Open House by Jim Woodard

College towns have unique characteristics and benefits for home buyers. This is a fact of real estate life that is seldom recognized by consumers.

A recent study revealed that homes in these communities offer generally undiscovered benefits. They are affordable and those markets are exceptionally stable. The cultural and economic stability associated with higher education institutions make them exceptionally desirable for the purchase of homes and other real properties.

Coldwell Banker Real Estate conducted the study while compiling data for their annual Home Price Comparison Index. They found that the average four-bedroom home costs less than $250,000 in 62 percent of college markets surveyed.

The study centered on an apples-to-apples comparison of 2,200-square-foot, four-bedroom, two-and-a-half bathroom homes in college markets. The most affordable market was Akron, Ohio, where a typical home costs $121,885. Next was Muncie, Ind., where the typical price was $144,996, followed by Ann Arbor, Mich., where the price was $148,000.

"Further research indicates that the charm and affordability of college towns is appealing to more than just students. College markets have long been one of the real estate industry's best kept secrets," said Jim Gillespie, Coldwell Banker's president. "People have been investing in college towns for years, often purchasing homes for their children who attend college in the area.

"However, these vibrant cities are not only for students. Many empty nesters and families are attracted to the health care systems, culture and overall quality of life that college towns offer," he said.

Q: Are FHA mortgages really stable in today's market?

A: FHA mortgages are in a financially strong and stable position. That was confirmed in a recent audit showing that the Federal Housing Administration (FHA) had about $31 billion in total reserves — it will certainly not need any special support from taxpayers.

"As private lenders tighten their credit standards and capital sources are diminished, FHA continues to fill the void in the market by insuring single- and multi-family loans to qualified buyers who might not otherwise be able to secure a loan at a reasonable cost," said Conrad Egan, president of the National Housing Conference.

"Almost 50 percent of all first-time home buyers in the housing market used an FHA loan in the second quarter of 2009."

FHA has quite a history in helping families attain a home of their own. The agency has proved this type of support to the nation's housing markets over its 75 years of service, resulting in a positive return for taxpayers, Egan noted. Of course, with an increased FHA role there is initial financial risk, but many experts agree that the worst is over for the current crisis.

Recent default rates on FHA loans are not anticipated to be as great as previous loan defaults. The credit quality of agency-insured borrowers has gone from an average FICO score of 633 two years ago to 693 today, making the loans that FHA is insuring now less risky.

It should be noted that FHA does currently face challenges and is implementing needed reforms. To be more specific, the agency is emphasizing additional real-time monitoring of portfolio management and delinquencies — all in the interests of minimizing risks to remaining capital. FHA is also tightening rules for appraisers and streamlining refinance and lender approvals to help prevent further erosion of its financial reserves and ensure increases in those reserves.

"We are encouraged by the corrective actions FHA is taking," said John Courson, president of the Mortgage Bankers Association. "This should help FHA come out of the current housing crisis positioned to continue its mission of promoting more affordable mortgage credit for borrowers."

Q: What's the prognosis for home sales in 2010?

A: The outlook appears to be very healthy for residential sales in the coming year. Home sales will increase by 15 percent to about 5.7 million units, predicted by Lawrence Yun, chief economist for the National Association of Realtors.

One key factor in spurring sales projections is the extended and expanded home-buyer tax credit. This will have a particularly strong impact in the lower-end of the housing market, bringing up to 400,000 first-time buyers into the market who wouldn't have bought a home otherwise, Yun noted.

This will tighten inventories of starter homes and will shore up prices, thus reducing homeowners' fears of further price drops, Yun added.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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