Are we there yet? Signs in March indicate bottom may be near

Trends in the housing market through the end of March suggest we might be seeing a bit of stabilization in the market, if not necessarily improving conditions for sellers.

On the plus side this month, total inventory continued to decrease dropping below the peak levels in 2006 - 2008. Likewise, the increasing gaps in inventory to sales (or absorption rate) seen over the past couple of years appeared to be leveling off. The rate was 10.1 months of inventory compared to 9.8 months of inventory at this time last year - even with a lower number of sales for the period.

At the national level, the Case Shiller Price Index showed decelerating price declines and first-time buyers were an increasing volume of sales accounting for 53% of transactions.

Areas to watch continue to be the level of foreclosure and short sales. This month the volume in the Cincinnati MLS was approximately 40% of sales compared to near 50% in January and February. While this might be a good sign, many banks delayed foreclosures while new government programs were put into effect. Banks have now started up foreclosure proceedings again which could put more inventory on the market in the coming months.

Cincinnati market data snapshots:

• March '09 sales vs. inventory
• March '09 absorption rate
  

Demand-response switches could save you money

The temperature today in Cincinnati rose above 80 degrees for the first time in a good while. While our springtime has been on the cooler side so far, folks will be trying out their air conditioners very soon.

A recent Wall Street Journal article highlighted how some companies are poised to benefit from devices that manage peak energy demand such as those made by "Comverge". The devices reduce or shut off power during periods of high usage, mostly during hot summer days. Locally, Duke Energy has been making a power-saving device available for some time. The "Power Manager" program adds a switch to a home's air conditioning unit so that it may cycle off at certain intervals. Just signing up for the program will fetch you between $25-35.

While cycling off your AC during the hottest of days may seem like an unpleasant thought, Duke offers a couple of different installation methods which might ease the process. The program that offers that highest savings on your bill cycles your AC off for longer periods. Duke's information suggests this may cause the temperature to rise 3 to 4 degrees during this period. However, if your home is relatively well insulated and sealed, then it would be reasonable to expect that the change in temperature you'd experience would be reduced. For those concerned with these longer outages, the optional installation minimizes the outage duration. That option, of course, does reduce the savings you will receive as a program participant.

If you are looking to save a few bucks these days - and who isn't? - I certainly recommend checking out this program to see what it might do for you. At the same time, review my previous article on maintaining your AC along with these summer preparation tips from "frugaldad" that could also help keep more money in your pocket.

Local lenders have credit flowing - at a glacial pace

Looking to refinance your current mortgage? Expect delays ahead. Local lenders I've been talking to in the Cincinnati area are all singing the same tune: they are swamped with people trying to refinance their homes, and those that can refinance will have lots of additional scrutiny to get approved.

Several events have mortgage lenders log-jammed:

• Rates have reached historic low levels
  
• First-time buyers are entering the market to take advantage of the $8000 tax credit
  
• Loan guidelines and rules are changing frequently
• The Making Home Affordable program was implemented to help reduce foreclosures
  

One of the areas where the process is particularly backlogged is in underwriting. As housing declined, many of these lenders laid off underwriters and are now understaffed as new loans make their way through processing. Many are scrambling to bring new personnel on board, but training of new staff requires time from the experienced underwriters causing further delays.

In most cases, lenders prioritize new purchase mortgages ahead of refinancing. Even with priority, some new purchases are taking 45 - 60 days to close compared to a typical period of 30 days. Those in position to refinance should also expect far greater scrutiny of their finances before being approved and expect the process to take anywhere from 30 - 90 days - or longer.

Here are some tips you may want to consider should you want to refinance:

• Be sure to have all your financial records in order including 2 years of tax statements, 30 days of recent pay stubs or other income verification, bank statements and documentation of any assets.
  
• Be prepared to explain any extraordinary and undocumented deposits (lenders will want to know the source of any external funds)
  
• Evaluate fees and requirements on different loan types. For example, an FHA cash-out refi requires two appraisals.
• Different lenders have different programs. Do a little homework to find out which program will work best for you.
  

Good luck!