About a month ago I received an email from James Kelly who writes a blog:  VA Benefits.  James wanted to know if I would allow him to do a series of guest posts focusing on subsidized housing financing for our veterans.  So, it is my pleasure to post this article on his behalf:

Written by James Kelly,

Coming home relieves our military members of their duties overseas. Even though the return is anticipated, certain challenges present themselves quickly. For thousands of veterans, getting proper medical care poses obstacles. But employment and housing don’t always come easy either. 
 A common effect of serving during war time, post-traumatic stress disorder (PTSD) causes a number of serious side effects. Nearly 150,000 veterans from the wars in Iraq and Afghanistan have been diagnosed with the disorder. Getting disability claims for PTSD was a chore until recent amendments from the Department of Veterans Affairs. 

Veterans also come home looking for jobs and homes. As with any economic contraction, jobs aren’t abundant. Combine that with veterans adjusting to life at home, and getting hired seems less likely. Last spring, legislators recognized the struggles veterans face when searching for employment by introducing the Veterans Assistance Employment Act   to spur veteran employment. But housing still remains a challenge.

 The VA has a program available to honorably-discharged veterans and qualifying active-duty members. Because of frequent relocation, military members may find it difficult to build credit or save money. The Veterans Affairs Home Loan Guaranty program accommodates these hurdles to help veterans find a home. 

VA loans do not have income requirements, making them more accessible to veterans looking for work. A host of financial benefits come with VA loans, such as paying no money down. To buy a house worth up to $417,000—or higher in expensive markets—qualifying borrowers don’t put a penny down.  
 Other  loan advantages  include: 

•  - Negotiable interest rates
•  - No private monthly mortgage insurance
• - Sellers covering up to 6 percent of closing and concession costs 
• - Refinancing options that can lower interest rates 

Not all veterans qualify for the home loan program, but working with a VA-certified lender maximizes veterans’ benefits. A trustworthy lender will also aid veterans in finding an affordable home once they return from service.

The federal government has also developed a  new program designed by the VA and the Department of Housing and Urban Development to introduce new ways to prevent homelessness. This innovative joint federal program aims to get hundreds of homeless vets off the streets and into new homes in the next several years.

Finally, many military families are surprised that the federal first-time home buyer tax credit  remains available to them through April 30^th, 2011, even though it is nearly expired for most other homebuyers. As long as the qualified service member  has a sales contract on April 30^th, and has closed by June 30^th, 2011, he or she will be eligible for up to $8,000 dollars in tax credits ($6,500 for repeat home buyers). This valuable program can do a lot to help a veteran and his or her family make a new home a reality.

All of these resources exist to help veterans overcome the housing challenge. When used in combination, these programs are a great tool in the fight to provide every American serviceman and servicewoman with a place to call home.

Thank you to James Kelley! To reach James with questions: james@vabenefitblog.com

Every once-in-a-while I write an eclectic article for my readers with miscellaneous business and real estate news that has accumulated in a stack by my desk.  Here is just such an update!

North Carolina and Lake Norman Area Business:

• North Carolina ranks fourthin CNBC’s recent survey:  America’s Top States for Business:  The Charlotte Business Journal ran an article on July 13th.
• The Palm City Florida based firm Policom recently ranked the Statesville-Mooresville area 15th among 576 Micropolitans nationwide in terms of economic strenth according to a recent article in The Statesville Record and Lankmark Newspaper.
• Today’sMooresville Tribune says that the Iredell County jobless rate dropped to 11.6%
• Lennar,one of the nation’s leading home-builders, recently announced that they will be building town-homes in a brand new community in Cornelius adjacent to Harborside.  It will be called Harborside At Lake Norman

Housing and Real Estate:

• According to the National Association of Realtors, 10 – 14% of all pending home sales don’t close.  (Very interesting!)
• A Wall Street Journal article on July 26th reported that “Foreclosures Reduce Home Values by 27%“.
• “Foreclosure starts hit a record high for Fannie, Freddie loans” according to an article today in Inman News.  It went on to say that in all loans, 30-day delinquencies were down 1.4% from May, 60-day delinquencies rose 2.4%, 90-day delinquencies were down 3.9% and loans in foreclosure were down .4%.
• The Federal Trade Commission has amended rules governing free credit report offers to prevent deceptive advertising.  The only authorized source under federal law for a free credit report is:  AnnualCreditReport.com  or 877.322.8228.
• Note to home buyers and sellers:  HUD has clarified it’s rule regarding fees to Real Estate Brokers for Home Warranty Plans.  Real estate brokers and agents may NOT be compensated by Home Warranty Companies.  I don’t take the fees and have always thought they were unethical and/or against the RESPA laws regarding kickbacks so now it is official!
• The number one source for home searches, REALTOR.COM is in the Beta testing mode of a vastly improved site: http://www.beta.Realtor.com which was launched on June 15, 2010.  It looks to be a truly major different and exciting!

There you have it…my stack of news is now much thinner and I can go back to analyzing our Lake Norman housing market!

Truthfully,  2009 was a pretty easy year to predict real estate trends in our Lake Norman area. (See my 2009 predictions).  Prices came down, foreclosures and short sales dominated our market, new construction ground to a screeching halt putting many of our local builders out of business, and lenders made everyones’  lives extremely difficult. Yes, it was a tough year for home sellers and home buyers.

However, looking forward in 2010 I am not seeing a lot of black and white but rather a medium shade of grey. 

For our Lake Norman real estate market 2010 will be a turning point.  The question is, how bumpy will the road be, how far down the road will we hit the turn, and will it be a gentle, hardly discernable curve or a pronounced change in direction?

The Big Picture:

To a certain degree, our Lake Norman housing market’s ability to begin to stabilize will depend on the national financial policy makers.  Our national financial uncertainly makes it extremely difficult to make solid predictions for our local market.  Here are some of the major issues that will play a significant role in our housing market this year:

• At the end of march, the Federal Reserve will end its $1.25 Trillion program backing the mortgage market and helping to keep interest rates low.
• FHA is currently working on legislation to tighten their underwriting standards although progress is being made to modify and soften their original requests.  This tightening was initiated by a need for capital reserves due to losses FHA has absorbed since the recession began.
• Only a modest rebound in housing starts is expected.  Builders who have survived are still finding it nearly impossible to get loans for new projects and spec building is almost not existent.
• The homebuyer tax credits will end April 30th – June 30th. 
• There is expected to be another wave of  resets of adjustable and interest only loans, especially on jumbo loans, which means sharply higher monthly payments for those homeowners.  This may trigger another wave of shortsales and/or foreclosures.

Regionally:

Our Lake Norman housing market is also going to be impacted significantly by regional economic components, especially jobs. 

• North Carolina’s population growth was the third highest in the US  according to the Charlotte Business Journal.  Lake Norman is still a destination for people throughout the US.  While many of my out-of-state buyers have had to delay their moves here, very few have actually canceled them.

• Jobs play a huge role in our recovery.  The jobless rate in North Carolina started to lessen in November however unemployment rates in Mecklenburg and Iredell Counties remain higher than the state average.  North Carolina pundits seem very mixed in their economic vision of 2010 but they do seem to agree that unemployment has peaked and that we will see improvement by the end of 2010 if not sooner.  But everyone agrees that we must see job improvement before we see any significant change in our housing market. 

My Predictions:

• Bargains will continue to drive the market.  More and more homebuyers who have been sitting on the fence will realized that these bargains, once gone, won’t necessarily be replaced so they will be more confident and motivated in 2010. 
• A year of  foreclosures and short sales.  Sellers who have been hoping to sell at a price that allows them to at least break even are going to run out of time. We will continue to see active listings slowly evolving into short sales or foreclosures. 
• Shadow Inventory?  One of the biggest questions I have is just how many Lake Norman homeowners are either waiting to sell until they see a turn in the market or have withdrawn their homes from the market (which accounts for our drop in inventory) while planning to bring them back on the market once they see signs of improvement.  If, just when our inventory of homes gets down to a good number (6-8 months of supply), a large number of sellers who have been waiting  jump into the market, then we will again face high levels of inventory and a second round of a buyers market.
• A year of stabilization more than recovery is what most everyone is saying throughout the country.  Personally, I don’t think it will be an exciting year with significant changes but rather a slow, methodical road towards recovery.  2010 may hold some surprises but for the most part it will be a year of righting the ship and preparing to sail slowing forward in 2011.

I would love to hear your thoughts and predictions. Please leave a comment!

Related Articles

 Lake Norman Real Estate’s Fourth Quarter 2009 Sales Analysis

Lake Norman Real Estate’s Fourth Quarter Sales Analysis 2008 

 Lake Norman Real Estate:  Why is it so hard to buy a home right now?

Lake Norman, Our Inland Sea 

Lake Norman Relocation Resources 

According to a recent update I received from the National Assoication of Home Builders, two scenarios since the extension of the First-Time Home Buyer tax credit and the creation of the repeat home buyer tax credit have risen and been addressed by the IRS:

“With the addition of the second tax credit, there may now be a situation in which two unmarried buyers purchase a residence together where one qualifies for the $6,500 repeat buyer credit and the other qualifies for the $8,000 credit. According to the IRS, they must allocate the tax credit in a meaningful manner. The repeat buyer cannot receive a tax credit higher than $6,500 and the total amount claimed by both buyers cannot exceed $8,000. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.

The second scenario involves the qualification status of married purchasers as repeat home buyers. In order to qualify for the repeat buyer tax credit, both individuals must have lived in the same residence for five consecutive years out of the last eight. If one spouse has lived in the house for five years and the other moved in later, after they were married, then they are both excluded from the repeat buyer tax credit.

This information has been updated on NAHB’s consumer tax credit Web site, which can be found at www.federalhousingtaxcredit.com.”

One of my Lake Norman home buyers also raised an interesting question recently.  They have owned a home in Raleigh NC  for 5 years but they only lived in it for 4 years before moving to Lake Norman.  It has been rented for the past year.  Because they had not lived in the home for 5 consecutive years out of the past 8 years they are not eligible for the tax credit.  Remember, there are also income limitations.

When in doubt, I would ask your accountant/CPA!

While you might think that listing a home and getting a good offer is the toughest part of our Lake Norman real estate market these days, in my opinion you would be wrong.  The greatest challenge in most cases right now truly is getting a lender to actally make a loan and close a sale!

We all know that banks and mortgage institutions are having their own tough times.  However, the current home loan market is so challenging that it is impeding any progress we might be able to make in the process of restoring our Lake Norman housing market’s stability.

The problem is that we have gone from having mortgages that were too easy to get to an irrational system that makes it nearly impossible to get a loan!  Just ask anyone who has tried to get a “Jumbo Loan” lately.  Jumbo loans are loans above the $417,000 ceiling set by Freddie and Fannie.  Right now they are more expensive (1% or more higher interest rates) and much harder to get.  This in part explains the significant slowdown of Lake Norman area home sales above $400,000.

Probably the single greatest challenge I have experienced lately is with appraisals and it is going to get worse starting this Friday May 1st (2009) when all banks are going to have to use management companies to choose the appraisers.  Not only will lenders and brokers not have any contact with these appraisers, but there is no guarantee that the appraisers will even be well versed in the neighborhoods in which they are doing the appraisals.

Even before this, it has not been uncommon for the appraisal to come in at the purchase price just to have the underwriter throw out the appraisal and order a field appraisal which is less likely to take into consideration special qualities and amenities that make a property more valuable. 

I guess what I find most frustrating is that a person’s home and property’s value in many cases is being determined by automated computer programs which don’t allow for considerations for so many qualities that add to it’s value to a home buyer.

The Good News:

USDA Rural Housing Program loans are available in much of our Mooresville and Lake Norman area.  These loans can be 100% financing with no mortgage insurance and no money down much like a VA Mortgage.  See the USDA Rural Loans website or call your loan officer to find out if the home you are selling or buying qualifies.   On April 20, 2009 they increased their income structure for 1-4 person household to $70,750. 

Other helpful websites:

United State Departement of Housing and Urban Development (HUD)

Making Home Affordable

Hope Now (Foreclosure prevention assistance/counselors)

It is not impossible to get a good loan and close a sale these days.  But, it is a lot more challenging!