Will expiring loan limits impact the Upstate?

By Matt Vaughn, Sales Manager
Homeowners Mortgage

Effective October 1, 2011, there will be a decrease in the GSE (government-secured enterprise) and FHA loans. This will decrease a bank’s opportunity to originate loans higher than the approved loan limit. Companies like Fannie Mae or Freddie Mac offer securities and guarantees to lenders that help grant favorable rates and loan securitization, thereby decreasing the risk to lenders origninating the loans.

As we close in on the deadline when the loan limits will expire, it is important to evaluate how that may effect our local market in the Upstate. The expiration of the loan limits, which have been statutorily higher since 2008, will directly affect 204 counties nationwide. None of those counties are located in South Carolina.

The limits were set in place under the 2008 stimulus package when financing was scarce for homebuyer’s whose loan amounts exceeded the $417,000 limits. Sensing a need to provide homeownership to borrowers in higher-priced markets where buyers could not afford the larger down payments for more expensive homes, the government assigned a new loan size to each county to 25 percent greater than its median home prices, not to exceed $729,750.

The new rule lowers the temporary increase to 15 percent from 25 percent above the median home price, not to exceed $625,000, effective October 1, 2011.

Another change taking place this fall will affect FHA loans. These changes will take place in 620 counties throughout the nation affecting 59 percent of all homes. That means changes in South Carolina for the following counties: Beaufort, Berkeley, Charleston, Dorchester, Georgetown, Greenville, Horry, Jasper, Laurens, Pickens, and York. For the Greenville market, the 3 counties located in the Upstate will see their FHA loan limit drop to $271,050 from $295,000.

When dropping the price threshold and assuming the minimum 3.5 percent down payment investment, according to NAHB 2,538 families in Greenville County will be affected by the reduced FHA loan limit. That may seem like a lot of families, but in order to understand the impact of changes in FHA loans it is important to focus on the statistics of borrowers obtaining FHA financing. According to HUD, 107,125 people used FHA loans to purchase homes last year with an average loan amount of $179,000 with an average credit score of 703; 77 percent of these loans went to first time home buyers. For those working, building and buying in Greenville County this means that the changes should not have a large impact on home sales in our area.

The average sales price of a home in Greenville County is between $160,000 and $170,000. Most homes here will not be affected by any upcoming changes. For those selling and building at a higher price, the good news is that conventional mortgage insurance companies have started to become more competitive now that FHA monthly premiums have increased, and should attract a larger percentage of buyers with money to put down looking for better payments.

Association Maximization Part 7: The Do's and Don'ts of Building Your HBA Reputation

We have covered quite a bit with regards to the HBA’s purpose, how to get noticed for the “right” reasons as well as utilizing the HBA to be informed and build a business contact network.

We will now focus on the do’s and don’t of developing your HBA reputation. The list could be very long on both sides but this post will focus on a few points that should help you maintain a solid reputation.

I know I'm supposed to start with the "do's" but I wanted to highlight the don'ts first. Plus, "Don'ts and Do's" sounds funny!

The don’ts will start it off followed by the *do’s:

1. Don’t use the association. Everybody is in business but don’t exploit your involvement to showcase your company. I remember one time, a member asked to attend a board meeting. The member was not on the board but asked to attend. No problem, right? The member came in early and placed his/her company’s brochure in the board packets and gave a 5 minute sales pitch to the board. Needless to say that was not the time or environment to sell. I’ve witnessed the same type of exploitation at committee meetings as well. Association business first, your business second. Wear your name badge with your company logo, introduce yourself by name, and then company name, whether you are a guest of a meeting or a member of that particular group. Make sure when you speak, it’s for the benefit of the initiative.
2. Don’t think that the association is not providing you with business. I know members ho have said that they are not getting builder business. OK, maybe not from builder members (yet) but are you doing business with builders who are not members? Know that the HBA is helping all builders, not just members. Yes, all builders should be members of the HBA and maybe in time they will. But those non member builders are building because of the efforts of the HBA so “Yes Virginia, you are getting builder business from the HBA!”
3. Don’t say yes and not perform. There is an old saying in the sales world, “under promise and over deliver.” The same holds true for being a volunteer. When you accept something you have asked for under promise and over deliver. Others are counting on your commitment, a commitment that you wanted. Don’t accept a responsibility or assignment unless you mean to be professional and handle it. No one will think less of you if you say you need to back out of your commitment. No one. However they will think less of you, which will hurt your reputation, if you OVER promise and UNDER deliver or, worse yet, NOT deliver at all.
4. Don’t be a resume builder. This is the same as the last item only broader. I know members who sign up for everything, but contribute nothing. All these committees, written down, give the impression that the member is dedicated to the HBA. They’re dedicated, but they’re dedicated towards self promotion. When you volunteer be a volunteer. Contribute your thoughts, your time and particular skill set to the initiative at hand. You will be a reputation builder and you will be a valued member.
5. Don’t interrupt members engaged in conversation. When two members are talking face to face this means they are in an intimate discussion. There is one member I know, maybe you know one as well, who is famous for barging into a conversation. Not only is it rude, you will be given a reputation as rude. And members will not go out of their way to help rude members. Be patient, there will be an opening later to say hello, or another meeting. Or an email to the person you needed to “target” that lets that person know that you saw them, timing wasn’t right for a conversation but you wanted to say hello. Thoughtful and considerate.
6. Don’t monopolize the conversation. OK, you’re not an interrupter but are you like a pit bull with a steak bone? Do you hold onto the person you are speaking with, probably to, without consideration of others? If you are engaged in conversation with someone, maybe a builder member, and you know others would like to say hello as well, make our conversation brief and ask for a call or office visit to continue discussion.
7. Don’t ignore or delete without reading HBA emails. You never know what the email contains and it could help you or it could be an action alert. Either way you have invested in the HBA, why ignore the information? If you feel you’re getting to much HBA email, call up the EO and ask if there are places on the HBA website that you can visit and read the information online, at your leisure. Action alerts are not leisurely and are needed to be sent out. But they are being sent to help you. Appreciate the HBA for being the guardian of the industry.
8. Don’t show up to an HBA event in a bad mood. Everyone has a bad day and nobody wants to be around someone who talks about their bad day. That’s what therapists are paid to do. People’s impressions of you are always happening. Always be on your game when you are out in business public. Know that it’s alright to take off a night if you’re not in the mood. People want to be around others who make them feel good or at least comfortable. Wouldn’t you?
9. Don’t act like you’re at a friend’s house for a party. There are a lot of HBA events and at those events alcohol will be served. Nobody likes a drunk and you will be remembered for that the next day, and beyond. I’m not going to tell not to drink but please know your limit! Remember, it takes time to build a reputation and one minute to ruin it. You are also not doing your company any favors either.
10. Don’t get discouraged with your HBA investment. It’s a long term commitment that only produces a return with the type of quality you put in. Patience is a virtue but is should be required when it comes to HBA expectations as it pertains to your involvement.
    

Those were the ten obvious do's and don'ts, at least to me. If you have more that you would like to share please post a comment and let us know what you're thinking.

Submitted by: Michael Kurpiel, CGA, CGP
2011 NAHB Associate Members Committee Chair
Director of Trade Association Relations, ProBuild

Greenville Business Magazine features how generations affect home buying

In their July issue, Greenville Business Magazine featured a young couple that represents the next generation of home buyers. The article discusses their buying preferences and how the preferences of their generation will be different from those of previous generations.

The article also details research done by HBA Executive Vice President Michael Dey on how demographics have affected the home building industry. In the article Dey contends that reduced demand resulted in the housing market collapse and contributed to the financial market meltdown--that the financial market collapse was a victim of reduced demand, not the cause of it. He states that demand will recover when the next generation of first-time home buyers, Generation Y, begin buying homes in earnest in the next several years.

Read the entire article at Greenville Business Magazine by clicking here. Scroll to page 20 for the article titled "Generational Homebuying."

HBA Past President Todd Usher featured on the cover of Greenville Business Magazine

HBA 2008 President Todd Usher, GMB, Master CGP, SC CMB, CAPS, President of Addison Homes, was featured on the cover of Greenville Business Magazine this month (July issue) under the feature, "Greening Greenville's Homes."

The article delves into the business of green home building and remodeling. Featured and quoted in the article are HBA members:

• Dean Benton, Benton Green Energy
• Scott Johnston, Johnston Design Group
• Trey Cole, O'Leary Cole

Also in the July issue is a profile of another HBA member, Upstate Forever. The article features their headquarters building, finished in 2008 to LEED Platinum standards.

Addison Homes builds all of their homes to EarthCraft and Energy STAR standards. Todd and his wife, Michelle, an HBA Affiliate member, regularly discuss the virtues of building and remodeling to high-performance "green" standards.

Read the article featuring Todd Usher, Dean Benton, Scott Johnston, and Trey Cole in Greenville Business Magazine by clicking here.

HBA Past President Gail Crawford featured on cover of Greenville Business Magazine

In case you missed it, HBA 1998-1999 President Gail Crawford was featured on the cover of Greenville Business Magazine in May under the feature, "Women Who Lead."

The article describes Gail's career, including 23 years in banking through a successful 20-year career as a home builder, developer, and real estate broker.

Gail has retired to her mountain home in North Carolina with her husband, Earl, but continues to keep tabs on her hometown of Greenville and she remains a member of the HBA of Greenville.

Read the profile of Gail Crawford in Greenville Business Magazine by clicking here.

NAHB: housing outlook weak in the short-term, but strengthening in the long-term

According to NAHB's Chief Economist David Crowe, pent up demand continues to accumulate and create upward pressure on future housing demand. "Household formations, like older children leaving parents' homes and young adults giving up roommates, have fallen to very low levels," Crowe said.

NAHB estimates that more than 2 million households have postponed moving out on their own and bolstering housing demand, waiting for a stronger recovery. "An improving economy, stronger job growth, historically low mortgage rates and stable house prices will help turn this potential demand into actual demand," Crowe said.

In the longer term, Crowe says household formation can only be postponed temporarily. "The underlying demographic forces are undeniable. The industry will need to deliver 17 million homes over the next decade just to keep pace with demand from a growing population," Crowe said.

The main industry challenge now is to open up lines of credit for new housing production; a top NAHB priority. In addition, NAHB has made resolving problems with the appraisal process another top priority.

Looking forward, there are more signs that conditions in the housing market are showing modest improvement. Positive factors include:

1. The economy is improving and sustaining job growth
   
2. Low mortgage interest rates are keeping housing affordable
3. Sustained sub-normal household formation has created pent-up demand that is helping to reduce excess housing inventory

“Consumers have not yet reached a level of confidence that is strong enough to begin lifting the housing market while builders continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions," said Crowe. Looking ahead, the fundamentals, such as economic growth and employment, are beginning to shape up and will eventually provide enough momentum to push housing forward at a healthy pace.”

Small businesses pay more than large ones to comply with government regulation

According to the Small Business Administration, businesses with fewer than 20 employees pay $2,830 more per employee complying with Federal government regulations than businesses with more than 500 employees. "Small firms don't have the resources in-house to figure out how to comply," says Radwan Saade, a regulatory economist for the SBA's Office of Advocacy.

Read the entire article in the Wall Street Journal by clicking here.