Only 34 percent of the American working population earn more than $65,000 in annual salary.  In fact, according to My Budget 360, only 17.8 percent of all U.S. households make more than $118,200 a year.  Only 2.67 percent make more than $200,000.  The median household income in the U.S. is $46,326.  That’s not much, folks, when you’re trying to make a house payment, car payment, paying utilities, credit cards, food, cable, insurance, and more.  Wonder why so many people have fallen behind on their mortgages?  Consider this from the site:

On average, the net pay for a household is $3215.37.

I ran the numbers for a state with no state income taxes, Texas.  A family at this level is only bringing in $3,215 a month.  The national median home price peaked around $200,000.  So let us assume this family purchased the median home:

5% down payment: $10,000
Mortgage 30-year fixed (6.5%): $1,200
Taxes and Insurance: $333
PITI:  $1,533

Right off the bat, this family is spending 47% of their net pay on a median priced home.  We didn’t even account for any pre-tax retirement account investing.

Renting really can be a better option for many!

Mortgage rates have been creeping up slowly, but are still fairly steady so far this year.  Right now the average mortgage interest rate is 5.07 percent for a conventional 30-year fixed rate loan.  Buyers are getting FHA interest rates at about 5.35 percent, with at least 3.5 percent expected for down payment.

Meanwhile stocks are on the uptick for home builders as we’ve seen a surge in new home sales int he last month.  From a personal level, my view is that we’ll see April as the best month we’ve seen in real estate in two years with home under contract.  Buyers are rushing to beat the deadline of April 30th to be under contract so they can receive the $8000 first-time home buyer tax credit.

In this past week alone, I’ve written three contracts and I’m not a mega seller like other agents.  However, once the deadline passes, it’s fair to say that lenders and real estate agents alike are very concerned about where the market will go next.

We’ve seen it in our local market.  Home sales are on the increase.  Real life multiple offer situations are occurring again (especially on homes priced right and nicely staged), the phones seem to be ringing again, and there are more agents coming in to the office.

We have a cork-board where new listings and new pending sales are posted for other agents to see a snapshot of the market.  At the worst, there would be maybe four or five posted in a two-week period.  From a company that regularly had $4 million in sales each week, taking a full quarter to reach that mark was painful.  Our cork board is filling up again, though, and it’s the same story nationwide.

Unfortunately, forecasters are talking about the “shadow” market that’s about to step out of the outer darkness.   According to NPR,

Shadow inventory comes in several forms. It includes homes in or close to foreclosure but not yet put up for sale — a number that’s increasing. It also includes homes that owners want to sell but are waiting to put on the market until it improves.

In a recent survey, Zillow found that nearly a third of homeowners would have considered putting their homes up for sale if the market were better. Nationally, that would mean between 11 million and 30 million homes that aren’t listed but are waiting on the sidelines.

I still believe the best time to buy may have passed.  With the federal tax credit due to expire in less than two weeks and interest rates creeping up, the very best time to buy may be gone.  However, homes are still very affordable AND compared to double-digit rates of two decades ago, the current rates of 5.1% to 6.0% (depending on the type of loan you get), are still excellent.

Wall Street major league player Goldman Sachs was charged today by the Securities and Exchange Commission with subprime loan fraud - a charge that the firm vehemently denies.  According to MSNBC.com,

In its lawsuit, the SEC alleged that Goldman structured and marketed ABACUS, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities.

It alleged that Goldman did not tell investors “vital information” about ABACUS, including that Paulson & Co was involved in choosing which securities would be part of the portfolio.

The charges come as the government is looking to expand regulatory efforts that would hold companies and their manager accountable for the nation’s financial crises.  The charges were so severe that the stock market tumbled today by 125.91 points.

I earned my SFR designation - Short Sale & Foreclosure Resource - earlier this year.  Although I nearly set the certificate on fire by accidentally leaving it on top of a burning candle, taking the actual coursework was very helpful in making me understand how complicated this type of home sale is.

Many agents don’t understand that mortgage companies can and will move forward with foreclosure even when a short sale is authorized - especially when a certain amount of time has passed.  Uncle Freddie and Aunt Fannie are not messing around, nor are other big banks and lenders, when it comes to collecting their money.  Without an experienced real estate agent to help navigate you through the complicated process, you could still lose your home to foreclosure despite having an agreement that the bank will allow a short-sale.

According to Massachusetts real estate agent Tori Stamp, the resulting lawsuits when agents are sued for not providing the service they say they can provide are becoming more common,

Short sales are a VERY labor intensive listing that require a VERY experienced agent.  While I’m an SFR (BFD, I took a class), I still bring in an agent who has A LOT more experience in short sales (from a different company, no less) because that’s what my clients NEED!  The Code of Ethics is VERY specific here - and it’s not hard to understand!

If you’re fearful of losing your home to foreclosure and want to do a short sale, be sure to interview the agent prior to listing.  Find out HOW MANY short sales they’ve listed and subsequently sold.  Find out if they have a good relationship with your lender.  You could also ask the lender if they have an agent in your area they’ve worked with in the past who’s done a good job.

I had lunch today with a mortgage lender and asked what she would advise buyers right now about getting a home loan.  I was surprised that she didn’t talk about the money part as much as a misconception people have,

“Remember that you don’t have to CLOSE your loan by April 30th to get the tax credit, you just have to have a fully executed contract.”

It surprised me because people still don’t understand that the $8,000 tax credit is available through June 30th as long as they’re in a valid contract by the end of this month.

The lender did add that when you’re finding a lender, don’t just take “No” for an answer.  Find someone who can counsel you about why you’re not yet qualified to get a home loan - they can’t “fix” your credit but they can tell you why your credit score was low.

Don’t be afraid to ask!