Smith Farm homes currently under contract

There are currently 20 Smith Farm homes under contract...that's good news. Now for the bad news...

16 of the 20 homes currently under contract are either Bank-Owned homes or Short Sales. That leaves just 4 out of 20 as regular sales of all the Smith Farm homes currently under contract.

This does not bode well for property values going forward as short sales typically sell at a discount to non short sales. And with the ratio being 16 "under contract" homes being short sales or foreclosures and only 4 being non short sales, this could cause an appriasal problem with sales later this year...this is an excellent graphic backing up the advice that I have been giving to sellers/potential sellers in Smith Farm lately: the window of opportunity is small, try to get on the market, under contract, and sold in the next 3-5 months...BEFORE all of these distressed sales become your new comps!

Smith Farm market activity report

Ther have been 6 reported sales in Smith Farm in the previous 60 days. Three of the 6 were short sales.

1) A 738 on Oak Grove...Short Sale...$225,000
2) A 739 on Oak Grove...Short Sale...$228,000
3) A 739 on Oak Grove...$255,000
4) A 1602 on Marbletree...Short Sale...$345,000
5) A 1603 on Marbletree...$345,000
6) A 1603 on Squirewood...$365,000

You can see, just from this 60 day history sample, how short sales tend to sell at a discount to non short sales. When there are a lot of short sales in a neighborhood it can certainly impact property values and appraisals. Take a look at the post above this one to get a feel for what the upcoming closed sales may be...

Smith Farm Foreclosures...more detail

As of 1/15/10, there were 83 Smith Farm homes in some stage of the foreclosure process...below is a bit more of a breakdown by street:

• Oak Grove - 12
• Rockport - 9
• Columbia - 6
• Branchwood - 6
• Greenville - 6
• Marbletree - 5
• Ashburn - 5
• Sally Lyn - 4
• Great Oak - 4
• Kingsley - 4
• Ridgefield - 3
• Waterdance - 3
• Copperfield - 3
• Stonehurst - 3
• Squirewood - 2
• Oak Bluff - 2
• Waverly - 2
• Ambleside - 1
• Boxleaf - 1
• Prestwick - 1
• Downwinds - 1

IRS says "sorry, you can't file for your tax credit"!

 NEW YORK (CNNMoney.com) -- Did you purchase a home after Nov. 6? Don't expect your $8,000 homebuyer tax credit any time soon. Since Congress passed the initial tax credit last February... more than 1.4 million buyers have taken advantage of it...But that all changed on Nov. 6...it appears that the IRS has NOT ALLOWED ANYONE TO FILE since November 6th...

Congress extended the credit to include contracts signed by April 30 and closed by June 30. It also made a refund of up to $6,500 available to existing homeowners looking to buy something new. And that marked the start of a new IRS paperwork wrangle. Those homeowners who closed their sale before Nov. 6 use Form 5405 to claim the credit right away. But those closing after that date are in limbo because no form yet exists for them to file! The IRS had been expected to come out with a revised form by early January, but it has yet to release anything.

Also, with the new fraud-prevention regulation attached to the extension/expansion credit, there is no E-filing available for those claiming the extension...adding to the already extended timeframe for the tax credit refund.

If you are planning to buy within the timeframe guidelines of the tax credit and are hoping to receive the money quickly...don't count on it!
As always, check with your tax advisor...

Industry insiders expect market to resume fall...

NEW YORK (CNNMoney.com) -- After four months of gains, home prices flattened in October. Worse yet, industry insiders think that they'll soon start to fall.Prices have risen more than 3% since May, according to S&P/Case-Shiller. But most forecasts predict price declines in 2010, with possible losses ranging from anywhere from 3% on up.


Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%."We've seen recent price stabilization because of low mortgage interest rates and the impact of the first-time homebuyers tax credit," said Pat Newport of IHS Global Research. "But there are really good reasons to think prices will now start going down."

There are three main reasons for the reversal: a coming flood of foreclosures, rising interest rates and the eventual end of the tax credits.The above is a snippet of a CNNmoney.com article from Friday, January 1st.

Take a look at this mortgage interest rate comparison I've done:
4.5% on a $400k loan = 2025.19/mo
8% on a $276k loan = 2026.74/mo

Right now...we are at about a 5%+ average mortgage rate...it has risen the past 3 weeks, and that is with the feds direct involvement with the rate mechanism. If the feds "backs away" from direct involvement some time this year, rates will surely increase. It is not too inconceivable that rates could rise to 8%, which, in the example above, reduces the buying power of the representative buyer $124,000!

If the "blame" for the housing bubble has been "low interest rates and loose lending standards" what effect will the opposite have? Couple higher rates, extremely tight/restrictive lending standards, the end of buyer tax credits and a wave of bank-owned homes...It's not a pretty picture being painted.