The second half of 2010 didn’t bring much good news on the home front, but those sales sure chugged along from July 2009 through June as folks took advantage of various permutations of a homebuyer tax credit.
New data pinpoints just who those Illinois homebuyers were.
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First-timers represented 53 percent of buyers, and the typical demographic of that group was a 30-year-old with a median income of $67,000, according to a survey of Illinois homebuyers and sellers prepared by the National Association of Realtors. The typical repeat buyer was 42 years old with a median income of $85,400.
How is this different from the folks who bought homes in Illinois in 2009? First-time buyers last year were just one year older, with slightly higher income. Repeat buyers had less income.
More telling may be two other facts gleaned from the survey that highlight the difficulties faced by homebuilders and home sellers during 2010. Only 9 percent of homes purchased were newly constructed, down from 14 percent in 2009. Also, 62 percent of sellers said they cut the asking price at least once, which probably explains why the median selling price of homes included in the survey was $190,000, down 4 percent from 2009’s survey.
Easier short sales? Ask most real estate agents and they’ll tell you the process to obtain lender approval on a short sale hasn’t gotten much easier since the Treasury Department announced revisions to its Home Affordable Foreclosures Alternative program a year ago. In a short sale, a homeowner tries to sell the property for less than the amount owed on the note, and the note holder forgives the remaining balance. But it’s not uncommon to see properties return to the market after banks refuse to accept the agreed-upon price between the homeowner and buyer.
In November, among the eight largest mortgage loan servicers, only 6.2 percent of financially distressed homeowners who had their Home Affordable Modification program trial payment plans canceled either did a short sale or a deed in lieu of foreclosure.
With worries mounting about the number of foreclosures in the pipeline, the Treasury Department is moving to Plan C to try to crank up the voluntary program’s success. Among the changes: Loan servicers no longer are required to verify if a borrower’s monthly mortgage payment exceeds 31 percent of their monthly gross income. But at the same time, the new guidelines say servicers can require borrowers to provide updated financial information so they can be evaluated.
Another change involves payments to subordinated lien holders to encourage them to sign off on a sale transaction. There still will be a $6,000 payment limit, but the federal government is removing the 6 percent cap.
The changes take effect Feb. 1, but participating loan servicers are being encouraged to implement them sooner. There’s a big caveat, however. The new guidance doesn’t apply to first mortgages owned or guaranteed by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration or the Veterans Administration.
ZipRealty’s new business model. There have been media reports and rumbles across the country about ZipRealty Inc. closing its offices in many cities. And, indeed, a recent filing it made with the state of Illinois makes it seem like the Emeryville, Calif.-based realty firm is turning off the lights in its Park Ridge office too. But that’s not true; there are no plans to exit the Chicago market, and the Park Ridge office will stay open, said company spokesman John Oldham.
ZipRealty did notify the state last month of a permanent layoff of its 91 local employees, but that’s because ZipRealty last fall decided to move away from its 10-year-old business model of hiring employees. Instead, ZipRealty agents will now be independent contractors, as agents at traditional real estate companies are. That means they’ll get no 401(k) or health insurance but a better split on commissions, said Oldham, who added that the company hopes most of its employees will stay on as contractors.