Positive News and a Happy New Year! This Week’s Real Estate News: December 24-30

I am continuing to strive for positive news to start off the weekly headlines...

Price declines in the tri-valley area of Los Angeles County are not nearly as great as the media would have you believe. The overly-negative Standard & Poor’s/Case-Shiller index shows home prices declined only 8.8% over the past quarter. More below... (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)

Los Angeles area isn’t even mentioned among the top housing decliners in a survey by CNNMoney. More below... (12/28)

High Desert area, including the Antelope Valley, continues to have the most affordable homes in the state. More below in Fast Facts (CAR, 12/27)

U.S. home prices fell 6.7 percent in October, their largest monthly drop since early 1991, according to the Standard & Poor’s/Case-Shiller index. This index surveys over 100 markets, but does not adjust for price differences between markets. It therefore tends to overestimate the swings of the higher-priced markets, such as LA. (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)

Least Expensive Housing Market: Killeen, TX, with average price of $136,725 (CNNMoney, 12/28)

Least Affordable Major City: Los Angeles, CA, only 3.7% of homes sold in L.A. during the third quarter were affordable to families earning the median income for the area ($61,700). (CNNMoney, 12/28)

Fastest Price Gains: Bismark, ND had a 12-month increase in home prices at 15.3%; Salt Lake City, UT; Yakima, WA; Binghampton, NY; and Charlotte, NC all had at least 11% price gains over the past 12 months. (CNNMoney, 12/28)

Biggest Drop in Home Price: Palm Bay, FL, followed by Sacramento, CA, Sarasota, FL, New Orleans, LA, and Hagerstown, MD with greater than 8% drops in price. Notice that although S&P/Case-Shiller showed the LA dropped more than 8.8%, the area didn’t even rank on is list, giving credence to the S&P/Case-Shiller index being overly pessimistic on LA housing price drop. (CNNMoney, 12/28)

Biggest Projected Decline expected in Punta Gorda, FL (35% from its peak to the expected trough), Stockton, CA (31.6%), Modesto (31.3%), Ft. Walton Beach, FL (30.4%), and Naples, FL (29.6%). (CNNMoney, 12/28)

Standard & Poor’s/Case-Shiller index numbers: Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent. Only Charlotte, N.C. (4.3 percent), Portland, Ore. (1.1 percent), and Seattle (3.3 percent) showed positive price growth. (CNNMoney, 12/28)

Mortgage Applications Up from Last Year: Mortgage applications fell last week but they were up nearly 10 percent compared to the same week last year, according to the Mortgage Bankers Association’s weekly survey. The seasonally adjusted mortgage application index fell 7.6 percent in the week ended December 21 to 603.8 -- its lowest reading since falling to 575.6 in the December 29, 2006 week. The applications slump this week and last, however, appears to more closely reflect the status of ailing housing sales. The MBA's seasonally adjusted refinancing applications index fell 8.5 percent to 1,915.3 last week, its weakest point since early September. Home applications trailed off last week despite falling mortgage rates. One-year adjustable mortgages tumbled 45 basis points in the week to 6.03 percent, the lowest since mid-November. Fixed 30-year mortgage rates averaged 6.10 percent last week, down 8 basis points, the association said. (AP, 12/26)

Commerce Department reported that new home sales in November plunged to their lowest level in 12 years, tumbling 9 percent to a seasonally adjusted annual rate of 647,000. (AP, 12/28)

Weak Dollar Continues – Due to uncertainty after assassination of former Pakistani Prime Minister Benazir Bhutto and a report that new home sales dropped in the United States. (AP, 12/28)

National Association of REALTORS to report existing house sales numbers on Monday 12/31. (AP, 12/26)

Orders for the big-ticket manufactured items known as durable goods fell significantly short of expectations in November, the Commerce Department said Thursday, in a disappointing report that added to the growing concerns about the U.S. economy's health. (CNNMoney, 12/27)

California Housing Starts Down 45% - The number of permits issued for new homes in California in November was 5,498, a 45-percent decline from November 2006, according to new data from the California Building Industry Association. Year-over year production of single-family homes declined by roughly 50 percent in November, and construction of multifamily units slid 36 percent. (CAR, 12/27)

Lastly Ending off in Worldwide Real Estate - U.K. Nationwide House Prices Fall for Second Month in December, Drop 0.5% U.K. house prices fell for a second month in December, indicating that higher credit costs are snuffing out a decade-long property market boom, Nationwide Building Society said. (Bloomberg, 12/28)

Fast Facts:
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 12/20: 30-yr. fixed: 6.14%; Fees/points: 0.4% 15-yr. fixed: 5.79%; Fees/points: 0.4% 1-yr. adjustable: 5.51%; Fees/points: 0.6% (Source: Freddie Mac)

Sources: KNX-AM, Freddie Mac, California Association of Realtors, Bloomberg, CNNMoney, Associated Press, Los Angeles Times.

Positve Thinking: This Week's Real Estate News, Decemebr 17-23

Merry Christmas!

The news media has been throwing out negative news on the housing market, and I’m guilty of reporting it in this column. I am reminded that the market is NOT that bad – I am staying busy in the business, and this isn’t the early 1990s. I’m going to make an effort to at least find some positive news as I continue to relay the current news that affect your home (or your future home).

Positive Fact: 30% of homeownership is free-and-clear. (M.Lush, 12/21)

SoCal is NOT THE WORST: Battered by a declining manufacturing base, low or no population growth and low demand for housing, Michigan and Ohio rank No. 1 and 2 on mortgage finance company Fannie Mae's list of states with the largest credit losses through Sept. 30. In contrast, California had $30 million in write-offs and Florida had $21 million. (AP, 12/17)

Riverside County remains the fastest-growing county in California, although its population growth rate is declining, partially due to the housing slow-down. (Riverside Press-Enterprise, 12/20)

Fresno area real estate agents offer tours of properties in foreclosure, and there are plenty available: roughly 12 percent of those listed for sale, or about 500. (Fresno Bee, 12/20)

Foreclosure Rate Improves over prior month – Foreclosures nationally declined 10 percent in November compared with October, but were up nearly 68 percent compared with November 2006, according to RealtyTrac, a foreclosure sales and data company. The national foreclosure rate in November was one filing for every 617 households. Nevada continued to register the nation's top state foreclosure rate for the 11th straight month. A total of 6,694 foreclosure filings were reported in the state for the month, up 1 percent from the previous month and up 167 percent from November 2006. (RealtyTrac, Reuters, 12/19)

The Fed developed new rules to prevent mortgage mess from happening again, restricting lenders from penalty for paying off early, eliminate no-doc loans, and force lenders to make sure borrowers set aside some funds for taxes and insurance. Ed Smith, with California Association of Mortgage Brokers, says it’s identical to H.R. 3915, which passed the U.S. House of Representatives, and a similar one that passed the Senate and is now in compromise committee. (KNX-AM, 12/18)

On Friday, December 14, 2007, the U.S. Senate voted 93 to 1 to pass S. 2338, the FHA Modernization Act, which will reform the Federal Housing Administration (FHA). A conference committee will now meet to resolve differences between this bill and the one passed by the House of Representatives earlier this year. (Personal Email from CAR, 12/17)

President George W. Bush signed legislation into law on Thursday that will ease the tax burden for home owners who have had debt forgiven on a mortgage due to a foreclosure, short sale, or deed in lieu of foreclosure. The bill — Mortgage Forgiveness Debt Relief Act — has been supported by NAR since the 1990s. (AP 12/18)

Mortgage Applications Fall as Rates Rise - Applications for home mortgages fell 19.5 percent to 653.8 last week compared with the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly mortgage applications survey. On an unadjusted basis, the index decreased 21.3 percent, but was up 1.7 percent compared with the same week a year ago. The Refinance Index decreased 27.3 percent, while the Purchase Index decreased 10.6 percent. The decrease could have been triggered in part by rising interest rates: 30-year fixed-rate mortgages increased to 6.18 percent from 6.07 percent; 15-year fixed-rate mortgages increased to 5.78 percent from 5.72 percent; 1-year ARMs increased to 6.48 percent from 6.31 percent. (Mortgage Bankers Association, 12/19)

November Home Sales in CA - Home sales decreased 36.2 percent in November in California compared with the same period a year ago, while the median price of an existing home fell 11.9 percent. (CAR, 12/21)

Sales of new homes in the U.S. fell in November, signaling no end to the housing recession that threatens to stall economic growth, economists said before a report this week. Purchases fell to an annual pace of 718,000 from 728,000 in October, according to the median forecast of economists surveyed by Bloomberg News. The 716,000 pace reached in September was the lowest since 1996. The real-estate slump, already the deepest in 16 years, shows no sign of abating as discounts fail to lure buyers and inventories swell. The risk that the slowdown will spread through the entire economy is prompting business to rein in orders for new equipment, a separate report may also show. (Bloomberg, 12/23)

How is your monthly mortgage payment? The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,111 last month, down from $2,198 the previous month, and down from $2,281 a year ago. Adjusted for inflation, the current payment is 3.6 percent lower than the spring of 1989, the peak of the prior real estate cycle. It is 15.4 percent below the current cycle's peak in June last year. (DQNews.com, 11/14)

Federal regulators are investigating whether mortgage lender Washington Mutual Inc. pressured Santa Ana-based First American Corp. to inflate home appraisals. (LA Times, 12/21)


A December reading of U.S. homebuilders' sentiment remained at a record low for the third straight month. The National Association of Home Builders said Monday its housing market index, which gauges builders' perceptions of conditions and expectations for home sales over the next six months, came in at 19 in December. The number was at the lowest level since the index began in January 1985. Upswing in building activity expected by second half of next year. (AP, 12/17)

California November 2007 Home Sales - A total of 25,578 new and resale houses and condos were sold statewide last month. That's down 0.98 percent from 25,832 for October, and down 38.8 percent from 41,809 in November 2006. Last month's sales made for the slowest November in DataQuick's records, which go back to 1988. On a year-over-year basis, sales have declined the last 26 months. The median price paid for a home last month was $414,000, down 2.4 percent from $424,000 the prior month, and down 11.9 percent from $470,000 for November a year ago. The median peaked last March/April/May at $484,000. Price declines are greatest in inland areas such as the Central Valley and Riverside County, which absorbed spillover activity during the housing boom. Prices in some core metro areas are off by a few percent. (DQNews, 12/21)

Southland prices fall again, sales perk up – Southern California home sales bucked the seasonal norm in November and rose slightly over October, thanks to bargain shopping and an uptick in new-home sales. But it remained a chilly market by historical standards: Sales were the slowest for a November in at least 20 years and the median sale price posted a record 10.3 percent year-over-year decline. A total of 13,173 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November. That was up 2 percent from 12,913 sales in October, and down 42.7 percent from 23,005 in November last year, according to DataQuick Information Systems. Last month's sales were the lowest for any November in DataQuick's statistics, which go back to 1988. The previous low was in November 1992, when 15,446 homes sold. November has averaged 22,749 sales over the last 20 years. The number of single-family houses that resold in November was about even with October, while condo resales fell 6 percent. The sales are based on the number of escrows that closed each month. (DQNews, 12/18)

Sources: M. Lush, KNX-AM, California Association of REALTORS (CAR), Associated Press, Mortgage Bankers Association, RealtyTrac, Reuters, Bloomberg, DQNews.com, Fresno Bee, Los Angeles Times, Riverside Press-Enterprise.

Less than 9 days ‘til Christmas: This Week’s Real Estate News, December 10-16

The market was initially disappointed with the 1/4% drop in Federal Funds and Discount Funds Rates by the Fed on Tuesday. The Fed followed Wednesday with an agreement with world Central Banks for the opportunity for U.S. banks to “auction” for additional funds. Later in the week, Producer Price Index rose dramatically, signaling inflation. The people I hear speculate that the Fed had already known these numbers, and therefore were more conservative in its rates drop. (KNX-AM, 12/11, 12/12)

The Fed seeks to add protections to back even the riskiest borrowers, already hit hardest by the housing and credit crunches. Rules expected to be proposed Tuesday would apply to loans made by all types of lenders, including banks and brokers. The plan from the Fed, which has regulatory powers over the nation's financial system, could be finalized next year. (AP, 12/11)

More to Come in 2008: For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008. Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year. Existing home sales will drop 12 percent and existing home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate almost 1 million mortgage loans will default in 2008, up from about 300,000 this year. (Bloomberg, 12/14)

USGS has released mudflow maps showing the potential for destructive mudslides in the wake of the recent Southern California wildfires at http://landslides.usgs.gov/research/wildfire/07sca/. They estimate the size of potential debris flows, commonly known as mudflows, and the areas that could be affected when rainfall begins on recently-burned areas. According to the National Weather Service, hillsides that have been denuded of brush and vegetation by fire can often become unstable because they lose the root systems that hold dirt in place. Heavy rains can over-saturate the vulnerable soil which can then lead to hillsides giving way under pressure.

Recession? “Morgan Stanley became the first major Wall Street firm this week to predict a recession, a mild recession,” said KNX Business Hour host Frank Mottek. (12/11)

Fannie Mae and Freddie Mac are changing their criteria for purchasing delinquent home loans they've guaranteed, in order to reduce the number they buy from investors. (AP, 12/11)

Los Angeles city officials are considering a law aimed at curbing the building of so-called “McMansions,” by limiting the square-footage of new or remodeled houses. (LA Times, 12/11)

Robert Kiyosaki (Rich Dad, Poor Dad) says that buying foreclosures is for the experts, and even he doesn't pursue them. Foreclosure purchases may be on the rise, but reportedly they can come with many pitfalls and take much longer to complete than a traditional home sale. (KNX-AM, 12/10, LA Times, 12/10)

The NATIONAL ASSOCIATION OF REALTORS®’s revised monthly forecast calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million, but predicts sales in 2008 will be higher than the trade group predicted a month ago. (AP, 12/10)

The median price of an existing home sold jumped 43 percent between 2001 and 2005, but year-over-year price declines started in late 2006 and are expected to fall almost 2 percent this year, according to the National Association of Realtors. That would mark the first year with a decline in prices. (AP, 12/10)

What has started as the U.S. Housing Crisis has become the Global Credit Crisis (KNX-AM, 12/13)

Mortgage applications rise: Mortgage application volume increased 2.5 percent for the week ending Dec. 7, according to the trade group Mortgage Bankers Association's weekly application survey. The MBA's weekly application index rose to 811.8 from 791.8 the previous week. Refinance volume increased 4.3 percent, while purchase volume grew 1.7 percent. Refinance applications accounted for 57.6 percent of total mortgage applications during the week ending Dec. 7, compared with 56 percent during the prior week. The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week. Mortgage applications rose despite a jump in interest rates. The average interest rate for traditional, 30-year fixed-rate mortgages grew to 6.07 percent during the week ending Dec. 7, from 5.82 percent during the prior week. The average interest rate for one-year adjustable-rate mortgages increased to 6.31 percent from 6.28 percent. (AP, 12/12)

On Capitol Hill, follow-up on last week: Key senators have reached a deal to expand the nation's largest federal homeownership program in a move that could help struggling subprime borrowers avoid foreclosure, legislative and industry sources said. If the deal holds, underwriting standards at the Federal Housing Administration will be loosened so that the program can help 200,000 troubled borrowers save their homes, according to the overseers of the program. Under the deal, lawmakers have agreed to a limited debate on FHA reform that will allow the full Senate to vote on the reform package. The Senate moved Friday against the worsening mortgage crisis, voting to make it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans. The legislation, approved 93-1, would allow the Federal Housing Administration to back refinanced loans for borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels. (AP, 12/13, 12/14)

This week in Economics: On Thursday, the Commerce Department releases its final reading on third-quarter gross domestic product. Economists are anticipating GDP to come in at 4.9 percent, as estimated last month; however, they are less optimistic about growth in the quarters to come. Late in the week will be the Labor Department's report on personal income and spending in November, which will also include the Fed's preferred inflation measure: the core personal consumption expenditures deflator. Core PCE is expected to show year-over-year growth of 1.9 percent - within the Fed's comfort range of 1 percent to 2 percent. (AP, 12/16)

Once again, like last week, I’ll close with a view of worldwide real estate, this week, we’ll focus on England. London Leads Biggest Drop in British House Prices for at Least Five Years London led the biggest drop in U.K. home values for at least five years this month as higher mortgage costs and the prospect of further declines in prices kept away buyers, a report by Rightmove Plc showed. U.K. Commercial Real Estate Returns Drop by Record Amount, IPD Report Says U.K. commercial real estate returns fell by a record amount last month as higher interest rates and a drop in bank lending pushed prices down, according to Investment Property Databank Ltd., a London-based research firm. (Bloomberg, 12/14)

Fannie Mae chief executive tells shareholders he sees no recovery in housing before 2009 - blames unaffordable prices for current housing woes. Average home prices will decline another 4 to 5 percent in 2008, according to Fannie Mae Chief Executive Dan Mudd. (CNNMoney, 12/14)


Sources: KNX-AM, Associated Press, Bloomberg, Los Angeles Times, CNNMoney.

Another Fed Rate Cut Almost Certain: This Week’s Real Estate News, December 3-9

Big news for the upcoming week is the expected quarter-point cut in the Federal Funds Rate: Analysts expect the Fed to trim its key rate, now at 4.5 percent, by one-quarter of a percentage point at the meeting Tuesday. Some even speculate about the possibility of a half-point cut. Stocks are spring-loaded, awaiting that next Fed move, and could no doubt rally heartily, if briefly, should the bigger cut be announced. The Fed is also seen trimming the 5 percent discount rate by a quarter point or more. (KNX-AM, AP, CNBC, multiple dates)

Two jobs growth numbers were released this past week: Both the ADP Jobs Growth in the private sector and the Labor Department numbers showed a moderate growth in jobs. (KNX-AM, 12/5, 12/7)

The big real estate news from the past week came from Washington. The Bush administration unveiled a foreclosure relief plan, includes a five-year freeze on interest rate hikes for some subprime borrowers with adjustable-rate mortgages (ARMs). The White House says it could help 1.2 million distressed homeowners. In separate announcements, President Bush and Treasury Secretary Henry Paulson said the plan will streamline the mortgage modification process for many distressed borrowers. It will offer "more relief to more homeowners, more quickly," the president said. And it will include a five-year freeze on interest rates for borrowers current with their monthly payments. (CNN Money, 12/7)

Foreclosure Relief Plan Drawbacks - I hear overwhelmingly that this plan is too limited: It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months. It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates. Borrowers who can't afford the loan even at low introductory rates also will be ineligible, according to Anne Canfield, executive director of the Consumer Mortgage Coalition, which represents lenders and mortgage servicers. Those borrowers will have to work with servicers on a case-by-case basis to determine if their homes can be saved. Additionally, the loan-to-value-ratio of the mortgage must be less than 97 percent. That is, the face amount of the loan must be less than what the home is actually worth. FICO credit scores also must not exceed 660 or have gained more than 10 percent since the origination of the mortgage. (CNN Money, 12/7; KNX-AM, 12/6; CNBC, 12/7)

Foreclosure Relief Plan Critics: Analysts also are arguing if this is the best thing for the economy and the open, Capitalist market that America is known for. Ben Stein, an economist, says it’s sad to see the government interfere with contracts between people and institutions. This Plan may go to court. Other economists and analysts are disappointed that the Plan prevents the fair market from ironing this out on its own. But in general, the consensus outside the market theorists seem to be that it is time for a bailout centered on the families and individuals, as long as we don’t bail out the lenders. Critics are also quick to note that this Plan is not a law, but a “best practices” document – not all lenders need to follow it, but the lenders that were a part of the discussions have agreed to do so. (CNN Money, 12/7; KNX-AM, 12/6; CNBC, 12/7)

The Dow is now up 9.3 percent year-to-date. Nasdaq is up 12 percent for the year, and S&P 500 is up 6.1 percent. Even in this volatile year, that’s better than your saving’s accounts and 1-year CDs! (CNN Money 12/7)

A Week of Economic Data Releases: Besides the Fed meeting, there is some important economic data expected in the coming week. Inflation data, in the form of both producer and consumer prices, are reported Thursday and Friday, respectively. Another big item is retail sales for November, on Thursday. (CNN Money 12/7)

Economists are in disagreement if there will be a recession in 2008. I’ve heard things this past week from “certainly” to “relatively remote.” See folllowing article...(CNBC, KNX-AM, 12/3-9)

UCLA Anderson Forecast states that the national economy is not technically in a recession, though the group’s economists are calling current conditions “a near recession experience.” A recession is defined as a two consecutive quarter decline in real Gross Domestic Product (GDP) and the UCLA Anderson Forecast is calling for real GDP growth to be just above 1% for the fourth quarter of 2007 and the first quarter of 2008. While acknowledging that an economy slowed to a 1% growth rate could slip further, the Forecast notes rather ironically that their near recession forecast “can be viewed somewhat optimistically.” In addition, job growth is strong and economic fundamentals all show strong numbers(AP, LA Times, 12/5; KNX-AM)

Bills for FHA Reform (Senate Bill 2338) and Freddie Mac/Fannie Mae loan limits appear to be running into some trouble in the Senate. National Association of Realtors and California Association of Realtors want people to write their Senators for passage of these bills. FHA reform will provide existing homeowners with secure and affordable refinancing alternatives and more mortgage options for first-time homebuyers. Increasing the supply of affordable mortgage money is a critical component for bringing stability to the nation’s turbulent housing markets. The other bill allows regional increases to the Freddie Mac/Fannie Mae loan limits and stress the need for quick Senate action on this vital reform. This change will make lower-cost GSE mortgage financing available to more families trying to buy homes in high cost areas and increase the supply of mortgage money. (CAR, NAR, 12/6)

According to the Mortgage Bankers Association, 5.12% of outstanding loans were in default in the second quarter, a rate about 17% higher than a year ago. (CNBC, 12/6)

GAVAR AV Market stats have not been updated yet. The figures shown on the monthly newsletter are still current.

Mortgage application volume rose 22.5 percent during the week ending Nov. 30, according to the Mortgage Bankers Association's weekly application survey. The MBA's application index climbed to a seasonally adjusted 791.8 points from 646.3 last week. That figure was revised down from a previously reported 652.5 because of an error by one of the larger reporting agencies, the MBA said. Refinance volume jumped 31.9 percent and purchase volume increased 15.2 percent. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom. The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week. The average interest rate for 30-year fixed-rate mortgages decreased to 5.82 percent from 6.09 percent a week earlier. That's the lowest in 2 years! The average interest rate for one-year adjustable-rate mortgages increased to 6.28 percent from 6.24 percent the previous week. (AP, 12/5)

The amount of equity homeowners hold in their homes slipped in the third quarter to just above 50 percent, according to a report from the Federal Reserve Thursday. In its quarterly U.S. Flow of Funds Accounts, the central bank reported that homeowners' percentage of equity dipped to 50.4 percent from 51.1 percent from the previous quarter. On average, housing is Americans' single largest asset. (AP, 12/6)

Some 16,000 San Diego County homeowners are seeking property tax relief, either due to declining home values or damages caused by the October wildfires. (SD Union Tribune 12/7)

Two economic reports predict a dismal 2008 for California, although, so far, recession is off the table. (SF Chronicle, 12/5)

I've been saying since June 2007 that I expect the housing downturn to become positive in the Spring of 2009. Moody's Economy.com, though, states no market upturn until 2010. In its study, 'Aftershock: Housing in the Wake of the Mortgage Meltdown', Moody's Economy.com said US housing prices should reach a trough in early 2009, by which time they will have fallen 12 pct nationally according to data gathered from 381 US metropolitan areas. The US housing market is awash in unsold inventory and with home prices already down more than 5 pct from two years ago, the sector in the midst of the worst downturn since 1945. While activity will stabilize in 2009, it will not be until 2010 before a measurable improvement in sales, construction and pricing will emerge, the report said. I think the key here is measurable improvement - when we see the changes affect the numbers. I do think people's mental state will change in 2009, numbers routinely lag behind reality. (Moody’s Economist.com, Forbes, Washington Post, Reuters,12/6)

The low point in the U.S. housing market may not come for another three to six months. Third-quarter home delinquency rates rose to the highest since 1986. (Bloomberg, 12/6)

I end today’s blog with a comparison of housing markets around the world: Australian Home-Loan Approvals Unexpectedly Fall on Higher Interest Rates Australia's home-loan approvals unexpectedly fell for a second month in October as interest rates at an 11-year high discouraged borrowing. New Zealand Home Prices Rise at Slowest Pace in Six Months on Higher Rates New Zealand's house prices rose at the slowest pace in six months in November, adding to signs that higher borrowing costs are curbing domestic demand. London Luxury-Home Prices Gain 0.1%, Smallest Advance in About Three Years London luxury-home prices rose the least for 35 months in November, as concern about the economy deterred some buyers, Knight Frank LLC said. U.K. Housing Transactions Will Drop 15% in 2008 as Prices Stall, HBOS Says U.K. housing market transactions will drop next year as prices stagnate, in a sign higher interest rates are cooling demand for homes, HBOS Plc said. (Bloomberg, 12/5-7)

Sources: Associated Press, San Diego Union-Tribune, San Francisco Chronicle, Moody’s Economist.com, Forbes.com, Washington Post, Reuters, Bloomberg, KNX-AM, California Association of REALTORS, National Association of REALTORS, CNBC, CNN Money

A summary so long it's worth to print it out: Real Estate News Headlines 11/26-12/2

Lots of news this week but if I had to have a headline, it would center around 2 speeches by the Fed hinting at a rate cut during their next meeting Dec. 11. Jobs data, now 4.7%, hit a low of 4.4 percent in March of this year and is likely to hit 4.8 percent in November. Fed Chairman Bernanke acknowledged the weakening labor market but suggested it was consistent with a slowing economy and not particular worrisome. With the exception of revised third-quarter GDP data, virtually all the economic data released this week -– from consumer confidence to weekly jobless claims to the personal income and spending figures released Thursday –- show deterioration in two areas of the economy once thought to be the remaining areas of some strength. (CNBC, 11/30)

Foreclosures are all the rage in many conversations I have with potential clients. It hardly seems like the holiday spirit to take advantage of other people’s misfortunes, but many people claim to be getting excellent deals and tout strategies to get them. Are foreclosure homes right for you? What are they? Find out in this month’s FAQ at http://changhomes1.blogspot.com/2007/12/faq-what-is-foreclosure.html.

The rising number of foreclosures in Los Angeles and beyond has become the nation's biggest economic concern - and possibly the biggest economic problem globally, Rep. Maxine Waters said as she convened a congressional subcommittee hearing on the issue at the California Science Center. Waters said the foreclosure crisis is larger than originally anticipated. She quoted former Treasury Secretary Lawrence Summers, who has said the chances of avoiding recession are less than 50% - unless decisive actions are taken. LA Mayor Villaraigosa said 2007 has been the worst year for foreclosures in the city, with 716 foreclosures in the first quarter, 850 in the second and 1,177 in the third quarter. In contrast, there were just 115 foreclosures in the city during the first quarter of 2006, the mayor said. In Los Angeles County, 5,000 notices of default were filed in October, a 102% increase from the same time last year, said Pastor Herrera Jr., director of the county's Department of Consumer Affairs. (AV Press, 12/2)

Housing Slump's Third Year to Be `Deepest' Since WWII - Standard & Poor's 15-member Supercomposite Homebuilding Index tumbled 62 percent this year as of yesterday, the largest drop since the benchmark was started in 1995. The companies have lost about $35 billion of market value. The outlook is bleak with new home sales projected to fall 13 percent in 2008, according to estimates from the National Association of Realtors in Chicago, even as interest rates drop. Losses at Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing, may restrict the availability of home loans, and chief executive officers at D.R. Horton Inc. and Centex Corp. expect another tough year. Total new home sales peaked in July 2005 and have declined for 19 of the last 28 months through October, according to Commerce Department data. Existing home sales peaked in September 2005. The median price for a new home dropped 13 percent in October, the most since 1970, and the annual sales rate for new homes in September was the lowest in almost 12 years. (Bloomberg, 11/30)

One third of adjustable-rate subprime home loans in the U.S. were delinquent as of August, according to a study by the Federal Reserve Bank of New York. The study found that adjustable-rate subprime mortgages had the highest rate of delinquencies and foreclosures. Twelve percent of 26,642 such loans sampled were more than 60 days delinquent and 7 percent were in foreclosure, according to data released today. Another 13 percent were less than 60 days overdue. (Bloomberg, 11/30)

The Treasury Department is finalizing a plan with mortgage industry leaders that will hold interest payments steady for many subprime borrowers facing higher rates and possible foreclosure. The mortgage representatives and regulators are focusing in on restructuring "2-28" and "3-27" subprime loans, which start with a fixed mortgage rate of up to three years but then reset to a much higher rate.As envisioned, the plan would effectively extend the fixed-rate period for stressed borrowers and so shield them from a payment spike that could push them into foreclosure. (Reuters, 11/30)

C.A.R. reports entry-level housing affordability at 24 percent in California - The minimum household income needed to purchase an entry-level home at $482,910 in California in the third quarter of 2007 was $99,590, based on an adjustable interest rate of 6.56 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $3,320 for the third quarter of 2007. At 48 percent, the High Desert region was the most affordable in the state, followed by the Sacramento region at 46 percent. Santa Barbara was the least affordable region in the state at 11 percent, followed by the Monterey region at 16 percent. (CAR, 11/29)

Home sales decreased 40.2 percent in October in California compared with the same period a year ago, while the median price of an existing home fell 9.9 percent. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2007 was 16.3 months, compared with 6.4 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. Thirty-year fixed-mortgage interest rates averaged 6.38 percent during October 2007, compared with 6.36 percent in October 2006, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.68 percent in October 2007 compared with 5.56 percent in October 2006. The median number of days it took to sell a single-family home was 59.3 days in October 2007, compared with 56.5 days for the same period a year ago. (CAR, 11/28)

The cost of financing a home remains out of reach for many households in California in the wake of the Office of Federal Housing Enterprise Oversight (OFHEO) conforming loan limits for 2008, announced earlier today. The maximum 2008 conforming loan limit for single-family mortgages will remain at $417,000, unchanged since 2006. The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California. (CAR, 11/27)Single-family existing-home sales were stable in October while the condo sector was down. Lingering effects of the credit crunch were a drag on sales but the mortgage situation has improved significantly. (NAR, 11/28)

Offset mortgage may be a new program coming from Britain - You get a mortgage linked to a non-interest-bearing savings account whose deposits "offset" your loan balance. So if you owe $200,000 on your home but have $50,000 on deposit, the bank calculates your monthly interest as if you borrowed only $150,000. The bank gets its back scratched by getting to use your deposit interest-free. You pay off your mortgage faster because more of your monthly payment is applied to principal - and you can get your hands on your savings any old time. Because this deal would give you an extra weensy tax break under U.S. law, however, no offset mortgages are allowed here. But two U.S. companies - CMG Financial Services and Macquarie Mortgages USA - have introduced a version that passes muster with the IRS. (Money Magazine, 11/29)

Mortgage applications fell 4.3%. 30 yr fixed mtg 5.69% - 15 yr fixed mtg 5.27% - 30 yr fixed jumbo mtg 6.60% - 5/1 ARM 5.56% - 5/1 jumbo ARM 6.04% (Mortgage Bankers Association, 11/28)

Third-quarter home prices dropped 1.7% from prior quarter, largest drop in 21-year history. Yale economist and index co-founder, Robert Shiller conceded that most economists are still optimistic; employment is strong, consumer spending robust and the weaker dollar has increased exports. But, there's a big question in his mind whether subprime problems will lead to a retrenchment in consumer demand. According to Shiller, the current situation is unprecedented - there's never had been a housing boom quite like the one that ended last year - and how we come out of the bust is anyone's guess. (S&P Case/Shiller and KNX-AM, 11/27)

More than 50,000 lost their homes in October; foreclosure rates expected to rise in 2008 as adjustable-rate mortgages reset. For the full year, RealtyTrac expects 2 million homes to have entered the foreclosure process - including bank repossessions, default notices and auction sale notices. The national foreclosure rate for the month was one filing for every 555 households. While California foreclosure activity decreased nearly 2 percent from the previous month, the state's foreclosure rate still ranked second highest, with one foreclosure filing for every 258 households. Among city foreclosure rates, California cities took six out of the top 10 spots in October, with Merced topping the list. Stockton, Modesto, Riverside-San Bernardino, Vallejo-Fairfield and Sacramento also were in the top 10. (CNNMoney and KNX-AM, 11/29)

Mayors and public officials worry about effects of housing downturn. As home values plummet and neighborhoods deteriorate under soaring foreclosure numbers, public governments will see lower tax collections. California, for example, had been expecting a balanced budget, but because of the real estate downfall, they are expecting a shortfall now. Notice has gone out to department heads to expect and prepare for budget cut of 10% or more across the board for the next fiscal year. (CNNMoney and KNX-AM, 11/28, 11/29)

Lenders quietly began offering such freezes during the summer. Last week California officials announced a rate-freeze deal with four major lenders. And now the Hope Now Alliance, coalition of lenders, servicers, investors and community groups, put together by the Treasury Department, is working on its own version of a freeze. But for a borrower with an adjustable rate mortgage (ARM) at 7 percent on a $200,000 loan, a freeze would mean substantial savings. If the loan were to reset to 10 percent, the monthly payment would jump from $1,331 to $1,755. Judging from other lenders' plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates. (CNNMoney, 11/30)

Sources: California Association of REALTORS (CAR), CNNMoney, Reuters, National Association of REALTORS (NAR), Money magazine, S&P Case/Shiller, KNX-AM, Bloomberg, CNBC, Antelope Valley Press.