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Housing Opportunities in Ramsey When people talk about our current residential housing environment, they often refer to it as a "down market." While "down" may be descriptive of what many are experiencing personally, it might be better stated as a "correcting market." Changes took root throughout 2007 that have set the stage for a slow and gradual rebound in 2008. We have come to realize that there are no quick fixes or band-aid solutions to housing market fundamentals, especially with still fragile affordability, changes in lender policies as a result of the credit crisis, and dampened consumer confidence. While the decrease in residential home sales prices understandably causes anxiety for some, especially sellers, it also means fantastic opportunities for home buyers who are desperately needed for future growth of the housing market. In the City of Ramsey, attracting more of those first time home buyers may in fact be a short term solution to help jump start many other facets of the city's economic stability and growth. At a networking event with other real estate agents earlier this year, one agent noted reading that there had been a 24% increase in average rents over last year. Demand for rental housing is increasing as more families sell or lose their homes in foreclosure, so rent prices will continue to increase. This change in the rental market also means that many potential home buyers can now purchase a home for the same or less than rent in many cases. First time home buyers also need to buy in order to create a ripple effect of benefits throughout the other housing price points and the city. Looking at the town home/condo segment of the market, there are additional concerns growing. Bank-owned properties and homeowners facing a short sale/foreclosure are generally not paying monthly association dues. This loss of revenue could result in higher monthly association dues for residents in that town home complex and/or special assessments for future maintenance projects where funds fall short. Extras expenses in an already strapped personal budget may force the homeowner to sell, which adds to a less- than-ideal cycle of activity. I suspect the city has already been dealing with additional costs related to the foreclosure market as quantities of short sales and bank-owned properties continue to rise. The condition of these properties could also be an issue with potential homeowners obtaining financing. FHA financing typically requires 3% down, although the Nehemiah Program allows us to coordinate down payment assistance for some FHA loans. Unfortunately, the short sale and bank-owned properties may not be in a condition where they can be approved in the FHA appraisal process (i.e., missing kitchen appliances, peeling paint on 1978-built or older homes, other safety hazards present). The next financing option is a conventional loan with 5% or more as a down payment. (Most other lenders require 10% down, but I have the pleasure of working with one of the few AAA rated, nationally chartered lenders). Unfortunately, Ramsey is part of the second ring of suburbs that is increasing being marked by appraisers as a declining market and/or the area has an oversupply of that style of home. Desktop underwriting activities at the lender level are also beginning to flag some loans in the same manner. When this happens, recent changes to lending guidelines require 5% more down payment to change the loan to value of the home as a protection to the lender. For example, the 5% down loan now requires 10%, and the 10% down loans now then require 1"5% down payment in order to be approved in this scenario. FHA loans 12