Economy

The growth of the suburbs might eliminate a government no-down-payment loan option in some areas of Virginia, pricing some buyers out of those markets.

With all the hubbub about Fannie Mae, Freddie Mac, and the FHA, one zero-down-payment government loan option hasn’t got much attention: USDA loans. The Department of Agriculture will guarantee a 30-year loan with no down payment for rural buyers with “reasonable credit.” It’s called the USDA Rural Development Single Family Housing Guaranteed Loan Program.

Here’s the catch: The point of the program was to get people to move to rural areas. Every 10 years, when it finishes parsing the US Census data, USDA tweaks its maps of what’s rural and what isn’t.

Money magazine’s 2012 list of 100 best places to live (in the U.S., anyway) includes four from the Commonwealth — and one of them made the top 10.

Reston (#7): “Activities come in all stripes too, from an über-urban downtown to 55 miles of bike paths, 52 tennis courts, and 15 pools.”

Centreville (#17): “…strikes the right balance for those who want to escape big-city life without sacrificing big-city job opportunities.”

Ashburn (#30): “Ashburn has a high median income thanks to its abundance of well-paid technology jobs, but housing in the area is still relatively affordable.”

That is the question being asked at recent housing information forums across Virginia.  The General Assembly decided this year to initiate a Virginia Housing Trust Fund, utilizing a portion of the National Mortgage Settlement funds…$7 million to be exact.  The trust fund will be administered by the Department of Housing and Community Development working in collaboration with the Virginia Housing Development Authority, to provide loan origination and servicing activities as needed.  80% will go to financing for low interest loans and 20% used for grants to reduce homelessness.  The next step is to submit a plan on exactly how the funds will be allocated.

The latest figures from MRIS (whose MLS covers much of Virginia) show that distressed homes — sold as either a foreclosure or short sale — made up a significantly smaller percent of the market than a year ago.

Total distressed sales went from 25.2% of the market in July 2011 to 20% in July 2012. Interestingly, the percent of short sales was up slightly (10.2% to 11.3%), while foreclosures dropped dramatically (from 15.1 to 8.7%).

Read more over at Calculated Risk.