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1305 Toscano Dr (Champ. Club) 5177 SF $ 1,199,900
1318 Toscano Dr (Champ. Club) 3847 SF SALE PENDING *
10601 Garda Dr (Champ. Club) 3825 SF $ 744,900
10635 Garda Dr (Champ. Club) 3785SF $ 749,900
1633 El Pardo (Champ. Club) 3940 SF SALE PENDING *
6316 Alcester Dr (Gated Comm.) 3739 SF $ 599,900
0 HAYES ROAD (LAND/HUDSON) 18 ACR. $ 499,900
2226 Toniwood Ln (Tarpon Woods) 2800 SF SALE PENDING
8914 Crescent Forest Blvd 2592 SF $ 379,900
4178 Des Prez Ct ( WATERFRONT) 50x 100 $ 189,000
3720 Odom Dr (New Port Richey) 1625 SF $ 164,900 great home
2854 Torrance Dr (Oakstead) 1699 SF $ 165,000 *
9624 Brookdale Dr (TimberGreens) 1859 SF $ 164,800 *
3566 Elfers Pkwy(New Port Richey) 1.30 acres $ 140,000
8141 Hutchinson Dr (New Port Richey) 1876 $ 139,000 *
124 Feather Ct # B (East Lake Wood.) 982 SF SALE PENDING *
5122 Manor Dr (New Port Richey.) 1128 SF $ 82,000 *
10806 Fillmore Ave (Port Richey) 1184 SF SALE PENDING
12618 Stone House Lp (Beacon Woods.) 1382 SF $ 54,900 *
*SHORT SALES or Bank Owned
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(Money Magazine) -- Maybe you've started thinking that now you can finally find a buyer for your house. After all, this summer the National Association of Homebuilders asserted that houses were more affordable than at any time during the previous four years. Prices have slid so far that many homes are now within the reach of people who couldn't buy during the bubble.
Other faintly cheery facts have emerged too. Sales of existing homes were 3% brisker in July than June, and in several metropolitan areas - among them Boston and Denver - the market seems to be turning around.
When examined closely, however, those glimmers of better times ahead seem to fade. Sure, lower prices can help you sell, but you also have to know whether there are enough people who can afford to pay the price you want.
That, in turn, depends on a mix of factors including the financing that buyers can get, whether there are enough of them who want to live where you do, their other housing options and how they feel about investing so much in an asset whose future appreciation is iffy.
"Price is just one of many variables that go into a decision to buy a house," says real estate analyst Michael Larson of Weiss Research, a Jupiter, Fla. investment newsletter publisher. "Many other factors are overriding price right now. That's why the market remains challenged."
Price, though, is still the primary measure of affordability for any buyer. And while the median price for an existing house has tumbled 8% from $230,100 to $212,400 since its peak in 2006, according to the National Association of Realtors, many potential buyers still see asking prices as expensive.
And they're not wrong. That $212,400 house, after all, costs 39% more than it did back in pre-boom 2001 when it sold for about $153,100. Prices in red-hot markets such as Miami became even more inflated during the boom and are still up about twice as high as they were in 2001.
So while homes are selling at a discount, they're not on clearance - not yet anyway. Peak to trough, the median-priced home nationwide is projected to fall as much as 20%, bottoming out around $185,000 by late 2009, according to a July report from Wachovia.
"Houses may be more affordable, but they will probably be even more affordable next year," says Nigel Gault, chief U.S. economist at Global Insight, an economic forecasting firm. "So why buy now?"
The price may be right, but if buyers can't borrow enough, the house isn't affordable. Difficulty borrowing is keeping many Americans from buying. "The industry went from little or no credit standards to credit standards on steroids," says Marc Savitt, president of the National Association of Mortgage Brokers.
According to the Federal Reserve Board, about 85% of lenders, worried about falling prices and rising foreclosures, have stiffened requirements for borrowers in the past three months. Those with a credit score of 600 or lower cannot get loans at all, says Keith Gumbinger of HSH Associates, a mortgage information publisher.
The upshot: 21 million, or 13% of those who have credit records, many of whom would have qualified for mortgages during the bubble, can no longer do so.
Those whose credit scores are high enough to qualify for a mortgage will likely pay more. Fannie Mae and Freddie Mac, which set the lending criteria for most loans, in November will require a 740 score, up from 680 for buyers to escape a surcharge that ultimately increases their interest rate.
As a result, the 33 million Americans whose scores fall between 680 and 740 (roughly 20% of adults with credit histories) may have to pay half a percentage point more to borrow. On a $300,000, 30-year loan, that would add about $100 to a buyer's monthly payment.
Back in the go-go years, lenders fell all over themselves to make no-down-payment loans. Those are gone, and lenders want some skin in the game, at least 5%. But to avoid paying extra, most buyers need the full 20% demanded in days of yore. To buy a $400,000 house, a family would now have to amass $80,000 in cash, up from $20,000 or less a few years ago.
Buyers also face higher interest rates, which allow them to borrow less. In mid-2004 a borrower with good credit could have qualified for a rate of 5.87% on a 30-year fixed $300,000 loan. That translates to a monthly payment of $1,774. Now, with the rate for the same loan at 6.57%, the same monthly payment could support a loan of just $278,500.
Back in the day, option ARMs and other exotic mortgages with low teaser rates helped struggling purchasers stretch to buy houses that they could not otherwise afford. Those deals have largely disappeared.
And while banks once allowed a homeowner's monthly principal, interest, taxes and insurance (PITI) to make up as much as 45% of a family's before-tax income, now buyers are restricted to using only 32% for a house payment. If PITI rises beyond that limit, banks consider the loan unaffordable and the family cannot receive a mortgage.
That limit boosts the amount of income a homeowner needs to purchase. Say your house has dropped from $425,000 to about $395,000. A couple of years ago a family needed an income of only $80,000 to buy. Now, even though the house costs less, a prospective buyer must have an income of $92,000.
Rental prices are looking good in many areas. Christopher Mayer, a Columbia University real estate professor, recently found that in 11 of 16 top cities, renting is a better deal compared to buying than it has been historically.
The extra expense of owning was offset by rising house values - at least a few years ago. Now that new buyers can no longer count on steep appreciation, they have less incentive to buy.
And it's not as if rents are standing still while your house's price falls. "Competition from vacant houses or condos that people can't sell is driving down rental rates," says Hessam Nadji, managing director of research at Marcus & Millichap Real Estate Investment Services in Encino, Calif.
A house is only affordable if a homeowner can meet its monthly payment and have enough left over to live on. Incomes rose by about 5% in the first half of the year, but few people feel as though they're better off.
Americans spent an extra $165 billion, or 26% more, on gasoline and oil in the first six months than over the same period last year, and food bills rose by 7%. Without a doubt, most Americans feel pinched.
If you live in an area dominated by financial companies or car makers, two sectors shedding jobs in the current downturn, you may encounter even less appetite to buy.
If the economic turmoil continues, vacation destinations like Las Vegas or Orlando could suffer a drop-off in business that would leave prospective buyers with less in their pockets.
"Not only is the amount of money people have to spend on housing in decline but because a house is a risky asset, the amount they want to spend on it is falling too," says Michael Englund, chief economist at Action Economics, a forecasting firm.
That fear may be the biggest obstacle keeping buyers from knocking on your door. During the boom, people were willing to spend as much as they did on housing because they thought that they were putting away money for retirement or college. And they could draw on their equity for renovations or other goodies.
If homes rose in value faster than stocks, as they did for a few years, homeowners could console themselves that forgoing 401(k) contributions for high mortgage payments was a sensible strategy.
Few these days think of real estate as a safe place to invest, however. According to Gallup, only 27% of the population believe a home is their best long-term investment, down from 50% in 2002.
"Nearly a quarter of potential buyers are on the sidelines waiting for some form of encouragement," says Walter Molony, spokesman for the National Association of Realtors. Maybe they're looking for some sign that houses have truly become more affordable. The price declines haven't done that yet.
Home buyers get cold feet
By Mark TrumbullTue Sep 9, 4:00 AM ET
The US Treasury is poised to commit large sums – perhaps exceeding $100 billion – in its rescue of Fannie Mae and Freddie Mac, but the real cost to American taxpayers won't be known for years.
The tab will depend on how Washington runs these mortgage giants and how the housing market and economy perform.
A wide range of outcomes is possible, because the size of Fannie and Freddie is so large. With a $5 trillion book of home loans that they own, or have guaranteed, fractional changes in foreclosure rates can translate into tens of billions very quickly.
In a worst case, the cost could run well above the roughly $125 billion that taxpayers spent in the early 1990s to insure depositors in failed savings-and-loan institutions, some mortgage-market experts say.
In other scenarios the short-term infusion of cash might ultimately be recouped with little or no net cost to taxpayers.
What's clear is that every US taxpayer is now tethered directly to the troubled housing market. And the stakes are much higher than the $30 billion federal intervention to stave off bankruptcy at Bear Stearns earlier this year.
"This is Bear Stearns times 100 or Bear Stearns times 1,000," says Brian Battle, a vice president at Performance Trust Capital Partners, an investment firm in Chicago. How much taxpayers lose is "100 percent correlated" with the depth of the housing slump, he adds.
The more home prices fall, the higher foreclosure rates will become and the more losses will pile up at Fannie and Freddie. The less home prices fall, the less that any lender will lose when a loan defaults and the property is resold.
Fannie Mae and Freddie Mac are known as government-sponsored enterprises (GSEs), because they were chartered by Congress to create a more stable mortgage market. Over the past year, they have been fulfilling that mission, guaranteeing home loans or buying them outright. Amid a sharp decline in real estate sales and prices, investors have been willing to fund the so-called "conforming" home loans that carry a Fannie or Freddie imprimatur. That has helped keep mortgages relatively available and affordable.
But even though the GSEs were not conduits for the worst "subprime" lending, they are being hit by loan defaults, with Fannie and Freddie posting a combined second-quarter loss of $3 billion.
Their capital, the reserves available to cover future losses and continue funding new loans, fell to the point where the US Treasury Department intervened.
That followed a string of other federal actions in recent months. The Federal Reserve has loaned money to investment banks in addition to the $30 billion in credit it extended to facilitate the buyout of Bear Stearns by JPMorgan Chase.
Bank failures, after a long period of quiet, are rising. The Treasury's Federal Deposit Insurance Corp. could run through its insurance fund this year and may need additional money from the Treasury to protect insured depositors.
Now the Treasury is becoming an equity investor in Fannie and Freddie and a buyer of their mortgage-backed bonds.
The move is a bid to help restore calm to credit markets, possibly lowering the cost of mortgages and, by extension, helping the housing market recover. The more successful the effort is, the less it will cost taxpayers.
"The Treasury may have to put a couple hundred billion dollars into these [GSEs]," says Christopher Whalen, managing director of Institutional Risk Analytics, a firm that tracks the health of financial institutions.
But beyond the injections of capital to get through the current crisis, he says ongoing operations of Fannie and Freddie should reap profits for the Treasury – thus providing some long-term offset to the bailout's up-front costs.
"Hopefully the cost to the taxpayer will eventually be zero," he says. "It might even be positive. But it has to be done right."
Doing it right, in his view, depends on resolving the long-term structure of the two companies – a politically divisive issue that will be debated by Congress and the next president.
Mr. Whalen suggests that over time, the government should shed the large portfolios of loans that Fannie and Freddie currently hold. The GSEs should focus on their role as a conduit, guaranteeing loans for resale. If the fee for those guarantees is set right, it should be a profitable business – and he suggests that that business be nationalized.
Other finance experts and policymakers argue for other strategies, ranging from privatizing all GSE functions to nationalizing them as much larger entities than Whalen recommends. The Treasury's new "conservatorship" plan holds the door open to many options, including ultimately returning the companies to their former status as public-private hybrids – but with tighter regulatory supervision.
"In the short term, yes, a bailout's necessary," says Joseph Mason, a finance expert at Louisiana State University in Baton Rouge. "The question becomes, [is it] an opportunity to exit … the current egregious level of government involvement in housing finance?"
Others say the subprime lending debacle is evidence that a strong role for the government in housing finance remains needed. "Private securitization [of mortgages] in secondary markets is what caused this mess" in the real estate market, says Dan Immergluck, a housing expert at Georgia Tech in Atlanta.
Because the GSEs have long been viewed as having implicit federal backing, delaying or avoiding intervention might have added to the ultimate taxpayer tab.
Treasury Secretary Henry Paulson is betting that providing fresh capital to the two firms will eventually lead to lower mortgage rates, spur homebuying demand and slow the plunge in home prices that has ravaged many areas of the country.
The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.
"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said.
But more importantly, "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," he added in a televised announcement.
The companies, which together own or guarantee about $5 trillion in home loans, about half the nation's total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.
Democratic presidential nominee Barack Obama issued a statement agreeing that some form of intervention was necessary, and promised, "I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis."
On Saturday, Republican vice presidential nominee Sarah Palin said Fannie and Freddie "have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."
Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie.
The executives and board of directors of both institutions are being replaced. Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.
Paulson was careful not to blame Daniel Mudd, the outgoing CEO of Fannie Mae, or Freddie Mac's departing CEO Richard Syron for the companies' current problems. While both men are being removed as the top executives, they have been asked to remain for an unspecified period to help with the transition.
The Treasury Department said it will immediately be issued $1 billion in senior preferred stock, paying 10 percent interest, from each company, but eventually could be required to put up as much as $100 billion for each over time if the funds are needed to keep the companies afloat as losses mount. The government also will receive warrants representing ownership stakes of 79.9 percent in each.
Officials defended this approach by saying it underscores the importance of the trillions in mortgage debt that each company either holds or guarantees and the need to make sure that investors in this country and overseas keep buying this debt.
The impact on existing common and preferred shares, which have slumped in value in the last year, will depend on how investors react to Paulson's assertion that they must absorb the cost of further losses first. Under the plan, dividends on both common and preferred stock would be eliminated, saving about $2 billion a year.
After the Treasury Department's announcement, credit rating agency Standard & Poor's downgraded Fannie and Freddie's preserved stock to junk-bond status, but reaffirmed the U.S. government's triple-A rating.
The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans."
The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.
Under government control, the companies will be allowed to expand their support for the mortgage market over the next year by boosting their holdings of mortgage securities they hold on their books from a combined $1.5 trillion to $1.7 trillion.
Starting in 2010, though, they are required to drop their holdings by 10 percent annually until they reach a combined $500 billion.
In addition, officials said the Treasury Department plans to purchase $5 billion in mortgage-backed issued by the two companies later this month.
Paulson said that it would be up to Congress and the next president to figure out the two companies' ultimate structure and the conflicting goals they operated under -- maximizing returns for shareholders while also being required to encourage home buying for low- and moderate-income Americans.
"There is a consensus today ... that they cannot continue in their current form," he said.
Paulson and James Lockhart, director of the Federal Housing Finance Agency, stressed that their actions were designed to strengthen the role of the two mortgage giants in supporting the nation's housing market. Both companies do that by buying mortgage loans from banks and packaging those loans into securities that they either hold or sell to U.S. and foreign investors.
He said that all lobbying activities of both companies would stop immediately. Both companies over the years made extensive efforts to lobby members of Congress in an effort to keep the benefits they enjoyed as government-sponsored enterprises.
Sunday's actions followed a series of meetings Paulson had with President Bush and other top administration economic officials with Bush relying heavily on the judgment of Paulson, who was the head of investment giant Goldman Sachs before he joined the Cabinet in 2006.
"It is really an assent to Hank's direction, guidance and judgment. The president was going to support Hank's judgment on this," said a senior administration official, who spoke on condition of anonymity to discuss behind-the-scenes deliberations.
This official said that Paulson kept Bush updated on the worsening situation at Fannie and Freddie on a regular basis starting in late July when Congress approved expanding the amount of federal support the institutions could receive.
Associated Press Writer Ben Feller in Washington contributed to this report.
