CREDIT SCORES TAKE CENTER STAGE

As a realtor, lenders have always been my friends, but many are now infuriating. With much of the blame for the housing crisis being laid at the feet of the lenders, they are in heightened defense mode. In reality nothing much has changed --- rates are about the same "mas o menos" 6%, buyers with good credit can get loans, appraisers are following their independent process to establish value --- but buyers are scared off and lenders will hang up a closing in that dark pit called Underwriting for days with no compunctions. Sure there were a few bad lenders giving credit or too much credit to marginal buyers. For myself, I will not accept offers on my listings from the marginal brokers, but then I always did that. Buyers who are marginal in their credit history, I send to lenders who will coach them to a good score before I take them out to look at houses. Disappointing for them? Yes. Realistic and professional? Yes. Not all realtors did that so they share blame for this crisis too. Now is a good time to buy, but not for everyone.
Credit scores have become almost an obsession with buyers so here are some interesting aspects. The LA Times (yes, I still read it but am over any other addiction I once had with Los Angeles except perhaps for the Lakers and good jazz!) had an article missed by our local news on the largest-ever class action lawsuit which promises free access to credit data. We will all be able to get our credit scores with no strings attached under a settlement with TransUnion Corp. Good timing, as we all need to take more heed about how we spend our money. I have a full article in my Legacy Outlook Newsletter this month on what makes for a good credit score. Turns out payment history and debt account for two-thirds of the score. Of that, credit card debt matters the most and balances affect the score as much as payment history. Keeping credit balances to 10% of the limit on any card will boost your scores. For the complete article, drop me an email.
So it is a good time to buy or sell, but the unqualified or too aggressive lenders and borrowers will have to jump through higher hurdles now, and that's just fine. It makes the whole real estate market stronger for all of us.

LOWE'S SUCKS!

I have always had confidence in Lowe's and even sign my clients up for a special discount program with them. However, they delivered a beat-up microwave to me and would not return it. My mistake was in not taking it out of the box to check it before the delivery jerks from the GE Appliance center left, but I trusted both Lowe's and GE. By the time I got someone here to install it and discovered it was terribly damaged, they said my forty-eight hours had passed so they would not take it back. So I was to keep a non-usable microwave and go spend another $300 for another one???? Where is customer service when you need it.

My favorite handyman, Rick Hammett (email me and I will give you his number) told me to give it to him and he would take it back. Says he loves shouting at the Customer Service Desk, and that it works. Took him an hour and a half but he got it exchanged and by the time I got home it was in.

Home Depot, not Lowe's. That's my tip for the day!!

RIO RANCHO IN GOOD STANDING NOW

One of my readers just informed me that the status of Rio Rancho as a Declining Market as designated by lenders has been rescinded. Thank you, Loran. I am double checking with Jason Pike at Countrywide to make sure. We sold one of our listings in Rio Rancho today that had been on the market for months and are seeing more activity there so our on the ground sense is that things have turned a corner. Not just in Rio Rancho, but all over the Greater ABQ/RR area. Although Memorial Weekend was deader than a doornail, things have picked up this week and we had four closings this week. Ahhh, money again. It's great. Keep those comments coming......

RATES HIT NEW LOWS! BUY! BUY!

Rates hit a 2 month low this week!
These low rates likely will not last. Yesterday, mortgages and treasuries improved with the stock market drop,
and analysts continued to forecast more credit losses. With record oil prices and a weakening US dollar,
inflation concerns grow in the market, which means rates are likely headed higher.

Don’t wait for rates to go back up!
Lock in your low rate today!

30 Fixed 15 Fixed 5 Year ARM

5.375% 2pts 5.00% 2pts 4.50% 2pts
5.625% 1pt 5.25% 1pt 4.875% 1pt
5.875% 0pt 5.50% 0pt

CLARIFICATION ON RIO RANCHO MARKET

One person has asked if the declining market status on my last blog refers to ABQ or just Rio Rancho. It just applies to Rio Rancho which is a separately incorporated city and is in Sandoval County not Bernalillo. ABQ is still sitting pretty as one of the few markets in the USA that has not seen any loss in values. In fact, to date this year the market area is tracking toward a 6% appreciation, if not up to 10%, overall. Because Rio Rancho has such a huge unsold inventory what with the builders' inventories and investors selling home they had purchased to rent, the price of homes has come down until that inventory has been reduced. It's a true buyers market --- lots of choices and sellers eager to sell by reducing their price.

RIO RANCHO A DECLINING MARKET

The Albuquerque MSA which includes Rio Rancho has been designated as a Category II for declining market. This has been the case for the past six months. As far as financing is concerned, it is business as usual UNLESS the appraiser indicates the property is in a declining market OR oversupplied OR the marketing time is over six months. IF the appraiser identifies the property as such, then the loan-to-value must be reduced by 5%. Again, SOME lenders require additional information. This does NOT mean that the borrower cannot buy the home. If the borrower is putting 10% or more down, it does not make any difference !!!! IF the borrower is only putting 5% down, we would require an additional 5% down. To date I have not had one issue.

WHAT HAPPENED TO HOUSING MARKET?

The overheated housing market cooled to levels seen in early 2000’s. What happened? For one, the GDP fell and is expected to be back to average by the end of the year. Key employment rates are holding so that’s not it. Affordability plummeted with the home prices outpacing income and the CPI. This trend started in 2001. The Feds have attempted to reverse the drop in home sales by reducing the rates 2 3/4 % in just the last three months, but that affects home equity lines and Adjusted Rate Mortgages not underlying mortgages. The problem has been overpriced homes for sale and buyers whose homes are not worth less than they owe. Lowering interest rates isn’t going to help. Consequently, the States and the Feds are putting in place measures to help these distressed homeowners, but the magic formula hasn’t been put in place yet. Mortgage origination is back to a 2001 level and appreciation has fallen off except here in New Mexico. It’s still a solid market. Home values are predicted to level off beginning in 2009.

Supply and demand are way out of whack. The usual supply in the USA is 6 months. The oversupply which started in 2006, is now up to almost a year and in the East coast it is closer to 4 years! It will take a couple of years just to work off the builders’ supply. Depreciation is spreading like a virus in States like California, Michigan, Arizona, Nevada, Florida and Oregon. New Mexico is holding up at a normal rate of 4-6% a year.

Real Estate in Albuerque

The Greater Albuquerque area once again defied the rest of the United States. The total homes sold, attached and detached, for April were 1,668 up from 1,616 in March. Days on market decreased to 66 days in April from a high of 71 in January. As reported in the USA Today, April 29, 2008, "Few areas of the country have been spared from the housing market meltdown, but some cities have managed to avoid the worst of the surge in home foreclosures. Consider Albuquerque."
Demand for luxury homes has slowed but activity in the range of $249,000 and lower remains strong. That being said Rio Rancho showed the strongest price gains in the Albuquerque MSA with a 7.13% increase in average sales price from April 2007.
The same USA Today article reported from Kiplinger.com saying, "The area’s outlook remains bright. It continues to generate jobs and attract retirees. The city offers "resort-town ambience, a boomtown economy and cow-town prices." Kiplinger has named Albuquerque one of the top 10 smart places to live in 2006.
"The Albuquerque area real estate market is strong and stable compared to other parts of the country," says Cathy Olson, Chair of the Board of the Greater Albuquerque Association of REALTORS® "Housing remains affordable in Albuquerque as we continue to attract new employers ranging from film to high tech to government contracting."