HGTV’s FrontDoor.com Offers the Top 10 Things to Expect in the Housing Market in 2009

(BUSINESS WIRE)--After the too-good-to-be-true housing boom in the first half of this decade, 2008 was a dose of reality. The subprime mortgage crisis and the collapse of major financial institutions made this a tough year for real estate. Expect 2009 to be filled with more change and adjustment in home values and expectations. On a positive note, help is on the way from the Feds, and some experts say a slow recovery could begin in late 2009. Prepare yourself for the challenges -- and opportunities -- of 2009 by getting familiar with FrontDoor.com’s expectations in the housing market. (http://www.frontdoor.com/top10)

1. Continued market adjustments. With home prices in some markets having reached astronomical levels, it was inevitable a reset button be pushed. Sellers will continue to be challenged in 2009 as the inflated pricing of years past adjusts to normal levels. With banks and builders willing to slash prices to sell a backlog of foreclosures and new homes, individual sellers will have to price their homes competitively.

2. Action from the Obama administration. President-elect Barack Obama's plan to help the housing sector includes a 10 percent mortgage tax credit for homeowners who don't itemize their taxes and a crackdown on abusive lending practices.

3. More assistance programs for homeowners in danger of foreclosure. While the federal government is attempting to reduce foreclosures, a report released by the Joint Economic Committee predicts 2 million foreclosures in 2009. Homeowners who are at risk should take steps to avoid foreclosure.

4. Some calm to the chaos of the banks' restructuring. This should cause loan modifications and short sales to get easier, and it will also (eventually) decrease the number of bank-owned properties on the market.

5. Thorough reviews of mortgage applications. Before the subprime mortgage debacle, you didn't have to prove you could afford to borrow $200,000 for a home and you didn't need a down payment. Those days of sketchy lending practices are gone. Lenders now require potential borrowers to provide extensive income and expense documentation. Homebuyers with the best credit will get the lowest interest rates. Take steps now to get your finances in order and boost your credit score.

6. Low prices and low interest rates. 2009 could be the time for reluctant homebuyers to act, as this is perhaps the last year of the best buying opportunity in recorded economic history.

7. Cool tech tricks and tools for the real estate obsessed. As homebuyers turn to the Web more and more for their real estate needs, video, webcasts and mobile search tools are becoming more prevalent. Sellers should consider using these cutting-edge tools to make their homes stand out.

8. Wiser consumers. After facing this foreclosure crisis, buyers, sellers, real estate agents and even tenants will have a deeper understanding of real estate, mortgage and credit, which they can use to make better decisions and be more self-protective in the future.

9. Leaner, greener homebuying. Across the board, homebuying is becoming more eco-friendly, from transactions being conducted digitally to buyers opting for smaller homes within walking distance of school and work.

10. An increase in consumer confidence. As the year goes on and we near the projected end of the recession, sellers can breathe a sigh of relief as buyers regain confidence in the market.

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Report Shows Subprime-Rate Lending Dominant with Non-Hispanic Whites and Upper Income Borrowers

RISMEDIA - ComplianceTech, a provider of technology and business intelligence for consumer lending institutions and government agencies, has released an industry report indicating that the majority of subprime-rate loans originated in 2006 were made to non-Hispanic Whites and upper-income borrowers (conventional, 1st lien, 1-to-4 family, owner-occupied, home purchase and refinance).The findings are contrary to the way subprime-rate lending has been portrayed. Frequent media portrayals and congressional dialogue refer to subprime-rate lending as a minority and low-income issue. Findings in the report are based on data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) analyzed with the data-mining tool LendingPatterns(TM).

The report concluded that a disproportionate share of loans made to minorities and low-income borrowers were subprime-rate loans, but the majority of subprime-rate loans were made to non-Hispanic Whites and upper-income borrowers. Of the 1,917,809 subprime-rate loans originated in 2006, non-Hispanic Whites had 70.82 percent of the loans, and 56.23 percent of the subprime-rate loans. Upper-income borrowers had the highest share of the subprime-rate loans at 39.37 percent, followed by 27.55 percent for middle-income borrowers and 20.99 percent for moderate-income borrowers.

Contrary to popular belief, low-income borrowers had only 149,173, or 7.57 percent, of 2006 subprime-rate loans. The report also concluded that the majority of subprime-rate loans were originated in predominately-White geographic regions (areas representing census tracts less than 30 percent minority).

Compared to joint applicants, the report also found that single men and single women received the highest share of 2006 subprime-rate loans. The frequency of subprime-rate loans for males without co-applicants and females without co-applicants was almost even at 32.60 percent and 32.21 percent, respectively. Together single borrowers received 64.81 percent of the subprime-rate loans originated in 2006.

For all racial and ethnic groups except Black, single men had the highest share of subprime-rate loans; White, 35.67 percent, Hispanic, 46.69 percent, Asian, 38.82 percent, Native American, 34.03 percent and Hawaiian, 32.44 percent, respectively. For Blacks however, single women had the highest share of 2006 subprime-rate loans at 42.10 percent followed by single Black men at 33.08 percent. According to Maurice Jourdain-Earl, co-founder and managing director of ComplianceTech, this data could imply more serious ramifications than previously considered, “These presumably single borrowers do not have two income sources to support the mortgage … and if these borrowers are single-head of households experiencing trouble making their mortgage payments, what about the children?”

Jourdain-Earl expresses that the problem with portraying the foreclosure crisis as a minority and low-income issue is that it affects how solutions will be approached. “If it is believed that subprime-rate loans were predominately made to Black, Hispanic or low-income households, housing policy-makers might approach solutions with biases about qualifications of those groups, such as low education, bad credit and low-paying jobs, etc. There could be a tendency to write-off the subprime lending debacle as a type of affirmative action gone bad. We must acknowledge that the foreclosure crisis affects broader and more demographically diverse segments of society. This politically responsible approach will likely change the tone, climate and context of how solutions are crafted.”

Jourdain-Earl also notes that “Not enough research and media attention has been devoted to other causes of the subprime crisis that might have race and ethnicity effects. Issues of steering, weak underwriting, fraud and discrimination have not been aggressively investigated. Despite the presence of federal regulation and periodic examinations for Safety and Soundness, Community Reinvestment Act and Fair Lending compliance, efforts to uncover whether subprime-rate loans can be explained by legitimate risk factors will be impaired if they are based on erroneous assumptions about the demographic distribution of subprime-rate loans.

He concludes, “To resolve the true issues, the subprime lending meltdown must be addressed as a nationwide problem with aspects that affect Whites as well as minorities, in suburban, rural and urban communities.”