In last week’s blog, I asked that question and then provided the issues facing a buyer, without supplying a firm answer. So let me directly answer my own question this week.

YES, I say emphatically, now is indeed an excellent time to buy a house in this country. Seldom in the last fifty years has a potential homebuyer been given the opportunity to take advantage simultaneously of both low prices in houses and low mortgage rates.

Under “normal” conditions, when housing prices are weak, it is generally during periods of high interest rates. This is logical because the mortgage interest rate is the key variable in determining the monthly mortgage payment. As interest rates rise, a buyer is forced to “trade down” i.e. find a less expensive house because of the cost of financing. The other side of that coin is true also – during periods of low interest rates, the buyers of houses can afford to pay up somewhat because the cost of financing is advantageous.

However, as I noted last week, these are not “normal” times. The glut of housing is keeping prices exceptionally low despite the extremely favorable interest rates that mortgage seekers can obtain.

Full story is available on CNBC.com

Octomom Nadya Suleman may have declined Playboy’s offer and decided to keep her clothes on, but bargain-hunters were able to get hold of them at her yard sale. The mother of 14 tossed some of her personal belongings and furniture to help save her house on Saturday.

Among the items for sale on her lawn in La Habra, California were an autographed nursing bra, the octuplets’ tiny devil Halloween costumes, a signed sonogram of the babies, a red bikini she wore for a magazine photo shoot, and a couch.

Suleman is selling off her things to try to save the roof on her family’s head after she fell behind $7,500 on her mortgage payments. She also owes $450,000 balloon payment, due on October 9.

Full story is available on AllHeadlineNews

Gains in U.S. home prices probably slowed in July and consumer confidence this month cooled, restraining the biggest part of the economy, a pair of reports may show today.

Property values in 20 cities increased 3.1 percent in July from the same month last year, less than the 4.2 percent gain in the 12 months to June, according to the median forecast of 28 economists surveyed by Bloomberg News.

Unemployment close to a 26-year high, the absence of a government incentive for buyers and an increase in foreclosures are weighing on the housing market. Depressed home values and a lack of employment opportunities may keep limiting confidence, holding back consumer spending, which accounts for about 70 percent of the economy.

“Consumers are still stressed,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. Americans are willing to spend “when you give them a big sales or a big tax incentive. Short of that, consumers don’t want to spend.”

Full story is available on Bloomberg

There was an excellent article  in this Sunday’s Washington Post by Dina ElBoghdady and Dan Keating about the rapid growth of short sales in 2010.  A short sale occurs when a lender allows an underwater homeowner to sell their house for less money than they owe on the mortgage.  I highly recommend reading the article which contains plenty of good information.

According to the article, short sales have tripled since 2008.  Fannie Mae has allowed three times as many short sales in 2010 than it allowed in 2007 and 2008 combined.  We are currently on pace to see 400,000 short sales this year.  The increase in short sales can be attributed to a variety of factors (and obviously the bad economy), but chief among them is the failure of loan modification programs such as HAMP and HARP.

Short sales have a variety of benefits for both lenders and borrowers.  For borrowers, short sales are less harmful to credit scores than foreclosures are.  For lenders short sales are less costly than foreclosures.

Full story is available on Total Mortgage Services

Last week Coldwell Banker released the findings of its new Home Listing Report (HLR) that shows prices for a normal four-bedroom, two bathroom home in different cities. While it may be no surprise to find Detroit bringing up the rear, you may be shocked to see how much it costs to buy a home in many California communities.

#1 Most Expensive Housing Market: Newport Beach, Calif.

Newport Beach tops the list as the most expensive real estate market in America. You’ll need $1,826,348 to buy a slice of the sunshine state in Newport (and that only gets you four-bedrooms and two bathrooms).

The price difference between the home in Detroit and the one in Newport Beach is a staggering $1,758,341. You could buy about 27 homes in Detroit for that amount.

Full story is available on Money Watch

Foreclosures are leading to home-buying deals — half off the appraised value — as the federal government sells houses it has repossessed.

For people who work in a select range of occupations, the Federal Housing Administration sells houses at half price under its Good Neighbor Next Door program, or GNND. These homes were insured by the FHA and foreclosed on. Now, the Department of Housing and Urban Development is selling them.

Good Neighbor Next Door is for buyers who are teachers, law enforcement officers, firefighters and emergency medical technicians, or EMTs. Buyers who don’t belong to those professions can’t participate in the program.

That’s not the only hurdle. For firefighters or EMTs to qualify, they have to serve the jurisdiction where the house is located. For teachers, the house must fall within the neighborhood boundary of the school where the teacher works.

Buyers who meet the professional requirements must be willing to live in the neighborhood. Good Neighbor Next Door homes are in what the FHA calls “revitalization areas.” These are neighborhoods with some combination of low household incomes, low homeownership rate and high number of foreclosures of FHA-insured properties.

By definition, a revitalization area isn’t vital anymore; it needs fixing up. The goal of Good Neighbor Next Door is “to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters/emergency medical technicians to live in the community,” according to the Department of Housing and Urban Development.

Full story is available on BankRates.com

A new wave of distressed home sales is rippling, more quietly this time, through American cities and suburbs.

Its unsettling effects are playing out here in Manassas, Va., along Brewer Creek Place, a modest, horseshoe-shaped street lined with 98 brick townhouses. Several years after the U.S. foreclosure crisis erupted, the U-Hauls are back.

The last time, banks seized nearly every fourth house on the street through foreclosure. This time, homeowners are going another route: a short sale.

“I love this house, but I just have to leave,” said Leanna Harris, 27, the owner of a corner unit that used to be the builder’s model, with a stone path in the yard and a gourmet kitchen. “I’m at peace with it now.”

The original owner bought the home for $400,714 in 2006; Harris and her husband, both bartenders, paid what seemed to be a bargain price, $289,000, in 2008. But they have fallen behind on their mortgage payments, in part because her husband was out of work. Now they have a $246,000 offer for the home, and the balance on their mortgage is more than that. They want to accept the offer. All they need is their bank’s okay.

Fulls troy is available on Sentinel Source

A countywide program to fix up and flip homes in foreclosure is set to get almost $9 million more from the federal government.

Local officials said they were happy to get the money, saying dozens of homes had been rehabilitated and resold to lower-income homebuyers since the Neighborhood Stabilization Program began last year. But they do not have sanguine expectations that the announcement of additional funding measures up to the county’s festering foreclosure problems.

“It’s great news,” said Jon Moore, chief deputy director of the county Community Development Department. “The need is still there.”

During the first round, Stockton received $12.1 million, and San Joaquin County got $9million for unincorporated areas and other cities. Most of the money has gone to flipping foreclosed homes. There was enough money to buy 84 homes, and 61 of them have been sold, according to the city and county. Money from the sales is being used to buy more homes.

Full story is available on Recordnet.com

J.P. Morgan Chase has seen an increase in the number of permanent home loan modifications they have made over the past months. Currently, as of the August 2010 Making Home Affordable servicer report, Chase has 60,932 permanent home loan modifications. Also, according to the same report, Chase has 22,799 active trial modifications in place.

While many would see this as a positive, especially since there are further reports to indicate more homeowners are being helped through in-house home loan modification plans made directly from mortgage servicers, there is still concern over defaults within home loan modification programs. Foreclosure prevention plans have assisted numerous homeowners avoid the loss of their home, but there have been concerns over the number of defaults homeowners face even when they are given a modification from the Making Home Affordable Program or directly from a mortgage servicer.

Full story is available on Red, White, and Blue Press

Mortgage giant Fannie Mae plans to give military families a break on their home loan payments if they are struggling because of the death or injury of a service member.

The Washington-based company says it will reduce or suspend borrowers’ monthly payments up to six months. Fannie Mae is the largest buyer and backer of U.S. home mortgages, owning or guaranteeing about $3.2 trillion in home loans.

Fannie Mae also says it would suspend reporting to credit bureaus for up to six months to minimize the impact on the borrower’s credit score.

Full story is available on The Associated Press