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New Year Brings New Lows in Home Price Reduction Levels

January 14th, 2010 5:51 AM

New Year Brings New Lows in Home Price Reduction Levels, Says Trulia

Posted By susanne On January 13, 2010 @ 4:35 pm In Consumer News and Advice, Home Buying 101, Homeowner's Toolkit, Real Estate, Today's Marketplace | Comments Disabled

RISMEDIA, January 14, 2010—Trulia.com recently announced that 21% of homes currently on the market in the United States as of January 1, 2010 have experienced at least one price cut. This represents the second straight month price reduction levels have decreased and the lowest level since Trulia started tracking price reductions in April 2009. The total amount slashed from home prices also dropped to $21.2 billion compared to $24.7 billion in December, a 14% decrease. The average discount for price-reduced homes continues to hold at 11% off the original listing price. This was also the second straight month where inventory levels have dropped for single-family homes and condos across the United States.

South Continues With Least Amount of Homes Reduced
The South has the lowest overall level of price reductions, with 20% of current listings experiencing at least one price cut, while the Northeast saw the biggest decrease in price reductions compared to the previous month- 12%. (Regions according to the U.S. Census Bureau)

South- 20% of listings with price reductions
West- 22% of listings with price reductions
Midwest- 22% of listings with price reductions
Northeast- 22% of listings with price reductions

“Consumers have a golden window of opportunity to find a great home and take advantage of the tax credit before mortgage rates start to rise,” said Pete Flint, Trulia co-founder and CEO. “Historically low interest rates currently available and tax credit incentives are the ultimate price reductions for home buyers. As rates rise throughout the course of the year, buyers will need to adjust their purchase price ceiling.”

The number of major U.S. cities with price reduction levels at 30% was cut by 50% in January. In December, 14 major cities saw a reduction of 30% or greater and that number has been reduced to just seven cities in January. Additionally, Minneapolis, which has the held the top spot for the past two months, experienced a 33% decrease compared to the previous month. Cities experiencing the largest decreases in percentage of listings with price reductions compared to the previous month include:

Los Angeles, CA – 46% decrease in price reductions
New York, NY – 36% decrease in price reductions
Memphis, TN – 34% decrease in price reductions
Minneapolis, MN – 33% decrease in price reductions
Honolulu, HI – 33% decrease in price reductions

Luxury Market Still Hardest Hit
Luxury homes (those listed at $2 million and above) continue to be hit the hardest by price reductions with the average discount rising to 15% for the first time since Trulia started tracking in April 2009. Additionally, luxury homes represent less than 2% of all current listings on Trulia, but are responsible for 24% of the $21.2 billion in home price reductions. The average discount for homes priced less than $2 million continues to hold at 10%.

Posted by Tom Kellam on January 14th, 2010 5:51 AMPost a Comment (0)

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New RESPA Rules, GFE and HUD-1 changes

November 26th, 2009 11:58 AM

HUD’s been trying to revise RESPA, in particular the GFE, to no avail for over 30 years. Shockingly, it actually happened this time!And now, all kinds of questions are popping up. Such as:

Are the new GFE and HUD-1 Settlement Statements effective 1-1-09, as I’ve been hearing?

Must the YSP still (unfairly) be disclosed by brokers and not lenders?

Must the Originator guarantee that the costs on the GFE won’t change? Is there any leeway?

EFFECTIVE DATE

First off, hold your horses and don’t panic; the whole thing isn’t mandatory until 1-1-2010. Once again, that is 2010 - as in more than a full year away.

…As usual, I cannot believe the mis-information that’s out there about the effective date! That’s right around the corner and the thought is enough to scare the crap out of anyone. So anyway, it’s 2010, okay? But that doesn’t mean you can ignore the whole thing. A LOT has changed. And besides, it will take a full year to deal with software and training.

The NEW FORMS

Before I answer the other questions, here are the links to the new forms along with a Fact Sheet from HUD:

HUD Fact Sheet

HUD’s standard Good Faith Estimate
HUD-1 Settlement Statement

YSP

Are you ready for this? There’s absolutely NOTHING on the GFE or the HUD-1 Settlement Statement that directly addresses YSP. I’m flabbergasted, but Brokers seem to have won this battle. If so, the playing field between brokers and lenders has been leveled a great deal by the new GFE & HUD-1.

According to the actual RULE, however, there is some question as to whether the broker must give the borrower their YSP, if received, on the top of page 2 of the GFE. (I took a copy of Page 287 from the actual rule if you want to see how it reads.)

I am definitely not an attorney and I’m curious to see how this will play out.

TOLERENCE For CHANGES in LOAN COSTS

You can read the allowable tolerances for yourself on page 3 of the GFE. There are some costs that you must honor exactly once they are disclosed; for instance, the loan origination fee. Others fees have 10% tolerance, and there are some charges that you don’t have to guarantee.

In the end, the originators who are completing the GFE are going to have to be much more educated about the borrowers’ costs, along with other program details.

ALTOGETHER

Personally, I think that the new forms are a step in the right direction to increased professionalism in the industry. I can’t say that I agree with each and every detail, but overall, I really like the changes.

If you are an originator - I highly suggest you download the new GFE form and spend some time with it. It isn’t mandatory for an entire year, but I believe it’s worth your time to get a jump-start.

Posted by Tom Kellam on November 26th, 2009 11:58 AMPost a Comment (0)

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