Strongly influenced by vacation home and investment property purchases, the local Bethany Beach market remains realtively strong.  A local Realtor - Leslie Kopp - recapped the summer end on her website:  As the summer season ends, our real estate market is sending mixed messages. We usually use single-family homes as the surrogate for the entire market. With that measure, over the last 40 days to September 10, this year was weaker than a weak 2007. For example, only 14 homes went under contract compared to 17 in 2007. Using listing prices, the value changing hands (15.233m) was 31% lower than last year. However, the picture shifts when adding condo/townhouses and vacant lots to the mix. 16 condo/townhouses sold this year compared to 13 in 2007, with listing prices 68% higher. In additio... 09/12/2008

Well, the news came today - Sunday, September 7th - that the Treasury is putting Fannie and Freddie into conservatorship under authority granted by the housing relief bill passed by Congress in July.  Senior management is leaving, all lobbying will be stopped, and dividends on the stock suspended.  Here's the link to the announcement from Paulson:  www.treasury.gov/press/releases/hp1129.htm The main news here is that the US Goverment has now guaranteed all Fannie and Freddie debt to the relief of many foreign banks and goverments that own it.  Investors in the common stock and preferred stock are subordinated to a new class of preferred that will be owned by the taxpayers.  The Treasury will purchase these shares over time to insure that each company maintains positive net worth.  In ad... 09/07/2008

According to data from the Sussex County MLS, there were 229 residential sales in July, 2008, compared to 321 in July 2007 - a 29% drop year over year.  These sales consisted of 145 single family homes, 59 condos/townhomes and 25 mobile homes Year to date, there have been 941 single family homes, 389 condos/townhomes, and 153 mobile homes sold in Sussex.  Total units sold this year (through July) are 1,483, compared to 2,107 in 2007 - a 30% decrease.  The decline in single family homes sold is 28% YTD while condo/townhomes sales are down 34% from last year's pace. Affordable homes are making up the bulk of the sales in the county.  About 30% of single family home sales in Sussex are priced below $200,000 and another 30% are priced from $200,000 to $299,999. On the higher priced end, her... 09/03/2008

At the beach, many property owners have used the 1031 exchange procedures outlined in our tax laws to delay or "push-off" taxable gains on the sale of investment properties and, many times, vacation homes.  Part of the strategy is to continue to rent the property for a while and then move into the property as a primary home for 2 years, sell, and qualify for the exclusions from taxes on the sale of a primary home.  Unfortunately, the new Housing Bill is changing that dynamic.  Click on the link below for a CCH summary of the new Housing Bill (all aspacts) and read below for an explanation of the change in the home sale exclusion. http://tax.cchgroup.com/legislation/2008-Housing-Assistance-Act.pdf?cm_mmc_o=Vywll%20qwkwzlwCjCHFzbkCjCniio%20ZBAlbET%20-llblfzEgw%20-gf%20CjCioCiInD This is e... 09/02/2008

The headlines grabbed you.  "Foreclosure activity in March increases 5% over February and 57% over March of 2007!"The reality?  Most of the foreclosure activity is taking place in Nevada, California, and Florida.  These are the states that had the fastest increase in home prices and the highest use of both Subprime loans and Option ARM loans, both made at very high loan to values.How's Delaware doing?  Delaware ranks 34th in foreclosure activity among the 50 states and most of that activity is concentrated in the Wilmington area.  There were 192 foreclosure filings in Delaware in March according to RealtyTrac.  This includes about 140 NFS filings - Notice of Foreclosure - and 51 REO filings - Real Estate Owned - when a property is foreclosed on and repurchased by a bank.Those 192 filing... 04/16/2008

March 21, 2008Legislation has been introduced (HB 293) that will raise the realty transfer tax by .28% to fund the Community College Infrastructure Fund for capital construction at all four (4) Delaware Technical and Community College campuses. In addition, Governor Minner and the Department of Finance, Office of Management and Budget and the Controller General's Office recently released the General Fund Revenue Report which outlines current revenue and examines potential revenue sources that policy makers may want to consider. The report states that "Despite its position among the highest realty transfer tax rates in the nation, in terms of revenue raising potential, increasing Delaware's RTT could be used to address an immediate budget shortfall." The report states that the cyclical n... 03/21/2008

FOR IMMEDIATE RELEASE   (From Bethany-Fenwick Chamber of Commerce)                             CONTACT:    KAREN McGRATH                                                                           302-539-2100 x14March 12, 2008  FISHING TOURNAMENT MAKES A MOVEMarch 12, 2008 FENWICK ISLAND, DE-The Bethany-Fenwick Area Chamber of Commerce is very pleased to announce that Old Inlet Bait & Tackle shop will now be managing and presenting the long-standing spring fishing tournament.  A new state law now requires licenses for surf-fishing.  Moving the tournament to Old Inlet will make that process easier for visiting anglers."We are so pleased to pass our surf-fishing tournament on to the folks at Old Inlet," said chamber executive director Karen McGrath.  "With the new licensing requirements it... 03/13/2008

February 24, 2008After declining steadily since the last week in December, mortgage rates have reversed course over the past 3 weeks.  Freddie Mac announced the average rate for conforming ($417,000 and under) 30 year fixed rate mortgages was 6.04% with 0.6 discount points for the week ended February 21st.  Rates have been dropping since last summer as part of a larger overall trend that was briefly interrupted in December.  That interruption was short-lived and rates began falling much faster in January and early February when economic reports and market sentiment led investors to believe the economy was extremely weak.  Rates bottomed out in late January averaging 5.48% with 0.4 discount points.The question becomes, is the ½% run-up in the 30 year rate the beginning of a reversal in t... 02/24/2008

February 21, 2008 I love when you see or hear the media proclaim "the average mortgage rate" is [pick a number].  Why?  Because they seldom, if ever, explain where the average comes from and how many discount and/or origination points it includes.  There's also the little issue of timing.  "Average rates" come from three (3) main sources - the Mortgage Bankers Association (MBA), the Federal Home Loan Mortgage Corporation (Freddie Mac), and Bank Rate Monitor.  A trade group, a government sponsored enterprise (GSE), and a for profit business respectively.  It would be helpful if you knew from which source the average came.  I use the Freddie Mac number on my website - http://www.sjbaxter.com/ - in the interests of full disclosure.Here are the latest averages and reporting dates:SourceWeek... 02/21/2008

February 18, 2008 Valentine's Day just passed and I fell in love with ARMs again after a 5-6 month hiatus. I used love the appeal of the ARM but she was replaced by the fixed rate mortgage which had all the appeal of my mother-in-law.  Stable, boring, but not very sexy.  All this was the product of a flat yield curve.Studying my rate sheet the other day, I was smitten.  She hit me like a bombshell, holding a great bottle of wine and the perfect smile.  This time, she promises to stay put for a ten-year period. Frankly, ten years is plenty of time for me to outlast a few bumps in the economic road; it's a relationship worth having. I'm talking about the spread between a 30 year, fixed rate loan and an ARM with a ten-year fixed period. The 30 year mortgage is around 6.0% while the ten-yea... 02/18/2008

February 17, 2008 In late 2006 Congress passed a law allowing a rather strange one-year deduction of premiums for private mortgage insurance (PMI). This was a scrap thrown to PMI insurers who had been complaining that their businesses were suffering from the number of homeowners opting for piggyback mortgages. These simultaneous second mortgages were used for a house down payment, eliminating the need for PMI and providing an additional mortgage interest deduction. This deduction required that the policy be taken out and paid for in 2006 (tough luck for homeowners struggling with premiums from earlier years,) was for home acquisition not refinancing, and the deduction was available for 2006 only. Now this deduction has been extended for 2007 provided that the PMI contract was entered in... 02/17/2008

February 16We all know the stock market has been volatile in the past few months, and now we are seeing an uptick in mortgage rates driven primarily by activity in the market for what are called Mortgage Backed Securities (MBS).  These are also commonly called mortgage bonds.  As with all bonds, when prices fall interest rates (yields) rise.Mortgage bond prices fell last week pushing mortgage interest rates significantly higher. Stock strength the beginning of the week hurt mortgage bonds. Stronger than expected retail sales also shocked the market. The weakness was compounded as investor concerns about exposure to mortgage bond risk grew. Fed Chairman Bernanke expressed concerns about economic growth but his remarks did little to help mortgage bonds. For the week, interest rates on gov... 02/16/2008

February 15, 2008 Well, the President signed the Economic Stimulus Bill HR 5140 on Wednesday. From our perspective, the increase in the conforming loan limits and FHA loan limits are the most important components of the bill.  Unfortunately, the reality of the new bill presents a mixed bag.  Congress did not pass a nationwide increase in the $417,000 conforming loan limit.  Rather, they authorized an increase in the limit in "high cost" areas to 125% of the median price of a single family home in that area, with a maximum of $729,750.  The Secretary of HUD is responsible for announcing the new limits per area and we expect this announcement within the next 30 days.The bad news is that in our market at the beach (Sussex and Kent Counties in DE and Wicomico and Worcester in MD) there will... 02/15/2008

I wish I knew!!  The Fed cut short term rates another 1/2% today and the stock market rallied, then pulled back - the Dow down about 34 points.  Mortgage Backed Securities (MBS) traded down slightly in the hours after the Fed cut - down about .125 discount points.  What are investors trying to tell us?   The large Fed cuts are an over-reaction and will lead to more inflation down the road, which is bad for mortgage rates or the Fed is behind the curve letting a slowing economy moving toward a recession, which is good for mortgage rates?  Tough choice!Here's the Fed Statement:The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent. Financial markets remain under considerable stress, and credit has tightened further for s... 01/30/2008

 Let's look at the local take on current news about mortgage financing. . .News from the Mortgage Bankers Association:"The White House surprised many on Monday by suddenly withdrawing its support for the inclusion of FHA reforms in President Bush's proposed economic stimulus package. Bush had previously made several personal pleas to Capitol Hill legislators on the importance of passing the bill, which would allow the FHA to insure more loans. Attaching the provisions to his economic stimulus plan had been viewed as a mostly innocuous move on the way to quick enactment. Among the provisions in jeopardy is one that would relax down-payment requirements and one that would temporarily raise the conforming-loan limit, thus give Fannie Mae and Freddie Mac a chunk of the jumbo loan market. A ... 01/29/2008

I can't believe I live at the beach!  Yesterday, I wanted to pinch myself to see if I really was watching the surf and my husband fish.  He had such a smile on his face as he brought in fish after fish.  The fisherman to his left was doing better than him but he didn't care.  This was a record for him.  Seven fish, one got away, in a 3 hour time span. The weather was perfect.  Here is a secret I'll let you in on...the beach is lovely in September.  10/01/2007