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Of course, not all change is a good thing:  According to Lisa Marquis Jackson, Vice President of John Burns Real Estate Consulting, among the policy changes the FHA is considering is a plan that limits their participation in underwriting loans for condominium sales to a total of only 30 percent of the project.   Which leaves the condo builder and condo buyers BOTH wondering:  who will insure the other 70 percent?

Stop and consider what that could mean to the sales pace in recovering markets, like San Diego, San Francisco and Oakland.  Only a portion of those sales are made to move-down buyers who can afford a traditional down payment.  The first-time buyer, who has helped buoy sales figures in markets that were shuttered early in this recession, can’t afford the higher down payment that other lenders are going to require.  Prices have just found a bottom, and in some markets, are starting to see some recovery—but is this going to be a short-lived phenomenon?

Lisa talks today about loan modification programs under the FHA.  Unlike the streamlining program originally envisioned, she sees the future of refinance as complicated, slow moving, and burdened with heavier information requirements.

Good information and a very complete question-and-answer forum exist on the HUD web site: www.hud.gov.

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There are a lot of reasons behind in the FHA’s current problems, and Lisa Marquis Jackson, Vice President of John Burns Real Estate Consulting, is in the studio with The Real Story this week to talk about how each of the ingredients has contributed to this recipe for another real estate setback come November.

The FHA has been propping the housing market by insuring loans with down payments as low as 3.5 percent—loans whose defaults, not surprisingly, are on the rise. Mortgage brokers who specialized in subprime loans back in 2007 reinvented themselves as FHA loan specialists during the downturn, expanding the number of approved FHA lenders from 9,600 at the end of 2007 to approximately 14,000 today. When HUD released its audit figures for 2008, it showed that the FHA capital ratio had declined from 6.4 percent to 3 percent.  The 2009 audit is expected to show that the FHA cannot stay above the minimum 2 percent capital reserve level.

So what does this all mean to the consumer? This financial reality check is coming to Capitol Hill just as the $8,000 first-time buyer tax credit program is due to expire. If the minimum down payment is raised, what will that do to the fragile recovery in residential home sales, which is currently been fueled by first- time buyers entering the market?

At the beginning of September, Lisa asked why the FHA has no Chief Credit Risk Officer. Two weeks later, her question was answered when, for the first time in 75 years, a Chief Risk Officer position was created, to serve as a watchdog. Will we see more conservative underwriting come of this change? Fewer FHA-approved lenders? Higher minimum down payments? How can we not expect that kind of reaction to the potential shortfall?

The Real Story will be covering West Coast Green, the nation’s largest conference on green innovation for the built environment. Beginning this Thursday, October 1st and running through Saturday, the event will showcase 125 speakers, 80 educational sessions and 300 exhibits at San Francisco’s Fort Mason Center. We’re thinking it’s going to be greeniac heaven.

The goal of the conference is to create an atmosphere where enthusiasts of every shade of green can connect and ideas can fly. Anyone with even a passing interest in a greener built environment will find an engaging conversation. Attendees (about 14,000 are anticipated) will learn the latest in the following tracts:

• Smart Energy Systems with details on developments in smart grid technology, energy management dashboards, buildings as systems, utility networks and the increasingly interconnected environment
• CleanTech and Products. Learn who’s pushing the envelope and where the finance is coming from, hottest materials on the market and those on the horizon.
• Building 2.0 will provide insight into policies and stimulus funds supporting commercial and residential retrofits, new construction and high performance buildings
• Business Opportunities and The New Economy. A close look at capital market transformations, better business models, and funding for big ideas
• Social Innovation. Discussions about successful public-private partnerships, global initiatives and incentives that serve the highest good

A full program and speakers list (which, by the way, includes such green luminaries as Bill Reed, Michelle Kaufman, Stewart Brand and Dan Kammen) are available on the conference web site.

On display will be the Integrative Show Garden, a hanging garden suspended from a bamboo structure over the bay. This visionary garden is an example of vegetated architectural systems that enhance building performance, reduce infrastructure impact, heat island effect mitigation, carbon sequestration, improved air and water quality, habitat restoration and increased biodiversity.

Also making a special appearance are self-sustaining homes, on-demand housing structures for emergency- and temporary-housing applications.

The conference’s After Party will be held at The California Academy of Sciences, the greenest museum in the world. With libations and dancing on the program, it’s a great excuse to see this truly innovative architectural masterwork.

Our reports from West Coast Green will air later in October.  Follow us on Twitter (@realstoryblog) for updates.

Photo caption: a living wall is demonstrated at the 2008 West Coast Green. Image courtesy of West Coast Green.

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Never in its 70+ year history has the Federal Housing Administration been so busy in its mission of providing mortgage insurance. Today, the FHA holds the loans for 5.2 million single-family homes and more than 13,000 multi-family (attached) home projects. But is all of this activity a good thing? And can the FHA keep up with the demand created by first-time buyers in recent months?

To get some answers, The Real Story called Lisa Marquis Jackson, a Vice President at John Burns Real Estate Consulting and director of the company’s qualitative analysis services. Lisa has covered the FHA as a business journalist, and has recently been following the up tick in the number of loans in the FHA’s portfolio.

For some background, the FHA was established in the 1930’s in an attempt to increase homeownership during the Depression. As a part of HUD, the FHA offers low down payments, easy credit qualifying, eligibility to people with less than perfect credit, a loan at reasonable cost, and even money for home repairs. It’s all there on its website:  www.hud.gov/fha” www.hud.gov/fha.

What the website doesn’t tell you is that the FHA used to be responsible for the mortgage insurance on about 2 to 3 percent of the mortgages made in the United States—and now it has booked about 23 percent of all loans. An FHA-approved loan is considered a safe loan because the FHA will pay the lender if the homeowner defaults. But is it a safe investment for the government?

Lisa gives us the back story on the FHA today, and during the week, pokes at  some of the loopholes in the FHA’s business plan. Stay tuned.

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To buy a new home in San Francisco, you need to come up with about $100,000 to play, according to Paul Zeger of Pacific Marketing Associates. If you don’t have that, Paul offers two resourceful suggestions.

First is to consider Oakland. Oakland is experiencing a slower escalation in sales than San Francisco. There’s still a lot of uncertainty in pricing, so there’s room for negotiation. But the potential is enormous: the Jack London Square location is primed for resurgence. New planned development, the ferry connections to the Financial District, a walkable ambience, transit connections and proximity to work centers along the I-80 corridor all contribute to its desirability as a residential address. Paul predicts this area will boom as the hiring begins again.

Second is to research affordable housing programs. All cities in California have been encouraged to provide housing for median income households by in essence partnering with the City in the purchase of a home. These are called Below Market Rate homes or Affordable Housing Programs. To find out more about below market rate opportunities, contact your city’s housing office.

Paul observes that the negotiated price for new homes today is higher than it was six months ago, and a year ago we were in freefall. He suggests anyone who can get their foot in the door should do so soon, so they can ride the wave as values increase.

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San Francisco is such a livable City, it attracts home buyers from all walks of life. In today’s podcast, we talk to Paul Zeger of Pacific Marketing Associates about two of these groups: the “adventurous creatives” and the Boomers looking for a lifestyle change.

The adventurous creative buyer is always the an enthusiastic pioneer, willing to move into newly redeveloped areas such as Dogpatch and the area between Portrero and The Mission called Noname Gultch. They are usually buying their first home, so there’s nothing holding them back from taking advantage of today’s buyer’s market.

The other group Paul is seeing is the Baby Boomer, now empty nesters. Still working in the City, they want to take advantage of the city amenities to make a lifestyle change. Paul sees them moving into new areas like Mission Bay.

Here are some interesting observations Paul shares:
Home prices are currently at 2004 levels, which represents a 25% to 30% drop over the height of the market.

You can currently buy a new home at 60% or 70% of what it cost to build it.

If you have a home to sell, even if it’s not the price you could have commanded a few years ago, you’re getting more for your money on the buying side. So moving down may make sense.

Download our conversation with Paul on iTunes.