax Credit Extension/Expansion is Approved

• Last week, the U.S. Senate and House passed legislation that included an extension and expansion of the tax credit for homebuyers. President Obama signed the bill into law at the end of the week.
• The $8,000 first-time homebuyer tax credit will continue until April 30, 2010, and the income limits have been increased to $125,000 for single filers and $225,000 for join filers.
• Additionally, current homeowners who have lived in their home for five of the previous eight years are eligible for a $6,500 tax credit.
• There is a purchase price limit of $800,000 for the home, and it must be maintained as the purchaser’s primary residence for three years or the tax credit will be due back to the IRS.
• Unlike the current tax credit program, the extended program allows any purchaser who has a binding contract in place by April 30, 2010 to close by June 30, 2010 and still qualify.

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