real/diaBlog - boldly saying what others won't about Real Estate

Is Congress Trying to Undermine a Real Estate Recovery?

Maybe it is just me but if I was a buyer in today's real estate market and I heard that Congress was trying to increase the $8,000 first time buyer tax credit to $15,000 and include all home buyers, I would seriously consider holding off on making a purchase.  Why you ask?  Well, there are many different reasons and they all stem from the uncertainty of what Congress will eventually do, if anything.  

Congress is notorious for floating out many different versions of a bill and then watering down one of them in order to get it passed by both the Senate and the House of Representatives and then get signed by the President.  This causes many great ideas and sound solutions to become ineffective and a waste of time.  

We don't have to look any further than the current $8,000 tax credit.  At one point it was a $15,000 credit that would have been available to all buyers.  But that bold, decisive bill that would have had a tremendously larger impact on home sales was weakened and become the current credit that has already had one major change and is set to expire on December 1st.  And there is no sign that the credit has done anything to improve the housing market.

So now they are considering either extending the current credit for another year, increasing the size to $15,000, adding a $3,000 credit for refinances and/or letting all home buyers get the credit.  And there is no indication of whether or not the new limits and credits will be retroactive and how far back they will go.  

The last credit was retroactive to Jan 1st when it was signed into law as part of the stimulus package in the middle of February.  How far back they make the next credit is anyones guess.  And that is the problem.  What if they pass the bill and don't make it retroactive?  What if the actually bill gets debated and changed and watered down again and doesn't get passed until the fall?  What then?

What should a prospective buyer do if they want the full $15,000 credit and want to be guaranteed they get it if in fact that is what Congress passes?  They have to wait and see.  That is the only way to guarantee you get the credit because no one knows what will happen.  The people that bought a home last year have to pay back their tax credit because they didn't wait.

Congress cannot make swift, decisive moves that will help the economy.  Congress doesn't do what is right, they do what will get them re-elected.  They need to answer to special interests, not constituents because special interests give them the money to get re-eleted.  Congress can't make hard decisions and instead they have partisan battles and pass bills with partial solutions that are ineffective.  

And this latest battle over the tax credit will showcase Congress at its finest, working to confuse the public, change the rules, cut some people out and create another finger pointing debacle.  Much like the TARP that didn't buy any toxic assets and a stimulus bill that doesn't stimulate.

I ask again, is Congress trying to undermine a real estate recovery?  I say yes.

UPDATE:  I will be at a function this Friday with Rep. Frank Wolf (R), the congressman for my district here in Northern Virginia.  I will try and corner him and ask him some pointed questions regarding the tax credit and efforts to help the housing recovery instead of continuing to create indecision in the minds of the public.

As Goes California, So Goes the United States

A wise man once told me "As goes the California economy, So goes the US economy".  With California such a large part of our economy, it only makes sense that until that state gets its act together, the country will continue to languish.  And by the looks of it, that isn't going to happen for quite some time.  And it also looks like the federal government is in no hurry to help out.

That same wise man also said that "As housing goes, so goes the economy".  That is another reason why this recession/depression will continue as long as President Obama wastes time on issues such as health care and green energy.

Think about it.  What is our biggest expense every single month?  Housing.  What is the biggest concern that most people have every day?  Housing.  What is the one area that has been the biggest drag on our economy for 3 years.  Housing.  And the biggest drain on consumer confidence?  The price of our houses going down with no end in sight.  

Yet Obama continues to push for national health care and green energy.  Does that matter if you are facing foreclosure?  When you are selling your house short to move into a tiny apartment?  When you have no more equity in your house and no hope for every getting back to zero?  When the majority of baby boomers are going to work until they die because the equity in their homes and retirement accounts are at zero.  How are they going to afford nationalized insurance and an electric car.

Am I missing something?

Quick Hit List - Citi, DR Horton, Peter Schiff, Twitter

Twitter Rejects Offer from Facebook.

Citibank is another joke of a company that taxpayers have to bail it out twice.

DR Horton reports lost of $800 Million

Peter Schiff had it right.  You gotta Watch the video.

New Website Unveiled for Dulles Area Association of REALTORS

During the past six months, the Technology Committee of the Dulles Area Association of REALTORS has been working on a new website design that incorporates RE 2.0.  Ben Lizik of DAAR has been busy programming the site and the staff has been instumental in getting all the information on the old site converted to the new site.

We wanted a clean design that appealled to members of the association as well as the general public.  A built-in content management system will allow updates to the site to occur as they happen.  Visitors are able to provide feedback on the site and are encouraged to do so.  We hope that the site will be a valuable resource for real estate news and information in the Dulles Corridor which includes all or part of Loudoun, Fairfax and Prince William counties. 

Additions to the website will be added in the coming months that will add to the website's 2.0 functionality and reach.

We would love to know what you think of the new site and encourage any feedback.

Banks Still Choosing to Foreclose Instead of Sell Short

I submitted an offer on a home that is "For Sale" for a client of mine.  It turns out, the house isn't for sale.  Here is the response from the agent:

Tony,
     The lender just called me and they are not taking your offer or any offers because they rather go through the foreclosure process.

Seems that some banks aren't willing to work with owners.  All the press and all the government programs still don't help.  Banks suck.

Negative Press about Real Estate a Worldwide Problem

I just ran across this article about the real estate industry in New Zealand.  It seems that the industry is upset over negative articles being written by Big Media. 

Supposedly, they are threatening to pull advertising if newspapers don't cooperate.  And the Government is not happy with the tactics.  Sound familiar?

HUD Proposes Changes To RESPA, But Misses Key Points

The Department of Housing and Urban Development (HUD) rolled out proposed changes to RESPA including changes to Good Faith Estimates (see the proposed changes). HUD claims that the proposed changes will make it easier for borrowers to see the true costs associated with getting a loan and will allow them to do a better job "shopping around." HUD estimates that "shopping around" will save each buyer an average of $668 at settlement.

But they don't address some key points. Currently, there is no law that protects consumers from lenders that "bait and switch" by showing "X" dollar amount on the Good Faith Estimate, but end up charging "Y" (aka higher) amount come settlement, much to the dismay of the borrower.

Since the financing contingency has typically been removed well before settlement date, the buyer has the choice of either paying the higher amount or not settling. If the buyer doesn't want to move forward with settlement, they will most likely be in default and lose their earnest money deposit, etc. Therefore, they really don't have a choice and just end up paying the higher fees.

Personally, I don't understand how mechanics are required to contact people when the repairs deviate from the initial estimate by more than 10 percent, but there is no such rule for lenders. Saving consumers $668 is a drop in the bucket compared to the amount that some lenders increase their closing costs by at the last minute.

HUD has also proposed changes to the HUD-1 Settlement Statement (see proposed changes). But the HUD-1 Settlement Statement repeats much of the same information listed on the Good Faith Estimate. They should worry about changing the laws surrounding holding lenders accountable to their Good Faith Estimates rather than spending time changing the HUD-1.

Plus, the HUD-1 Settlement Statement is not ready until the day before or the day of settlement. By that time, there's very little a buyer/borrower can do to make changes to their loan or "shop around" for better terms or a new lender.

Though consumers surely appreciate what HUD is trying to do, they will not be protected much, if any more than they are today. Personally, I'd rather pay the $668 and have a guarantee that the loan will close on time and that the lender fees will be the same as listed on the Good Faith Estimate.

Fed Dumps $200B Into Markets; Lessens Chances Of Rate Cuts?

News of the Federal Reserve dumping $200 billion into the troubled financial system sent stocks soaring almost 4 percent today. But it left some consumers wondering whether it will lessen the chance of a major rate cut, which seems be the most important thing to many consumers with ARMs resetting in the near future.

The Fed, in conjuction with central banks in Europe, Canada and elsewhere in the world, will offer loans to financial institutions and accept various securities as collateral. Some of these securities will be the mortgage-backed debt that has been wreaking havoc in the lending and financial markets since last summer.

According to some, this move will help financial institutions gain liquidity by exchanging their mortgage-backed securities for Treasuries, which are very liquid. In doing so, the Fed may not cut rates as much as the previously anticipated 75 basis points.

Recap Of My "Day On The Hill" With The Virginia Association of REALTORS®

Tony and I just got back from the Virginia Association of REALTORS® (VAR) Legislative and Education Conference in Richmond, VA. We were there representing our local association, the Dulles Area Association of REALTORS® as well as VAR and its' members. It was my first time at the Legislative Conference, as well as my first time in the VA General Assembly building in Richmond so I was eager to find out what it was all about.

The day I was there (Wednesday) was the biggest and most important day of the conference. It was called "REALTOR® Day On The Hill". We spent most of the day in the General Assembly building meeting and chatting with Delegates and a few Senators representing Loudoun County and Northern Virginia (where we're located). Those we had a chance to speak with were Senator Mark Herring, Delegate David Poisson and Delegate Joe May.

We discussed several topics, issues and bills though one of the most talked about items was the Dulles Rail Project. It's a huge topic of discussion because the project will greatly affect Northern Virginia, especially Loudoun County.

As of Wednesday, the project looks to be dead in the water (click here for more info). That's not good news for Fairfax County or Loudoun County, which both want the rail project to be completed. The project would bring mass transit to the Tyson's, Reston, Dulles Airport and Ashburn/Loudoun County corridor and with it would come businesses, jobs, ammenities, tax revenue for the county, etc.

The impact of the project could be huge. One Delegate compared the potential impact of the project on these areas to the impact the metro rail had on Arlington when it was extended from Washington, DC to Ballston (Arlington), Virginia. Today, Arlington is a thriving area in which home prices were much less affected by the down turn in the market than Loudoun County, due, in part, to the infrastructure in place thanks to the mass transit system.

"Inc." Names Social Networking and Blogging New Basics of Marketing

In their latest issue (February 2008), "Inc." ran a piece entitled "The New Basics of Marketing". Of the five "basics" they named, Social Networking and Blogging were two of them.

Yet, so many within the real estate industry view real estate bloggers and those of us on Facebook or LinkedIn as crazy or even a threat.

If you don't get it, you don't get it.

D