Top 10 Most Undervalued Markets

The 10 Most Undervalued Housing Markets

Nationwide, only 87 markets are in the overvalued category, according to a newly released 2010 report compiled by IHS Global Insight and PNC Financial Services.

That means 242 of the 299 largest U.S. housing markets are selling for prices that even bankers think are less than fair market value. The judgment is based on a comparison of median home prices, local interest rates, population densities and income, plus historic premiums or discounts.

Here are the 10 most undervalued areas, according to the study:

• Las Vegas, -41.4 percent
• Vero Beach, Fla., -39.8 percent
• Merced, Calif., -37.7 percent
• Cape Coral, Fla., -36.8 percent
• Houma, La., -34.6 percent
• Port St. Lucie, Fla., -33.3 percent
• Warren, Mich., -32.3 percent
• Vallejo, Calif., -31.9 percent
• Modesto, Calif. -31.8 percent
• Stockton, Calif., -31.8 percent

Source: CNNMoney, Les Christie (01/27/2010)

FHA Relaxes Resale Rule

Effective February 1, 2010 the Department of Housing and Urban Development (HUD) will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days -- a move that could help expedite the rehabilitation and resale of foreclosure properties.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.  The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to contact clients who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."
To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sales price of the property is 20 percent or more above the seller's acquisition cost, the lender must meet specific conditions for the waiver to apply.
• The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

You can read the full text of the waiver on HUD.gov:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

What the IRS is NOT Telling You

I just read an article detailing how the IRS is making it a little more difficult to receive your First Time Home Buyer Tax Credit or the Move-Up Home Buyer Tax Credit.  According to Karen Deis, a contributing author for Broker Agent Social, the IRS has put stipulations on claiming your credit that are not generally known to the public.  I just wanted you to be aware so that if you have purchased your home after November 6, 2009 there are some things you can't do and some that you must do:

• You cannot file a 1040 EZ form to claim the tax credit
• You cannot file electronically if claiming the tax credit
• There will be a revised Form 5405 to fill out to claim the credit if you purchased after Nov. 6, 2009 but it won't be available on the IRS website for a couple more days (January 8, 2010 is the target date)
• The IRS will need extra time to audit the document to make sure you qualify so they are telling tax advisors to expect an average of a 16-week turnaround.  They may even ask you for additional information that was not previously needed (i.e. letter from a previous landlord, copy of your driver's license, closing statement from the purchase of your home, etc.)

To see a great (and quick) informational video about the revised Tax Credit CLICK HERE.

The main thing to remember is to make sure to get all of your questions and concerns addressed by a licensed tax professional.  I'm here to make sure you are informed before you go into any transaction.