Finding middle ground

Appropriately pricing a property is important to attract buyers. Today’s buyers are more educated and seek more information from their Realtors than is available on the Internet to make informed purchase decisions.

If a property is priced above its competition, it will languish on the market. Home sale statistics indicate that appropriately priced homes will sell at or close to listing price. Homeowners wishing to list their homes should also consider that an appraiser will be deriving a value for a buyer to secure a mortgage and will be looking at comparables.

According to the National Association of Realtors, the majority of metro areas in the first quarter of this year continued to show price growth. However, the price gains are increasing at a lesser rate than previous quarters. Median existing single-family home prices increased almost 44% based on first quarter closings compared to closings for the same period in 2013. Of the 170 metro areas, 37 of them, equaling 22%, showed double-digit increases. In the fourth quarter of 2013, 26% of metro areas had reported double-digit gains.

The moderate rate of price gains will help to maintain favorable housing affordability conditions in the coming months. However, new construction needs to increase housing inventory across the nation. Buyers continue to have limited choices in many markets including Greenwich. The West Coast is experiencing unsustainable price growth because of limited inventory.

The national median existing single-family home price for the first quarter of this year was $191,600 — an 8.6% increase from the first quarter of 2013. The median price in Greenwich increased approximately 20% to $2,175,000.

Mortgage rules becoming less restrictive

Meanwhile, last week it was reported that the administration and regulators wish to loosen mortgage requirements to promote the housing recovery.

It is anticipated that earlier proposals to require larger down payments on mortgages in certain types of mortgage-backed securities will be abandoned. The treasury secretary and the Federal Reserve chairwoman believe the housing market is one of the causes holding back the economic recovery.

Fannie Mae, Freddie Mac and federal agencies continue to back the majority of new mortgages issued. There are few indications that private investors are returning despite increasing the cost of government-backed lending.

After the 2010 Dodd-Frank law, regulators proposed rules to remove “questionable” mortgage products and incentives for banks to offer loans that were unlikely to be paid. One of the proposed changes would have borrowers put 20% down or the mortgage provider would have to assume 5% of the loan’s risk.

The Department of Housing and Urban Development (HUD) was disturbed over this approach as it felt it would hold back the economy’s recovery. Pressured by other agencies, HUD stated it would authorize this approach providing a 10% down payment was included as an option.

Regulators stepped back from their restrictive plans to make it easier for first-time and other entry-level home buyers. Instead the regulators will identify for banks what signals “put-backs” or defective loans which they bought back in the economic downturn to prevent them in the future.


Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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