You’d have to be living under a rock to have missed the news that the local (and national) real estate market is on the mend, but I thought I’d post a quick graphic scraped from the most recent monthly indicators report (PDF!) from 10k Marketing (the most excellent “research and stats” arm of the Minneapolis Area Association of Realtors.)

Related posts:

1. Twin Cities Real Estate: Inventory Improves, and Why You Should Ignore Prices (sometimes)
2. Behind The Numbers: Feb 2011 Twin Cities Real Estate Market Stats
3. Mixed Signals: Good and Bad Signs for Twin Cities Real Estate Market in September 2011

Sometimes, the fact that lenders can be sticklers for property condition makes people crazy.

To explain why we are the way we are, here’s an excerpt from an actual email received in our office today, on a property that we required the sellers to turn the water on before closing.

We sent the appraiser out to verify the water was on.  And boy was it.

“[Appraiser] went out there this morning and the water was on however there are numerous leaks throughout the home that need to be corrected. He turned on the water in the basement bathroom and there was a gush of water that came running out from underneath the sink and the water heater has a bucket full of water. I’ll send over the final inspection but it is NOT cleared. All of those plumbing leaks need to be corrected.

I know that is definitely not what you wanted to hear but that’s the scoop.”

So yes, the water must be turned on, and it does not matter if the property is being sold as-is, unless you are paying cash.  If you are borrowing the money, there are rules.

Related posts:

1. Why You Should Always Read Your Loan Application Before you Sign it, Then Read it Again at Closing
2. How To: Refinance Your Mortgage Without Paying Closing Costs
3. Curb Appeal Enthusiasm™: Blood in the Water Edition

I have been too busy generating these to do much proper blogging lately.

Related posts:

1. Does this count as a Testimonial?
2. Announcing: Holiday and Hiatus and A New Contributor at Behind the Mortgage
3. The Obama Refinance Proposal: Don’t Hold Your Breath Just Yet

About a year ago, we started telling anyone who would listen that housing was at, or very close to a bottom in both prices and sales, and that those who would wait, might miss the best deals.

Here’s one example, from February 2009: The Fear Bubble May Cause You to Miss an Opportunity.

Now, over a year later, we are seeing confirmation of this bottom from too many sources to cite here.  This, in short, is a market that is quickly turning.

Today, we’ll list the two most recent examples point at the Twin Cities metro area.

First, Jim Buchta at the Star-Tribune reports that New Home Sales have posted a year over year (that is, May 2011, compared to May 2012) increase in sales of 20%.  And when it comes to new construction, sales are the number to watch.  They’ll likely still finish the year with totals well below the historical norm for new homes, but this report, and others confirming a similar trend nationally are telling signs that the new construction market has passed the turn.

So why the bump?  Our old friend supply and demand.  From the article:

“In some parts of the Twin Cities, there is only a four-month supply of existing homes on the market, nearly half of what’s needed when the market is considered in balance…Inventory is down for new houses, as well. Across the country there’s a 4.7-month supply of homes at current sales rates, leading some to worry about a shortage…”

Catch that?  Existing inventory is low, and gets snapped up fast, pushing many buyers into the waiting arms of homebuilders, who are stepping in to fill the supply vacuum.

In addition to impacting sales, thin inventory is predictably having it’s way with prices:

“…in the Twin Cities metro, the median price of new homes that closed during May was up 2.9 percent to $300,000, according to the Minneapolis Area Association of Realtors…Prices of existing homes were up a healthy 10 percent, largely a reflection of declines in less-expensive foreclosure and short sales”

This is what a recovering housing market looks like, folks.

And for what it’s worth, and despite the flaws (lagging indicator, imperfect methodology, as in all housing indices) today’s Case-Schiller also shows the Twin Cities home prices on the rebound, jumping 3.8% since last year.

Now, none of this is to say that you are going to get your 2006 price back.  It may still be decades before we recoup the 30% plus loss in value from 2006-2010.  And with a still stunted economy, the road to full recovery may prove a little bumpier that current data suggest.

But this is clear: As we predicted a year ago, the worst days of the housing market are behind us.  THAT is a story worth telling.
________
Watching mortgage rates? Need a rate quote? Follow me on Twitter for a leg up as mortgage-related news breaks, and if you are actively shopping for a mortgage, feel free to drop me a line I answer my own email and reply to all inquiries promptly.

Related posts:

1. Your Weekly ‘Housing is at a Bottom’ Call
2. The Fear Bubble: Do You Need Permission to Buy a Home?
3. Twin Cities Real Estate: Inventory Improves, and Why You Should Ignore Prices (sometimes)

UPDATE:  HUD has now published the Mortgagee Letter: The new program will be available for FHA Case Numbers assigned on or after June 11th 2012.  This means eligible borrowers will need to wait about 3 months (and hope that rates remain low) before they can lock in.

Additional fact sheet here.
——–

Now here’s a refinance program that actually makes some sense.

At 12:15 Central time today, The Obama Administration will announce changes to the FHA’s streamline refinance program.  The broad details are already on the street (at the WSJ, MNI, and soon to be many more outlets) but here are the basics:

Here’s what you need to know about the changes:

- The new fee/cost structure only applies to FHA loans originated prior to June 1st 2009 which are being refinanced through the FHA’s streamline refinance program.

- For eligible loans, the up front FHA premium is being reduced from the current 1% of the loan amount to .01%.

- The monthly FHA insurance premium is being rolled back to .55% of the loan amount per year.  Down  from the current 1.15% (soon to be 1.25%)

- We do not know when exactly these changes will be implemented.  Best guess is within 30-60 days but we await guidance from HUD on this.  Program will be available for FHA case numbers assigned on or after June 11th 2012.

Bottom line:  This is a huge, positive change – it effectively “grandfathers in” the monthly insurance premiums that were in effect before the FHA began ratcheting up these fees two years ago;  and it will open up refinancing to sub 4% rates for many borrowers who to this point have not been able to take advantage of them.

FHA Streamline Refinance Basics:

Being a member of the FHA club confers certain advantages when it comes to refinancing.  The general principal of which is:  FHA already insures your risk, so if you have a solid track record in making the payments on your existing FHA loan, they care a LOT less about the details that often trip-up traditional refinances – the process is as the name suggests:  Streamlined.

Using an FHA Streamline Refinance, you can:

- Refinance with ANY lender – you are not required to refinance with your current mortgage servicer.
- Refinance without documenting income (though mileage will vary, since some lenders will require that you are currently employed.)
- Refinance without an appraisal, or any measure of the property’s current market value.  The original value is used.
- Refinance with a checkered credit history: Credit is reviewed only in context of whether or not you have had any mortgage lates in the last year (though this is another instance where some lenders have set a minimum FICO score, even though the FHA does not.)
- Refinance a home that you have converted to a rental property (even though it was an owner occupied property when you took out the loan.)
- Refinance and leave an existing second mortgage or home equity in place (both loans/lines can be up to 125% of the original value of the property.)

With an FHA streamline refinance you cannot:

- Increase the loan amount to payoff other mortgages or debts.
- Refinance a conventional loan into an FHA streamline.  Conventional-to-FHA refinances require an appraisal, full credit qualifying, and are subject to the current FHA mortgage insurance costs and structure.

Disclaimer: FHA has not released full program guidelines yet – so there may be some important, material details to follow.  Also, if it is not obvious, I am not communicating on behalf of or at the direction of HUD, FHA, or any governmental agency.

——–
Have questions about an FHA streamline refinance?  Drop me a line or call [952.417.8490] I’ll walk you through your specific options, quote a rate, and generally give you the rundown on how an FHA streamline refinance can reduce your rate, and save a lot of money with very little hassle.

Related posts:

1. The Obama Refinance Proposal: Don’t Hold Your Breath Just Yet
2. Congress Passes Tax Deductibility of Mortgage Insurance Premiums
3. HARP II: Fannie, Freddie Announce Changes to HARP Program