An abundance of homes on the market in Riley County could mean prices are starting to level off after years of increases. But a jump in national foreclosure rates could make getting a mortgage more challenging for buyers with less than perfect credit ratings. "We have had double digit home price increases for two or three years," said Tom Giller, president of Commerce Bank in Manhattan. "The general statement is that current prices are flat." Recent reports indicate sales of existing homes are declining throughout the country. Sales of existing homes totaled 5.91 million units nationally in the second quarter of 2007, down 10.8 percent from sales in the second quarter of 2006, according to a recent survey by the National Association of Realtors.
Locally, experts say the supply of houses has finally outpaced the demand. "I think Manhattan is still fairly vibrant, although it's slowed down in growth from the last two or three years," Giller said. "I think everyone is keeping an eye on supply and demand." While a leveling of home prices could mean a possible shift from a sellers to a buyers market locally, the uncertainty of home prices in the future and an overabundance of houses has some people want to purchase a home worried. Although buying a home when prices level or lower could mean a good value now; a drop in prices later could mean that buyer might be paying for a home worth less than the purchase price. "There are a lot of concerns with customers of what is going to happen in the Manhattan market," said Michael Brighton, senior mortgage consultant with Capitol Federal Savings in Manhattan. "Some are afraid there will be a downturn in prices." And it's not only home buyers who are worried that market conditions could lead to losses. Mortgage foreclosure filings are rising on a national level, stirring concerns with mortgage investors about poor returns on loans. Foreclosures associated with sub-prime mortgages, which are those often provided to borrowers with weak credit histories are especially high. Foreclosure filings throughout the country are up more than 30 percent from the first six months of 2007 compared to the same period in 2006, according to RealtyTrac, an online marketplace for foreclosure properties. Foreclosure filings in Kansas rose 38 percent during the same period. The result, Brighton said, is that lenders are starting to be more conservative with lending guidelines. "We've had minor changes to our policies this summer as things nationally started hitting the news. "Nationally, we are going through a crunch where it's hard to borrow money in general," he said. "Lenders are more worried about bad loans and foreclosures and are tightening standards a preventative measure to save trouble down the road." Although area lenders said spikes in foreclosure filings haven't appeared to hit the Manhattan/Riley County area the way they have in some major cities, many lenders are tightening up on formerly loose lending practices. "We don't have the same market as a year ago," said Deb Knudsen at Community First National Bank in Manhattan. "It's a tough year for lenders and realtors... I think with all the changes going on in the current market, you're pretty much going to have to have stellar credit." Knudsen said although numbers have dropped from a year ago, business is not stagnant. Giller said Commerce Bank continues to close on mortgages daily, despite slightly tougher lending requirements. One change that even buyers with good credit will likely see is the difficulty of purchasing a home with no down payment. "One-hundred-percent financing is still available," Knudsen said, "but they are toughening up the guideline." Giller also said 100-percent financing is becoming risky in light of market trends, but home buyers with 10- to 20-percent down payments are "ok." "Normal 80 to 90-percent values with good debt ratios are still ok, banks are continuing those," Giller said. "The risky ones are hard to do right now." Changes in lending practices hit the local market within the last three to six months, Giller said, as national default rates went up and housing prices went down on a whole. Purchasing a home with the standard 20-percent down payment provides a cushion to the loan holders in case the value of the home decreases. "I think housing prices nationwide are starting to drop," he said. "If you lent 100-percent (of the home value) and it goes down 10 to 15-percent, whoever has that loan is under water. That makes the holder of the loan nervous." Randall Anderes, president of Sunflower Bank in Manhattan, said lenders are looking forward to troops to return to Fort Riley. "We've had more homes in the market that are for sale than we have had in several years," he said. "We are really looking forward to the return of the military families. That would be a real good thing for our community. I think everyone expects that to happen." In general, lenders said buyers with solid credit and salary history; coupled with a 10 to 20 percent down payment will be most likely approved for loans, while riskier applicants could could run into stumbling blocks. "Buyers who are financially prepared to buy a house will have no problem finding a loan in this market," Brighton said. "In terms of prices — it's anyone's bet of what will happen with home prices. Some are wondering if they should wait a couple years to see if they come down, but there's hardly a guarantee."
Locally, experts say the supply of houses has finally outpaced the demand. "I think Manhattan is still fairly vibrant, although it's slowed down in growth from the last two or three years," Giller said. "I think everyone is keeping an eye on supply and demand." While a leveling of home prices could mean a possible shift from a sellers to a buyers market locally, the uncertainty of home prices in the future and an overabundance of houses has some people want to purchase a home worried. Although buying a home when prices level or lower could mean a good value now; a drop in prices later could mean that buyer might be paying for a home worth less than the purchase price. "There are a lot of concerns with customers of what is going to happen in the Manhattan market," said Michael Brighton, senior mortgage consultant with Capitol Federal Savings in Manhattan. "Some are afraid there will be a downturn in prices." And it's not only home buyers who are worried that market conditions could lead to losses. Mortgage foreclosure filings are rising on a national level, stirring concerns with mortgage investors about poor returns on loans. Foreclosures associated with sub-prime mortgages, which are those often provided to borrowers with weak credit histories are especially high. Foreclosure filings throughout the country are up more than 30 percent from the first six months of 2007 compared to the same period in 2006, according to RealtyTrac, an online marketplace for foreclosure properties. Foreclosure filings in Kansas rose 38 percent during the same period. The result, Brighton said, is that lenders are starting to be more conservative with lending guidelines. "We've had minor changes to our policies this summer as things nationally started hitting the news. "Nationally, we are going through a crunch where it's hard to borrow money in general," he said. "Lenders are more worried about bad loans and foreclosures and are tightening standards a preventative measure to save trouble down the road." Although area lenders said spikes in foreclosure filings haven't appeared to hit the Manhattan/Riley County area the way they have in some major cities, many lenders are tightening up on formerly loose lending practices. "We don't have the same market as a year ago," said Deb Knudsen at Community First National Bank in Manhattan. "It's a tough year for lenders and realtors... I think with all the changes going on in the current market, you're pretty much going to have to have stellar credit." Knudsen said although numbers have dropped from a year ago, business is not stagnant. Giller said Commerce Bank continues to close on mortgages daily, despite slightly tougher lending requirements. One change that even buyers with good credit will likely see is the difficulty of purchasing a home with no down payment. "One-hundred-percent financing is still available," Knudsen said, "but they are toughening up the guideline." Giller also said 100-percent financing is becoming risky in light of market trends, but home buyers with 10- to 20-percent down payments are "ok." "Normal 80 to 90-percent values with good debt ratios are still ok, banks are continuing those," Giller said. "The risky ones are hard to do right now." Changes in lending practices hit the local market within the last three to six months, Giller said, as national default rates went up and housing prices went down on a whole. Purchasing a home with the standard 20-percent down payment provides a cushion to the loan holders in case the value of the home decreases. "I think housing prices nationwide are starting to drop," he said. "If you lent 100-percent (of the home value) and it goes down 10 to 15-percent, whoever has that loan is under water. That makes the holder of the loan nervous." Randall Anderes, president of Sunflower Bank in Manhattan, said lenders are looking forward to troops to return to Fort Riley. "We've had more homes in the market that are for sale than we have had in several years," he said. "We are really looking forward to the return of the military families. That would be a real good thing for our community. I think everyone expects that to happen." In general, lenders said buyers with solid credit and salary history; coupled with a 10 to 20 percent down payment will be most likely approved for loans, while riskier applicants could could run into stumbling blocks. "Buyers who are financially prepared to buy a house will have no problem finding a loan in this market," Brighton said. "In terms of prices — it's anyone's bet of what will happen with home prices. Some are wondering if they should wait a couple years to see if they come down, but there's hardly a guarantee."
Article by Kevin Elliott, The Manhattan Mercury
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