Massachusetts Home Buyer Guide

Forget About Foreclosures, The Latest Massachusetts Unemployment Numbers Will Hurt The Housing Market

The politicians on the federal and state level like to mention foreclosures as a result of subprime loans as a cause for the slow real estate market. If you think all the foreclosures hurt the market, wait until you see what unemployment does to the real estate market.

The Massachusetts unemployment rate is the highest in more than 15 years, the Boston Herald reported January 31, 2009.

Massachusetts lost 16,800 jobs in December 2008.The Boston Globe reported January 23, 2009 that unemployment has risen to 6.9 percent.

"The state's unemployment level jumped by a full percentage point last month to 6.9 percent, the highest since October 1993, the Executive Office of Labor and Workforce Development reported yesterday. The unemployment rate has risen 2.6 points since December 2007, and the number of unemployed has increased by nearly 90,000."

The construction industry has been hit as hard as any area of the Massachusetts economy.

"With both housing and commercial real estate slumping, construction firms have cut more than 11,000 jobs, or 8.5 percent of employment over the past year. In comparison, overall state employment has declined a little more than 1 percent, or about 44,000 jobs."

Read The Boston Herald Article

Read The Boston Globe Article

If you have lost your job, the following video discusses networking tips for job hunters.

Assessed Value Does Not Equal Fair Market Value

The assessed value of a home is a pretty worthless piece of information when considering what a property is actually worth. 

Sellers love to point out that the list price is below the assessed value, and home buyers are typically outraged that a home is listed above the assessed value. 

In fact Massachusetts assessed values are nothing more than a yard stick for a city or town to collect an appropriate amount of taxes. Assessed values do not equal fair market value.

Metro West real estate agent Bill Gassett has authored a good blog post on the topic of assessed values. 

Mortgage Applications Decline

U.S. mortgage applications declined 38.8 percent compared to the previous week, USA Today reported January 28, 2009.

The data comes from the Mortgage Bankers Association (MBA).

"Rising government borrowing to pay for financial bailouts and expected stimulus to stave off recession have begun to push up Treasury yields, offsetting Fed efforts to drive mortgage rates lower, analysts say. Benchmark 10-year Treasury note yields, which help govern mortgage rates, have climbed nearly a half-percentage point since late December to 2.53%."

The good news is that applications for purchases declined only 2.9 percent. The Conventional Purchase Index decreased 7.8 percent while the Government Purchase Index (mainly FHA loans) increased 8.8 percent.

Refinance applications plunged 48.8 percent.

The MBA weekly survey covers approximately 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.

Read The USA Today Article

MA Legislation Would Require Loan Modifications

Legislation filed in Massachusetts would require  lenders to modify home loans in certain circumstances, the Boston Business Journal reported January 27, 2009. 

The legislation named, An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure, was filed by Massachusetts Attorney General Martha Coakley, with Senator Susan Tucker and Representative Steven Walsh, would mandate loan modifications in certain circumstances.  

Specifically, the legislation requires that creditors take commercially reasonable efforts to avoid foreclosure upon mortgage loans securing homes that are owner-occupied.  This would apply only to loans on principal residences, and to loans with certain risky features, such as interest-only loans, adjustable rate mortgages, and loans with short-term, introductory interest rates.  The legislation also provides a "safe harbor" for creditors to comply with this requirement of commercial reasonableness. 

A violation of this legislation will constitute a violation of Massachusetts General Law Chapter 93A, which is the Massachusetts Consumer Protection Act. 

This really is an amazing piece of legislation. State government is now forcing private businesses to operate their business a certain way and mandating those businesses to make certain business decisions. 

Foreclosure Listings Absolutely Free

Read The Boston Business Journal Article

Read Attorney General Coakley's Press Release

Summary of the Legislation Filed

Full Text of the Legislation Filed

Another Multi-auction Event; Buyers Beware

The Boston Herald reported January 25, 2009 that a Dallas-based auctioneer, Hudson & Marshall, will auction off more than 100 bank-owned Massachusetts properties at the Boston Quincy Marriott Saturday January 31, 2009.

Another 28 Western Massachusetts properties will be sold January 27, 2009 at the Sheraton in Springfield, MA.

Successful bidders must make a $5,000 deposit in cash, cashier’s check or certified funds for each property. The article did not mention it, but I suspect the deposit is not refundable. All properties are sold "as is."

"Evelyn Friedman, director of [Boston's] Department of Neighborhood Development, warned that some properties sold at such massive auctions have title problems."

I really don't recommend these auctions for first-time home buyers, and all buyers should be very careful about what they sign.

Read my previous post about some other multi-property auctions in Massachusetts over the last 18 months. Some successful bidders may still be waiting to move in. 

Read The Boston Herald Article

Homes Getting Smaller

Recent research suggests that new homes today are getting smaller, MarketWatch.com reported January 24, 2009.

The average size of homes started in the third quarter of 2008 was 2,438 square feet, down from 2,629 square feet in the second quarter, according to the U.S. Census Bureau. Similarly, the median size of homes started in the third quarter was 2,090, down from 2,291.

"Gayle Butler, editor-in-chief of Better Homes and Gardens, said for many homeowners, it is not so much a matter of downsizing as 'right-sizing,' giving up big homes with unused space and buying a home that better fits their needs."

Builders are responding to consumer desires. According to the National Association of Home Builders, 88 percent of builders surveyed recently said that they are building or planning to build a larger share of smaller homes. Eighty-nine percent said they're planning on building more lower-priced models too.

Many home buyers I speak with, especially buyers purchasing their second home, indicate they would give up some space for upgrades and extra amenities.  

A Better Homes and Gardens study revealed that the top priorities in a new home include an affordable price, natural light and comfortable family gathering places.

Read The MarketWatch.com Article

Should You Refinance?

The video below is from the CBS Morning Show on January 22, 2009.

U.S. Housing Starts In 2008 Worst Since 1974

The number of U. S.housing starts in 2008 declined 33 percent compared to 2007, the largest decline since 1974, USA Today reported January 23, 2009.

"New building permits, which give a sense of future home construction, dropped 10.7% to a rate of 549,000 units, also an historic low, from 615,000 in November. That was also sharply below analysts' estimates of 610,000."

Permits plummeted 36.2 percent for the year, also the largest drop since 1974.

Michelle Meyer, an economist at Barclays Capital in New York, said she believes the bottom of the market for housing starts will come in the summer.

Read The USA Today Article

U.S. Citizens Wait For Public Housing

While hundreds of thousands of U.S. citizens wait for public housing, thousands of illegal immigrants live in public housing, USA Today reported January 1, 2009.

"While there are no hard numbers on illegal immigrants in public housing, the U.S. Department of Housing and Urban Development reports that 29,570 people — 0.4% of all those in federally funded housing — are 'ineligible noncitizens.' Some may be on temporary visas, such as highly educated workers or college students, but many are believed to be illegal immigrants."

The federal government, which funds the a large majority of the nation's public housing, only requires that illegal immigrants share a home with at least one family member who is in the country legally, and that they pay their share of the rent.

Read The USA Today Article

Mortgage Interest Rates Hit 38-year Low

Not since 1971 has the average rate for U.S. 30-year, fixed-rate mortgage loans been so low.

The 30-year note stood at 4.96 percent, down from 5.01 percent, United Press International (UPI) reported January 15, 2009.

The data comes from Freddie Mac. It was the 11th consecutive week that interest rates declined.

Read The UPI Article

New Rules For Appraisers

Federal and state regulators announced an agreement to regulate home appraisal practices as part of an agreement with mortgage finance companies Fannie Mae and Freddie Mac, the Everett, Washington Herald reported January 4, 2009.

Many complaints of problems with inflated appraisals and their impact on the nation's housing market led New York Attorney General Andrew Cuomo to reach an initial pact in March 2008 with Fannie Mae and Freddie Mac on a plan to try to reform the industry.

The original changes, however, brought complaints from bank regulators and mortgage industry officials, who said Cuomo was overstepping his authority and said the law would harm the mortgage industry.

Fannie Mae and Freddie Mac, federal government-controlled companies, own or guarantee the majority new U.S. home loans and have become more dominant in the mortgage industry since the collapse of dozens of lenders that catered to borrowers with poor credit. Any changes made by the two companies affect the entire lending industry.

The new agreement is effective May 1 and requires appraisers to abide by a six-page code of conduct that includes new rules for appraisers who work for the same companies as lenders. A prior version of the agreement banned "in-house" appraisals, but that apparently was excluded from the final pact. 

Read The Everett, Washington Herald Article

U.S. Foreclosures Rise 81 Percent

RealtyTrac, a company that sells foreclosure data to consumers, reported that there were more than three million various foreclosure filings (default notices, auction sale notices and bank repossessions) in 2008 on 2,330,483 U.S. properties, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006.

Nevada, California, Arizona, Florida, Michigan and Ohio were among the states hit hardest by the foreclosure crisis in 2008.

MassForeclosed.com has more information on the latest foreclosure numbers.

The latest Massachusetts foreclosure listings are available for free at MassForeclosed.com.

Not Just A Stove, But A 'Masonary Heater'

Check out this Boston.com video about masonry heaters. These heaters are suppose to be energy efficient and environmentally friendly, but certainly not inexpensive.

If You Can't Sell It, Swap It

Some homeowners unable to sell their homes are considering a swap. It may sound crazy, but apparently people are doing it.

Hotline To Help Avoid Foreclosure

If you are currently having, or anticipate having, difficulty making the payments on your mortgage, or have recently received a foreclosure notice, you should contact the HOPE Hotline at (888) 995-HOPE (4673), or visit www.995hope.org. Counselors on the HOPE Hotline are available 24 hours a day.