On July 26 the Senate passed the housing bill aimed at reviving the nation’s housing market.  President Bush is expected to sign it soon. The two primary objectives of the bill are to ensure the smooth functioning of Fannie Mae and Freddie Mac, and to assist homeowners at risk of foreclosure. Here is a simple breakdown of the elements of the bill that will impact most folks who are not facing foreclosure:

The Fannie Mae, Freddie Mac and FHA conforming loan limit will be permanently increased to 115% of the median area home price from $417,000. More details will be available in the coming days as to how they will define the median area home price, but the Washington DC metro area will see a limit higher than $417,000.  You may recall this was temporarily raised in the stimulus package earlier this year.

A first-time homebuyer tax credit of $7,500 for anyone closing between April 9, 2008 and July 1, 2009 goes into effect. A first-time homebuyer is defined as anyone who has not owned a home in the past three years. The credit is reduced gradually for single filers with an adjusted gross income over $75,000 and joint filers with adjusted gross income over $150,000. The refund is actually an interest-free loan that must be paid back over 15 years in equal installments.  Logistics of this have yet to be worked out.

For 2008, the bill provides an additional $500 single filer deduction for folks who do not itemize their taxes, $1,000 for joint filers.

How much will this really help the housing market?  That remains to be seen.  The permanent increase in the conforming loan limit is the most useful for our market in the long run.

Do you think this bill will improve the housing market?  Post a comment for us to read…

As a teenager my Dad and I would visit elderly patients at nursing homes around Des Moines, Iowa most Sundays. The visits were usually under an hour and we would simply spend some time with people in need. Some of the patients had supportive families; some hadn’t received visitors for months. Some suffered from disease, others were only very old. Some people were sharp, but their body had failed years ago. And others seemed as if they were far away, in another land, deeply dreaming of days past.

I came to appreciate my father’s sense of service to the community at an early age and I wish I devoted more time to it today.

Perhaps it was because of my history of making a difference in the lives of others, I was moved a few months ago when Channing, the Director of the Washington AIDS Partnership, presented to us. “Us” in this case was The Capital Tennis Association of which we’re a sponsor. Each year, the Association holds a tennis tournament in the fall and the proceeds are directed to a charitable organization. http://capclassic.org/Home_Page.html for more information.

Channing brought with him half a dozen young people who had just participated in the year long Americorps DC program. The program placed people in 12 agencies in the DC Metro area for a year of service to those agencies. Many of the receiving agencies are organizations you have heard of. For a list visit http://washingtonaidspartnership.org/Network_placements.asp

It was a moving presentation and it quickly became clear that the year had changed these individual’s lives and they had impacted many others in a positive way.

The Capital Tennis Association decided to select Washington AIDS Partnership’s Americorps Program as the recipient of the charitable funds for 2008. See http://washingtonaidspartnership.org/Americorps.htm for more details.

This year the Association has committed to raising more then $20,000 to give to Washington AIDS Partnership, and I’m proud to announce that Brandon Green & Associates, in partnership with David Kanstoroom of North American Title and Rob Riggins of Washington Home Mortgage is giving $10,000 to support the event.

I challenge the entire BGA family to raise $5000. Please, if you can make a donation contact me and I’ll fill you in on the details. I’ll post an update blog later as to our progress thus far.

At Brandon Green & Associates, we have sold over 40 homes already this year. I saw an article in The Wall Street Journal and I thought it reflects well what we are advising our clients to do to be successful.

http://online.wsj.com/article/SB121553612650836199.html?mod=todays_us_nonsub_journalreports

So far this year, we have not had any expired listings and our average Days on Market are lower than the average in the area. Why? Because we give our clients the right advice and we know our local market.

I believe the most important factor when selling in this market is to hire the right agent, not just your friend or the agent next door. You want the agent that is going to work hard for you. I also believe presentation of your property, staging, and of course pricing, are key points to selling your home.

The bad news for seller is that if you bought your house in 2004, 2005, 2006 and 2007 it is likely that your house is worth only a little bit more or just under what you bought it for. It is not easy for us to tell our clients the bad news, but we need to give them the facts if they decide to sell. We have no control over the market but we do on how to market and to sell.

If you decide to sell, you need to be very realistic about the market and forget how much your house was worth in 2005.  These days are over.  The good news is that if you follow our guidance, you will be able to sell your home at a price that is right.

If you have any friends that are struggling to sell their home, please send them our way. We are experts in selling houses that haven’t sold. We work hard!

Make sure to interview me if you are not a US citizen. You need good advice since there are huge differences between a US citizen a non US citizen when buying and selling. I am a Certified International Specialist Certified and have had extensive training to support foreign and domestic needs.

Will the suburbs of today be the ghettos of tomorrow as rows and rows of mostly identical homes that have remained vacant for months are subdivided into rooming houses?  While current suburbia residents’ move closer to the city to save on fuel and to cut their commute time, less affluent people are moving to the suburbs where housing has become more affordable.  The opposite is exactly what happened to the cities starting in the 50s as America’s love affair with the car drove people from the city to the suburbs.  Perhaps this is just the beginning of that reversal – perhaps the love affair is coming to an end…

You’ll have to look deep into the belly of the Wall Street Journal’s online archive to find this article but this might be the start of the press believing the housing crisis is over. http://online.wsj.com/article/SB121003604494869449.html

Market trends are driven partially by psychology, and when we think the crisis is over, it will be. This article cites some interesting statistics that are hard to argue with. Written in early May it didn’t take into account the trickle down effect of high oil prices. When the fear leaves the market, the buyers will return.

A client of mine sent me the following link which I thought was really helpful so I am passing it along to all of you.  http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=1&oref=slogin#  I frequently get asked the question whether someone should rent or buy.  Clearly buying is not for everyone (are you shocked that a Realtor is saying buying isn’t for everyone?) so when making the decision, think carefully about your individual situation and speak with a professional about your options.

That same helpful client also drew my attention to this article http://www.nytimes.com/2008/05/28/business/28leonhardt.html?ref=business.  For all you “evangelist renters” out there (credit given to the author of the article David Leonhardt for that term) you might consider a review of your finances and situation about 6 months before your lease expires.  We would of course be happy to talk to you about that.

Credit for this blog is given to GCAAR.  www.gcaar.com

Fannie Mae will no longer require borrowers to put up an extra 5% down payment when purchasing homes in areas deemed “declining markets.” Fannie Mae had been hearing concerns from REALTORS® and others for months that the policy was bad for housing because it discouraged consumers from buying in markets hardest-hit by foreclosures. NAR met several times this spring with Fannie Mae officials and sent letters reflecting members’ unease with the policy. Under the policy change, borrowers can get loans up to 95% loan-to-value, even in markets in which prices have been falling. Prior to the change, borrowers could only get loans up to 90% to give lenders a 5-percentage-point cushion to protect against possible price declines in the future.

The new policy takes effect June 1, and Freddie Mac has said it will also scrap this policy

With all the media attention on the so-called credit crunch, it sounds like there are no mortgages available unless you have perfect credit, a 20% down-payment, and helped a little old lady across the street this morning. Not so – FHA to the rescue!

The Federal Housing Administration is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.  FHA loans had fallen out of favor over the past few years as people chose sub-prime mortgages with low teaser rates and little documentation, but currently one out of every five mortgages is FHA insured.

Do you need 20% down?  The great news is that FHA only requires 3 percent down. 3 percent!  And that 3 percent can come in the form of a gift or grant.  FHA borrowers only need to have $500 in a transaction.  All the while, FHA mortgage rates are as good or better than their conventional counterparts.

Low or no down payment, extremely competitive rates and easier qualifying, no wonder FHA is moving up the charts!

Perhaps the biggest question in buyers and sellers minds is – should I make a move now or am I doing so at the wrong point in the cycle? To answer this question, we need to look at market cycles better and understand how they work. Take a look at this graph which represents markets over time.

The two diagonal straight lines represent the top and bottom of what I like to call the “safe zone”. The curvy line represents the cyclical peaks and valleys within the market as a whole. The space above the top line of the safe zone, yet below the curve line is the place I like to call the “unlucky buyer zone “(or the very lucky seller zone). This is when the market is the most expensive, and it is right before a correction. If you look below the bottom line of the safe zone to the space above the curved line, you’ll find the “buyer’s lucky zone”, (or the seller’s unlucky zone). All the rest of the space is the safe zone. What this means is there are only very small periods of time when it is really a bad time to buy (right at the peak before a correction) or to sell (right at the bottom, before an upswing). The vast amount of time you’re safe to make a move. Statistically speaking, chances of you buying or selling in the safe zone are far, far greater than buying or selling in the other zones.

You can’t time real estate so waiting for the right moment in the market to make a move doesn’t make sense. When was the last time you “timed” anything intelligently? Did you “time” your career move to be ideal? Did you “time” your marriage or commitment ceremony to be on the day without rain? Did you “time” that stock sale to sell right before the company announced a gigantic loss - intelligently? Most likely not – and you cannot “time” the real estate market either. The period of time of ideal buys and sells are simply too small, and impossible to determine until about 6 months after they have occurred.

Therefore, buy or sell when the market is in the safe zone – and pay no attention to the top or the bottom. It is foolish to rely on luck as a strategy.

One thing is for certain, the market is moving… are you?

The Washington Post’s real estate editor, Maryann Haggerty, and the Local Address columnist for the paper, Elizabeth Razzi, recently had a live chat on The Post’s website. Here’s the transcript:

Live discussion with Post editor Maryann Haggerty and columnist Elizabeth Razzi

Most pieces in the media cover the overall market condition, so it’s interesting getting the press’s take on some individual’s situations.

It’d be great if they included an agent in one of their chats—I’d love to weigh in on the discussion.