1. The Home buyer tax credit will soon end on April 30th. First time home buyers can qualify to receive a $8,500 credit and buyers who are current home owners can qualify for a $6,500 credit.  Considering it takes 30-45 days to close after you have found the home of your dreams you need to start your search today.
2. In March 2010 the Federal Reserve Bank will stop its unprecedented purchase of nearly all mortgage back securities. What does that mean to you ? Experts believe interest rates are likely to go up as much as a one-half to one percent.  The average mortgage rate is at its lowest level in 40 years, almost all economist believe that once the economy rebounds rates will increase significantly.
3. Ray Perryman of the Perryman group predicts Texas, the last state to enter the recession will be the first state out of the recession. Home prices  are very affordable and once the economy rebounds and employment increases home prices will start to appreciate again.

Residents and future home buyers in League City will now be able to check updated crime statistics directly from the League City Police Department.

League City Police and CrimeReports.com  have announced a new On-line Crime Alerting and Mapping Service that provides easy to read incident crime maps and automated alerts to the citizens of League City by extracting data from the records management …The service, located at http://www.crimereports.com or directly from the League City Police Web site http://www.lcpd.com , provides neighborhood crime data in near real-time and is available now. Additionally, the data is assessable to officers in a working environment who will use the information to strategically deploy assets with the intent of meeting the department’s objective to protect life, property and individual liberties.

The CrimeReports service is free to the public and allows citizens to receive automatic daily, weekly or monthly email alerts if/when crimes occur near their home, office, local school, etc.

League City Press Release

To check out the easy to use website click Crimereports.com

West Ranch is a new development on the west boundary of Friendswood. Click Here to read detailing information about West Ranch.  Now that more homes are being built the style and shape are taking shape. Many of the spec homes have hard flooring (wood or tile) on the first floor which most buyers now demand. You are also seeing dark cabinets, tile and paint colors keeping with the rustic feel of the neighborhood. Also you will see a stone exterior on many of the homes which has been well received by buyers.

• In the Creekside & Stonecreek section there are currently 19 properties for sale, 4 pending sale and 10 sold since January 2008.   The average price per foot sold was $86.  On average the properties sold for 86% of list price.
• In the Estate section there are 4 for sale and 2 sold since 2008. This is information obtained from MLS, builders frequently sale homes that they don’t put in MLS. The average price per foot sold was $117. On average the properties sold for 95% of list price.

The community has a lot to offer buyers with quality builders, a great school district and outstanding amenities.  Unfortunately in the Friendswood/Clear Lake area there is a large supply of homes in the $300,000-$500,000 price range.  The ratio of list price to sales price is very low at 86%.  This statistic is very troubling. Typically in our market we sell homes selling for 98%-95% of the list price. Home selling for 86% of list price speaks to the large amount of supply. Again its important to purchase correctly in our market or you get into a position of negative equity when its time to sell. Click here to read more about purchasing new construction.

Children at Risk a non-profit organization who’s goal is to improve education in the Greater Houston area released its list of best and worst high schools in the Houston area. Our local high schools ranked very high on the list of 145 schools. Clear Lake High School which always seems to be high on every list was ranked 13th. Friendswood was ranked 25th and Clear Brook was ranked 28th.  In the 2nd tier was Clear Creek high school which was ranked 53rd. Overall a very good showing for our area. Clear Springs the newest high school was not on the list because of the lack of data. One of the reason we have such high demand for our area is because Clear Creek ISD and Friendswood ISD are outstanding school districts.  Click here to see the full list.

Rates are down below 6% for just about all loan products (30 yr, 15 yr fixed, arm) FHA limits were increased and the end of school is approaching. Interest rates are directly affected by the bond markets. Many people think that when the fed reduces the short term lending rates it automatically means mortgage rates will drop and unfortunately that is not true. The bond market has been very volatile over the past few weeks. Hopefully we will see some stability which will help keep interest rates low.

Constellation Pointe League City

Constellation Pointe has had a rough start with slow sales.  The development sits on a prime piece of property shaped like a peninsula on the south shore of Clear Lake.  There are two major roads Constellation & Pegasus. Development along Constellation has been very brisk because the lots are large (close to an acre) and are true waterfront home sites. Lots sold from $150,000 to over $300,000.  Most of the homes built on Constellation are by prominent Bay Area builders with good reputations. As you travel down Constellation the road turns in to Pegasus. The majority of the lots on Pegasus were purchased by Stonebridge. For what ever reason Stonebridge had 10-12 spec homes on the market for sale last year (2007). I personally showed the homes to three different buyers who were concerned by the fact that there were so many homes available. Unlike Constellation on Pegasus none of the lots are true waterfront.  On the west side of Pegasus the home sites stop before the water. There is a pipeline easement that runs parallel to the road between the homes and the water. The easement is owned and maintained by the homeowners association.

Constellation Pointe Homes

On the east side of  the road the homes back to another road/parking lot. The developer has requested approval from League City for a private marina to be developed on that side of the road.  Owners on both sides of Pegasus can purchase a slip from the developer on the east side as shown above with a month maintenance fee to maintain the docks.  With an average sales price of $608,000 most buyers expect true waterfront with a slip outside their door, not on the other side of the street or down a walk way.  Stonebridge is no longer building in the subdivision. The development does have a lot of positives, the lots on Constellation are amazing and offer a size not found on Clear Lake. The views from the homes close to Clear Lake are amazing. In stark contrast to last summer there are only four homes for sale and the last spec home on Pegasus is under contract. This will help prices increase with less demand. While the slips have to be purchased they are floating docks and owners can put in lifts. Here is what is currently available on the Point.

3 Bedrooms 2 Baths – 2871 sq ft  List – $675,000

4 Bedrooms 3 Baths – 4091 sq ft List – $849,900

4 Bedrooms 3 Baths – 4750 sq ft List – $995,000

5 Bedrooms 4 Baths – 5430 sq ft List – $1,375,000

On March the FHA (Federal Housing Administration) increased it’s single family home loan limits from $200,160  to $271,050.  FHA provides mortgage insurance on FHA loan programs through their approved lenders. FHA is a quasi-government agency that is a part of HUD. FHA operates as a business generating enough income so that it does not have to rely on the government for income. The great thing about FHA loans is that people with low credit scores can get a 30 yr fixed mortgage with a market interest rate. Loan requirements for private banks are becoming stricter every day which will push more buyers towards FHA loans.

The FHA only requires a borrower to have 3% invested into the property. I have heard of many instances where borrowers had fico (credit) scores well below 600 and were still able to obtain financing. FHA does require no late payments or charge offs within the past year to two years on your credit report. FHA loans are great things for people trying to rebuild their credit or coming off a financial hardship. In the past FHA would require the appraiser to attest to the condition of the home. There were a number of things the appraiser had to certify were in good condition or working order.

Many appraisers felt uneasy about this and frequently called out things that were not real issues. Unfortunately the appraiser was the only party that made the decision. We would have appraiser stating that homes need painting or that the side walk is cracked. These items would be required to be corrected before the loan closed. All of those certifications are no longer required so a FHA loan is very similar to a conventional loan from a private bank. Higher loan limits will help home sellers because it will open up a new pool of buyers.  This increase is only temporary, but hopefully FHA will make it permanent.

MSNBC and some other media outlets have reported that top democrats in congress are backing a law that would allow bankruptcy judges to alter the terms of a 1st lien mortgage. Meaning when a homeowners files bankruptcy and goes court the judge could legally reduce the amount they owe the bank, which is currently prohibited.  No party can change the terms of your loan, not the bank, not you or any government official. We don’t want that to change. A mortgage is a secured loan, when you get a loan, a lien is placed on the property for the amount you owe. This is a guarantee that the bank will get the amount you borrowed back or they get your property. Because the loan is secured by a safe asset “real estate” borrowers can get very low interest rates and loans with good terms. If banks cannot be guaranteed that they will get back the full amount loaned or the real estate that you used to secure the loan, interest rates and down payment requirements will soar. Borrowers with questionable credit will be required to put down a substantial down payment so that a bank would feel confident that they would not lose money on their investment. Why would a bank loan a borrower with questionable credit $200,000 if a judge may reduce the amount owed by $20,000 next year if they declare bankruptcy?

What does it say to a homeowner who works three jobs to payoff their debt  so they won’t go into bankruptcy? Or someone who rented for 5 years in order to save up 20% to buy a house?  That the short cut is OK?

Congress needs to focus on creating jobs and working together to make our economy stronger, not creating long term problems for future home buyers.

On February 19 the bond prices fell by almost 2 points, which pushed interests up by almost a full percentage point. Buyers who got interest quotes two weeks ago at 5.4% were told Tuesday the new prime rate was 6.3%. That’s a huge jump that could cost a buyer considerably over the life of the loan. The lesson to learn here is when rates get historically low (Under 5.9%), lock them in.  The fee is normally very small, typically the price of an appraisal ($350-$400).  Most of the time all of the money goes towards your appraisal or other cost when you close the loan. I always encourage buyers to shop rates, but once you find a lender with acceptable fees and rate, lock it in. Also most lenders will let you get the benefit interest rate reduction, if rates fall below your locked in rate. Below is an example of what not locking in can cost you.

Principal & Interest on a $200,000  30yr Fixed  @ 5.6% = 1148.15

Principal & Interest on a $200,000 30yr Fixed @6.3% = 1237.94

Over 5 years that the lower interest rate will save the buyer $5,387.

Consumers in Houston on average have the worst credit scores in the United States.  Your FICO/Beacon or your credit score, it is the largest factor lenders use to determine if you can get a loan and at what rate. You have a separate FICO score for each of the three major credit agencies.  A common question is “why would they be different?”. They can vary by more than 100 points. Not all creditors report to all three agencies, so you will have different information for each. In many cases there is incorrect information posted on your account which negatively impacts your credit rating. A few FICO points here or there and it can mean the difference between a good interest rate or a bad one. Depending what was reported incorrectly it could mean the difference between getting a house or continuing to rent.  It can take many months to clear up a credit report for incorrectly reported items. Credit Agencies do not verify what is on your report. They are supposed to by law, but they don’t because of the time it would take to do so. They simply take the word of the creditor. Why would a creditor report inaccurate information about you? Because of the large amount of data they deal with daily mistakes are bound to happen. One type “O” in your account and it could show you were late or never paid at all. Worse someone could still your identity, a crime that is growing daily. Here are some of my recommendations to make sure you credit is in order before buying a home.

First Opt Out – Opt out of the annoying credit and insurance offers you receive in the mail. Why? Because they are damaging your credit score. Credit card and insurance companies are allowed to inquire about your credit even if you did not authorize them to do so. For every inquiry it may knock your score down by as much as 5-7 points. 5-7 points is not much unless you receive 4 a month which would result in reducing your score by about 50 points. Once you opt out insurance and credit card companies are not allowed to inquire about your credit unless you requeste them to do so.

Next Request your Free Annual Credit Report – You are now allowed to request your credit report for the three major reporting companies(Experian, Equifax, Transunion). You can print them instantly or have them mailed to you. You can find them at http://www.annualcreditreport.com/ . Be sure to print the reports if you request them on-line because some services will only allow you to view them once on-line.

Review the Reports – Look for anything that maybe incorrect, take your time it is a big report. Credit reporting agencies are required to correct any incorrect items, amounts, dates, etc. If you find something wrong dispute it with them and the company that reported it to them. Dispute it in writing with registered mail or online, but do not call. There is not documented record of a phone call.  You have to be persistent and follow up. In general their first reply with be that they verified it but you have to be persistent.

Even if you are not going to buy a house in the future, it’s important to monitor your credit. Just about everyone checks your credit these days even some employers. A bad FICO score can cost you in many ways in life.  Knowing whats on your credit is taking control away from banks and putting you in control of your financial future. Below are some good websites to help you.

Credit Monitoring – www.truecredit.com

Personal Finance Website – www.bankrate.com

New developments in League City and Galveston County are at a all time high. It has been going on for close to 7 years with no end in sight. Some consumers are learning hard lessons about what can happen when purchasing a new home direct from a builder without representation. This year I have met with many homeowners that purchased a home 3-5 years ago from a home builder cannot afford to sell there homes. Many of them are stunned and rightfully so. You hear many times that you cannot lose money in real estate? The reality is many buyers are overpaying for new construction which is costing them when its time to sale.

Resale vs. New Construction – Why is new construction different?

Resale Homes – Properties are owned by Consumers. When you purchase a home from a consumer in an established neighborhood typically only 2%-9% of the total homes in that area or subdivision are on the market at a given time. Of that 2-9% they are all owned by different people. Most of the homes are occupied with homeowners. Most of those homes are bought and sold through Realtors which is documented in MLS. Most consumers have only one or two homes. When Realtors are involved all parties (buyer & seller) have representation.

New Construction – Properties are owned by corporations. Depending on when you purchase a home there can be between 100-1% on the market. All of those homes are owned by the same builder or by a few builders. All of those properties are vacant costing builders thousands of dollars a day. Very few if any of those homes are listed on MLS with no documentation of what homes sold for. Builders own hundreds or thousands of homes at any time in different developments, cities and states. The vast majority of new homes are sold by the builders own sales people who only represent the builders interest. Most hold no real estate license so they are not held to the same standard as licensed real estate agent.

Pricing

During the development of a subdivision homes are sold at different prices, that is not a shock to most people, but many assume that prices go up as a subdivision is built out. That scenario happens in a hot sellers market, but in a balanced or buyers markets typically that is not the case. What I see is more of a pricing curve, with the lowest sale prices being the beginning and end of a development. Builders initially want to get people in a subdivision because it is more appealing to the eye so they offer low prices. (People want to feel like there are making a good decision and they feel better when they see that other people purchased homes there.) Once they get enough development to look like growing community, they raise the prices. The first 20% of homes normally get lower prices. The next 70% of homes sold the builder continues to raise prices until they get close to closing out a subdivision. Then the last 5-10% of homes that are on the market they discount, sometimes deeply discount in order to close out the subdivision quickly. Why do this? It doesn’t make good financial sense to have sales people, constructions managers and trades all working on a few homes when they could move on to other larger subdivisions. In cases were subdivisions/developments are unsuccessful or have marginal sales some builders will liquidate there lots to other builders. Its not uncommon for them to be lesser quality builders.

The other issue is that builders give different prices to different people. The price sheets builders have are normally their dream price. Many times the price in MLS is 5-20% less. It’s not uncommon for me to contact a sales associate and I am immediately told they will knock $20,000 off a price in MLS. The reality is a property is only worth what comparable homes have sold for in the past 6 months. So when builders liquidate homes for 6 months your home value can drop significantly.

Builders make decision based upon their current need at the time. They make so much money on the 70% of people who buy homes at higher prices that they can afford to discount and liquidate property at the end of a development. Also they make an extraordinary amount of money on people who walk in and simply pay the builder’s dream price for a property. Homeowners typically have so much money tied up in their home they cannot afford to deeply discount their property just to move.

Using an agent will solve most of these problems. Agents can get the rock bottom price from the builder before negotiating. They can assist with negotiating for the lowest possible price and best terms. Agents know what builders have selling properties for. Builders welcome agents and will pay there commission. Builders know that an agent will simply take a customer to another subdivision or builder so are more likely to negotiate. An agent can also recommend or discourage upgrades based upon there resale value. There are many outstanding home builders in Clear Lake and Galveston County. They are like any business trying to make money, but that doesn’t mean you have to help them. There is no Blue Book value for new homes. You have something even better, a professional Broker with years of experience who will guide you through the process for free. You just need to call him. 281-450-8689.