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Thoughts to consider about homeownership:
• Teenage students raised by home-owning parents are less likely to drop out of school than teens raised by renters, according to the “Journal of Urban Economics.”
• Homeowners are less likely to be crime victims than renters because neighborhoods where owners have a stake in the community are more stable, according to “Social Forces.”
• Equity—the value of a property after all debts have been paid—is an important component of wealth building because it can be a safety net for emergencies or hard times. It also can be used to launch a business or pay for college tuition, both of which have the potential to create future earnings. (CAR, 2/21)
Painfully Slow Growth for California and Southern California in 2008-2009, with “Spot” Recessions – While the economies of California and Southern California overall are not expected to fall into recession in 2008-2009, it will be a painful period for several industries and metro areas, according to the Los Angeles County Economic Development Corporation. (LAEDC, 2/20)
California Home Sales January 2008 - A total of 19,145 new and resale houses and condos were sold statewide last month. That's the lowest number for any month in DataQuick's records, which go back to 1988. It was 25.2 percent lower than December's 25,585 and 41.0 percent lower than 32,425 for January last year. (DataQuick, 2/18)
Commercial real estate market activity - expected to decline moderately with fewer business opportunities for commercial practitioners in the months ahead. (CAR, 2/20)
Fed Hints at More Rate Cuts - Minutes from the Federal Reserve meeting in January that were released Thursday suggest that more rate cuts could be in the offing. The minutes show that at the Jan. 29-30 meeting, the most recent, Fed officials decided that keeping interest rates low “appeared appropriate for a time to counter the factors that were restraining economic growth." (Wall Street Journal, 2/22)
Entry-Level Housing Affordability at 33% - The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago, according C.A.R.'s First-time buyer Housing Affordability Index. CAR calculates affordability based on the minimum household income required to make a 10 percent down payment and secure an adjustable interest rate loan at 6.21 percent. Average monthly payment including taxes and insurance was $2740 for the 4th quarter of 2007. (CAR, 2/20)
New Home Sales Decline 30% in 2007 - The pace of new-home sales across California fell more than 30 percent in 2007 compared with 2006, according to recent data from the California Building Industry Association (CBIA). (via CAR, 2/20)
Consumer Price Index Rises 0.5% in January – This index is often related to inflation, so with this rise, economists are getting wary about inflation pressures. The index for housing climbed 0.2 percent in January, and the index for shelter remained unchanged from December at 0.3 percent. (CAR, 2/20)
Perspectives: More buyers moving in to first homes – Fresno Bee
Declining prices and interest rates and a large number of homes for sale are enticing potential first-time home buyers off the sidelines, experts say.
• Although this story is specific to the San Joaquin Valley, it applies to many regions around the state where prices have declined. Now may be an ideal time to buy an entry-level home.
• If enough first-time home buyers gain entry to the housing market, middle- and upper-tier homeowners will be able to sell and upgrade, and that can only help the economy. (CAR, 2/21)
Perspectives: Group says more Californians can afford to buy their first home – San Francisco Chronicle
As mentioned above, some 33% of households in the state were able to afford their first home in the last three months of the year.
• As the median home price declines, many potential home buyers who had previously believed an entry-level home was out of reach may now find themselves in a position to buy.
• The median price of an existing, single-family detached home in California during December 2007 was $475,460, a 16.5 percent decrease from the revised $569,350 median for December 2006.
• Prospective buyers for the most part need not worry about the bidding wars that drove up home prices during the housing boom.
• First-time home buyers needed to earn an annual income of $82,200 to buy an entry-level home in California in the fourth quarter of 2007, down 15 percent from the $96,600 annual income needed to buy during the last three months of 2006. (CAR, 2/21)
Mortgage rates inch above 6% - Fueled primarily by inflation concerns, interest on long-term mortgage rates moved higher for the week. Freddie Mac reported a rise to 6.04 percent from 5.72 percent last week on 30-year fixed loans, which broke the 6-percent threshold for the first time in seven weeks. Rates on 15-year loans, which are popular in refinance deals, bumped up to 5.64 percent from 5.25 percent; while five-year adjustable-rate mortgages settled at 5.37 percent, up from 5.19 percent. One-year ARMs, however, resisted the downward trend and slipped to 4.98 percent from 5.03 percent in the week-to-week survey. (Freddie Mac 2/21; Baltimore Sun, 2/22; CNNMoney 2/21)
Mortgage Applications Tumble - Volume of applications dropped more than 22% as most interest rates increased sharply. (AP, CNNMoney, 2/20)
Southland Rents Rise Despite Falling Home Prices - Apartment rents across Southern California have increased 4.5 percent over the last three months compared to where they were a year ago, despite falling home prices. (LA Times, 2/22)
Foreclosure Prevention Plan Under Attack - Lenders trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners. (CNNMoney, 2/21)
Subprime Loans Defaulting Even Before Resets - It turns out that massive interest rate spikes aren't the problem; many borrowers couldn't afford these mortgages even at the low, introductory interest rates. (CNNMoney, 2/20)
Fast Facts
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Fourth Quarter 07: 33 percent (Source: C.A.R.)
Sources: Los Angeles Economic Development Corporation, DataQuick, California Association of REALTORS, Wall Street Journal, Freddie Mac, Baltimore Sun, CNNMoney, Los Angeles Times, San Francisco Chronicle, Fresno Bee, Associated Press.
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Sunday, February 24, 2008
Sunday, February 17, 2008
Economic Stimulus Bill Signed: Week in Review, February 11-17
Did you know? You can sign up for my weekly news summaries and monthly newsletters at ChangHomes.Net or either of the blog websites.
Quick Bullets:
• It is more important than ever for potential home buyers to have a good credit score. Consumers should obtain a credit report and take care of any outstanding issues that can be fixed or improved prior to applying for a loan. According to a recent Federal Reserve survey, some 53 percent of lenders tightened requirements for prime-quality borrowers, 72 percent for sub-prime borrowers, and 85 percent for non-traditional mortgage borrowers, including PayOption ARMs, loans with interest-only payment structures, and other such products.
• Whether or not they have children, consumers may want to consider a home in a neighborhood with excellent schools. Homes in good school districts typically are a bit more "recession proof" and appreciate faster than homes near weaker schools, according to MSN Money. (CAR, 2/14)
Bush signs Economic Stimulus Plan – raises conforming loan limits and puts rebate checks in Americans’ hands. For details on this legislation, see http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html (AP, 2/13)
Project Lifeline offers 30-day foreclosure reprieve – Six lenders joined the Treasury Department and the Department of Housing and Urban Development to offer seriously-overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans. The lenders are Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual, and Wells Fargo. All are involved in Hope Now, an effort to freeze rates on some high-cost subprime mortgages for 5 years to aid borrowers whose teaser rates are jumping sharply higher. More details below in Perspectives. (CNNMoney, AP, 2/11)
Home Buyer Fair - C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair for consumers Saturday, April 12, and Sunday, April 13 at the Los Angeles Convention Center in downtown Los Angeles. The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish for consumers, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership. (CAR, 2/11)
Bush Budget seeks $38.5 Billion for HUD - The Bush Administration's FY 2009 budget seeks $38.5 billion for the U.S. Dept. of Housing and Urban Development, a boost of $1 billion more than HUD's current budget. The budget package includes "significant increases for housing counseling, homeless assistance and affordable housing programs," according to HUD Secretary Alphonso Jackson. (NAR, 2/13)
Beginning this week and continuing through September, HUD's Federal Housing Administration (FHA) is mailing 850,000 letters to at-risk borrowers who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. If this has the intended effect of keeping those at risk out of foreclosure, it could help shore up the housing market and the state’s economy. (CAR, 2/14)
Perspectives: New program aims to forestall foreclosures – Washington Post
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under “Project Lifeline,” an initiative the Bush administration announced Tuesday.
· The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation’s largest financial institutions are participating. Together they service almost half of the nation’s mortgages. Fewer foreclosures improves the strength of the housing market.
· The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.
Perspectives: Southern California home sales drop to a 20-year low – LA Times
Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systems said Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.
· The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
· Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
· Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
· Declining home sales have contributed to lower prices, making homes more affordable.
Latest Pending Home Sales Index and Forecast – Soft market conditions continue for existing home sales in the months ahead, with notable improvement expected by the 2nd half of this year as loan limits increase. (NAR, 2/14)
Metro Areas Home Prices Mixed, Half Show Gains - Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the National Association of REALTORS. (2/14)
Home prices fell faster nationally in more places over the last part of 2007. (CNNMoney, 2/14)
The real-estate auction market rose 5.3 percent in 2007, generating $58.4 billion in revenues 39 percent more than it did in 2003, according to the National Auctioneers Association. (NAR, 2/13)
Greenspan says no recession yet – Former Federal Reserve Chairman said the American economy is on the “edge” of a recession, pointing to the slump in the country’s housing market as the primary cause. (CNNMoney, 2/15)
Bernanke optimistic for late 2008 – Current Federal Reserve chairman says the central bank is likely to slash rates further in the coming months, with the benefits of the rate cuts likely appearing in the second half of the year. (NAR, 2/14)
Job losses point to recession – California’s Index of Leading Employment Indicator decreased in the fourth quarter of 2007, marking the seventh consecutive quarterly drop and indicating further declines over the next six months, according to a report released Monday by the A. Gary Anderson Center for Economic Research. The primary factor feeding the decline, according to the report, is the slump in California's construction spending. (CAR, 2/11)
The Consumer Confidence Index fell nearly three points in January. While consumers were more positive about job prospects in January, the sampling from the January household survey of those who view business conditions as "bad" rose to 20 percent from 18.8 percent in December. (CAR, 2/11)
Mortgage Rates Rise to Highest Level in 5 Weeks - 30-year fixed-rate mortgages averaged 5.72% this week, up from 5.67% last week. Rates on 15-year fixed edged up to 5.25% versus 5.15% last week. 5-year adjustable-rate mortgages (ARMs) dipped to 5.19% from 5.21% while 1-year ARMs remained unchanged at 5.03%. One year ago, 30-year mortgages stood at 6.30%, while 15-year were at 6.03%, 5-year ARMs at 6.01% and 1-year ARMS were at 5.52%. Mortgage applications fell during the last week. (AP, 2/14; Mortgage Bankers Association via CNNMoney, 2/16)
Countrywide's Overdue Mortgages Increase to 7.47%; Highest in Six Years Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. (Bloomberg, 2/15)
Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Web Spotlight:
CrimeReports.com posts crimes from police departments in 16 states, including California. You can join to receive free regularly-scheduled crime reports via email. You can also choose to receive time sensitive crime alerts, neighborhood and community policing program bulletins and other crime awareness and prevention information as they become available. (Charlie Turner, MarketWatch, KFWB-AM, 2/16; AP, 2/4)
Sources: California Association of REALTORS, Bloomberg, National Association of REALTORS, CNNMoney, Washington Post, Associated Press, MarketWatch, KFWB-AM, Los Angeles Times.
Quick Bullets:
• It is more important than ever for potential home buyers to have a good credit score. Consumers should obtain a credit report and take care of any outstanding issues that can be fixed or improved prior to applying for a loan. According to a recent Federal Reserve survey, some 53 percent of lenders tightened requirements for prime-quality borrowers, 72 percent for sub-prime borrowers, and 85 percent for non-traditional mortgage borrowers, including PayOption ARMs, loans with interest-only payment structures, and other such products.
• Whether or not they have children, consumers may want to consider a home in a neighborhood with excellent schools. Homes in good school districts typically are a bit more "recession proof" and appreciate faster than homes near weaker schools, according to MSN Money. (CAR, 2/14)
Bush signs Economic Stimulus Plan – raises conforming loan limits and puts rebate checks in Americans’ hands. For details on this legislation, see http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html (AP, 2/13)
Project Lifeline offers 30-day foreclosure reprieve – Six lenders joined the Treasury Department and the Department of Housing and Urban Development to offer seriously-overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans. The lenders are Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual, and Wells Fargo. All are involved in Hope Now, an effort to freeze rates on some high-cost subprime mortgages for 5 years to aid borrowers whose teaser rates are jumping sharply higher. More details below in Perspectives. (CNNMoney, AP, 2/11)
Home Buyer Fair - C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair for consumers Saturday, April 12, and Sunday, April 13 at the Los Angeles Convention Center in downtown Los Angeles. The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish for consumers, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership. (CAR, 2/11)
Bush Budget seeks $38.5 Billion for HUD - The Bush Administration's FY 2009 budget seeks $38.5 billion for the U.S. Dept. of Housing and Urban Development, a boost of $1 billion more than HUD's current budget. The budget package includes "significant increases for housing counseling, homeless assistance and affordable housing programs," according to HUD Secretary Alphonso Jackson. (NAR, 2/13)
Beginning this week and continuing through September, HUD's Federal Housing Administration (FHA) is mailing 850,000 letters to at-risk borrowers who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. If this has the intended effect of keeping those at risk out of foreclosure, it could help shore up the housing market and the state’s economy. (CAR, 2/14)
Perspectives: New program aims to forestall foreclosures – Washington Post
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under “Project Lifeline,” an initiative the Bush administration announced Tuesday.
· The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation’s largest financial institutions are participating. Together they service almost half of the nation’s mortgages. Fewer foreclosures improves the strength of the housing market.
· The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.
Perspectives: Southern California home sales drop to a 20-year low – LA Times
Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systems said Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.
· The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
· Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
· Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
· Declining home sales have contributed to lower prices, making homes more affordable.
Latest Pending Home Sales Index and Forecast – Soft market conditions continue for existing home sales in the months ahead, with notable improvement expected by the 2nd half of this year as loan limits increase. (NAR, 2/14)
Metro Areas Home Prices Mixed, Half Show Gains - Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the National Association of REALTORS. (2/14)
Home prices fell faster nationally in more places over the last part of 2007. (CNNMoney, 2/14)
The real-estate auction market rose 5.3 percent in 2007, generating $58.4 billion in revenues 39 percent more than it did in 2003, according to the National Auctioneers Association. (NAR, 2/13)
Greenspan says no recession yet – Former Federal Reserve Chairman said the American economy is on the “edge” of a recession, pointing to the slump in the country’s housing market as the primary cause. (CNNMoney, 2/15)
Bernanke optimistic for late 2008 – Current Federal Reserve chairman says the central bank is likely to slash rates further in the coming months, with the benefits of the rate cuts likely appearing in the second half of the year. (NAR, 2/14)
Job losses point to recession – California’s Index of Leading Employment Indicator decreased in the fourth quarter of 2007, marking the seventh consecutive quarterly drop and indicating further declines over the next six months, according to a report released Monday by the A. Gary Anderson Center for Economic Research. The primary factor feeding the decline, according to the report, is the slump in California's construction spending. (CAR, 2/11)
The Consumer Confidence Index fell nearly three points in January. While consumers were more positive about job prospects in January, the sampling from the January household survey of those who view business conditions as "bad" rose to 20 percent from 18.8 percent in December. (CAR, 2/11)
Mortgage Rates Rise to Highest Level in 5 Weeks - 30-year fixed-rate mortgages averaged 5.72% this week, up from 5.67% last week. Rates on 15-year fixed edged up to 5.25% versus 5.15% last week. 5-year adjustable-rate mortgages (ARMs) dipped to 5.19% from 5.21% while 1-year ARMs remained unchanged at 5.03%. One year ago, 30-year mortgages stood at 6.30%, while 15-year were at 6.03%, 5-year ARMs at 6.01% and 1-year ARMS were at 5.52%. Mortgage applications fell during the last week. (AP, 2/14; Mortgage Bankers Association via CNNMoney, 2/16)
Countrywide's Overdue Mortgages Increase to 7.47%; Highest in Six Years Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. (Bloomberg, 2/15)
Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Web Spotlight:
CrimeReports.com posts crimes from police departments in 16 states, including California. You can join to receive free regularly-scheduled crime reports via email. You can also choose to receive time sensitive crime alerts, neighborhood and community policing program bulletins and other crime awareness and prevention information as they become available. (Charlie Turner, MarketWatch, KFWB-AM, 2/16; AP, 2/4)
Sources: California Association of REALTORS, Bloomberg, National Association of REALTORS, CNNMoney, Washington Post, Associated Press, MarketWatch, KFWB-AM, Los Angeles Times.
Sunday, February 10, 2008
Economic Stimulus Bill Passed: Week in Review, February 4-10
NEW! You can sign up for my weekly news summaries and monthly newsletters at ChangHomes.Net or either of the blog websites.
Bush to sign Economic Stimulus Bill on Wednesday – Legislation that gives $300-$600 per person passed both the House and Senate the same day. For details on the legislation, please see my Special Report at http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html or send me an email for a PDF version. (CNBC, 2/10; other sources noted on Special Report)
The stimulus package temporarily raises the maximum size of mortgages that Fannie Mae and Freddie Mac can purchase and market as securities from $417,000 to as high as $729,750 in expensive parts of the country like New York City and California. (AP, 2/8; NAR 2/8)
Homeowners Confident on Market - Despite plenty of evidence to the contrary, 77 percent of homeowners believe that their homes are worth as much or more as they were in 2006, according to a Harris Interactive survey conducted for Zillow.com. And 36 percent say their homes increased in value in 2007. The slow market also isn’t discouraging homeowners from major transactions. Despite what they read and hear about the real estate market, 34 percent say they are equally or more likely to consider selling their homes this year, and 35 percent are just as likely as before to take out a home equity loan. 36 percent would consider a second mortgage. Homeowners continue to forge ahead on projects that they believe improve the value of their homes. (Zillow, 2/7; NAR 2/7, CNNMoney 2/7)
Statewide MLS being established in California - C.A.R.'s board of directors has approved a plan to establish a statewide hybrid multiple listing service for California (the "California MLS"), which will be owned and operated by C.A.R. This effort is focused on providing the most innovative and cost effective MLS services delivered to members through their local association or regional MLS. Its goal is to provide statewide coverage of listing data to all those who choose to participate. (CAR, 2/6)
Home Prices Spark Suit - Two California couples are suing KB Home and mortgage lender Countrywide Financial, contending the companies collaborated with home appraisers to inflate home prices. (San Jose Mercury-News, 2/8)
Home Sales Flat Before Rise - A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®. New-home sales are likely to decline 17.7 percent to 637,000 in 2008 before rising 7.6 percent to 685,000 in 2009. (2/7)
Pending Home Sales Fell 1.5% in December - The NATIONAL ASSOCIATION OF REALTORS® reports that pending sales of previously owned homes trended further downward than expected in December, falling by 1.5 percent. (Reuters, 2/7)
Construction Spending Falls 2.8% in December - Reflecting builders' continuing efforts to balance bloated inventories against a nationwide decline in home sales, residential construction spending in December fell 2.8 percent to $462 billion from the revised November estimate of $475.1 billion. (CAR, 2/6)
Las Vegas tops foreclosure list – the Nevada area has 7 of the top 10 zip codes hardest hit by the housing meltdown (CNNMoney, 2/5)
Stockton highlighted in National News - The CBS news magazine "60 Minutes" recently identified Stockton as “ground zero” for the nation’s foreclosure crisis. (Stockton Record, 2/3)
Freddie Mac Looks at Apartment Financing - Freddie Mac is looking to expand into financing multi-family buildings in an effort to bolster its competitive edge with Wall Street. (NY Times, 2/4)
Mortgage Rates Forecast to Rise Slowly This Year - The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9 percent range in the fourth quarter, and then average 6.3 percent in 2009. (NAR, 2/7)
Banks Tighten Mortgage Loan Standards - The rise in mortgage defaults and construction costs are making the process of obtaining a home or building construction loan more difficult, according a Federal Reserve survey released Monday. More than half of the U.S. lenders who responded to the January 2008 Senior Loan Officer Opinion Survey reported having tightened standards for prime mortgages during the quarter, an increase of 40 percent from the Fed's survey conducted during the previous quarter. (CAR, 2/6; NAR, 2/5)
Harder to get Refi – Lenders are studying applicants credit scores and the home’s appraisal numbers in much more detail than before. (CNNMoney, 2/8)
Mortgage Rates Flat – on news of slowing service sector report earlier in the week, the 30-year fixed-rate loan averaged 5.67% for the week ending Thursday, down from 5.68% last week, and still well below rates at this time last year Freddie Mac noted. At this time last year, the 30-year fixed-rate mortgage averaged 6.28%. 15-year fixed-rate loans averaged 5.15%, down from 5.17% last week. A year ago, the 15-year rate averaged 6.02%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.21%, down from 5.32% last week. The 5-year rate averaged 5.99% at this time last year. One-year Treasury-indexed ARMs averaged 5.03%, down from 5.05% last week. At this time a year ago, the 1-year ARM averaged 5.49%. Mortgage application volume increased 3% during the week ending 2/1. (CNNMoney, 2/7; MSNBC, 2/6)
Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Perspectives: “Foreclosures up 75% in 2007” – RealtyTrac.
* Foreclosures were lower prior to last year, and that causes the numbers to appear to be soaring only when looked at purely in terms of percentage gains.
* RealtyTrac reports defaults on loans, not on properties, so one household that defaults on a primary loan and an equity line will be counted as two defaults, even though both loans were for the same house. This could artificially inflate foreclosure statistics.
* A foreclosure filing includes default notices, auction sale notices and bank repossessions. One home may fall into each of these categories as it moves through the long foreclosure process. RealtyTrac counts each step along the way separately. This also skews foreclosure statistics.
* The overwhelming majority of homes are not in danger of foreclosure. If slightly more than 1 percent of U.S. homes were in some stage of foreclosure last year, then 99 percent of homes were not. Although some of the hardest hit communities with high concentrations of defaults are suffering, those communities do not reflect California overall.
* There are tremendous differences between counties and cities as well as neighborhoods in the same town—all the more reason consumers need a REALTOR® who is a local community expert. (CAR, 2/6)
Perspectives: “Even in today’s market, homeowners needn’t have a stratospheric down payment and the squeakiest of credit histories to get into a house.” – USA Today
* Clients who don’t have 20 percent to put down will find a 10 percent down payment is often acceptable with good credit.
* Loans for 100 percent of the purchase price are extremely rare but are still available for a conforming loan of $417,000 or less and for consumers with a credit score of 700 or higher.
* Congress is considering loosening rules on the Federal Housing Administration’s mortgage-insurance program, which gives buyers with imperfect credit better odds of approval.
* Over the long-run, the median home price of an existing single-family home in California has increased about 9 percent a year since 1969, according to the CALIFORNIA ASSOCIATION OF REALTORS®.
* The Mortgage Bankers Association in Washington said Wednesday that its index of total mortgage applications rose 3 percent last week to its highest level since March 2004, and applications were up 73 percent from a year earlier. This could be a sign that potential buyers are regaining confidence in the market.
* Homeowners accumulate significantly more wealth than renters. According to the most recent Federal Reserve Survey of Consumer Finances, the median net wealth of a renter household is $4,800, while the median net wealth of a homeowner household is $171,700. (CAR, 2/6)
Web Spotlight:
RottenNeighbor.com is a Web site that lets people dish about their neighbors — both the good and the bad. Type in any address and if someone has posted something negative about it, a bright red house pops up on top of the satellite image. Green house icons show up where the nice neighbors live. (Orlando Sentinel, 2/1; NAR 2/4)
Overseas Spotlight:
British Housing Repossessions Rose to Highest Level Since 1999 Last Year - U.K. housing repossessions reached the highest since 1999 last year and will increase further this year as banks curb lending and the economy slows, the Council for Mortgage Lenders said. (Bloomberg, 2/8)
Ending with Interesting News:
Bear Stearns Makes $1 Billion Bet That Subprime Market Will Continue Slide - Bear Stearns Cos., the U.S. securities firm that posted its first-ever loss last quarter on mortgage writedowns, has more than $1 billion of trades that profit if subprime home loans and bonds continue to deteriorate. (Bloomberg, 2/8)
Sources: CNBC, Associated Press, National Association of REALTORS, San Jose Mercury-News, Reuters, Stockton Record, New York Times, California Association of REALTORS, Zillow.com, CNNMoney, MSNBC, Orlando Sentinel.
Bush to sign Economic Stimulus Bill on Wednesday – Legislation that gives $300-$600 per person passed both the House and Senate the same day. For details on the legislation, please see my Special Report at http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html or send me an email for a PDF version. (CNBC, 2/10; other sources noted on Special Report)
The stimulus package temporarily raises the maximum size of mortgages that Fannie Mae and Freddie Mac can purchase and market as securities from $417,000 to as high as $729,750 in expensive parts of the country like New York City and California. (AP, 2/8; NAR 2/8)
Homeowners Confident on Market - Despite plenty of evidence to the contrary, 77 percent of homeowners believe that their homes are worth as much or more as they were in 2006, according to a Harris Interactive survey conducted for Zillow.com. And 36 percent say their homes increased in value in 2007. The slow market also isn’t discouraging homeowners from major transactions. Despite what they read and hear about the real estate market, 34 percent say they are equally or more likely to consider selling their homes this year, and 35 percent are just as likely as before to take out a home equity loan. 36 percent would consider a second mortgage. Homeowners continue to forge ahead on projects that they believe improve the value of their homes. (Zillow, 2/7; NAR 2/7, CNNMoney 2/7)
Statewide MLS being established in California - C.A.R.'s board of directors has approved a plan to establish a statewide hybrid multiple listing service for California (the "California MLS"), which will be owned and operated by C.A.R. This effort is focused on providing the most innovative and cost effective MLS services delivered to members through their local association or regional MLS. Its goal is to provide statewide coverage of listing data to all those who choose to participate. (CAR, 2/6)
Home Prices Spark Suit - Two California couples are suing KB Home and mortgage lender Countrywide Financial, contending the companies collaborated with home appraisers to inflate home prices. (San Jose Mercury-News, 2/8)
Home Sales Flat Before Rise - A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®. New-home sales are likely to decline 17.7 percent to 637,000 in 2008 before rising 7.6 percent to 685,000 in 2009. (2/7)
Pending Home Sales Fell 1.5% in December - The NATIONAL ASSOCIATION OF REALTORS® reports that pending sales of previously owned homes trended further downward than expected in December, falling by 1.5 percent. (Reuters, 2/7)
Construction Spending Falls 2.8% in December - Reflecting builders' continuing efforts to balance bloated inventories against a nationwide decline in home sales, residential construction spending in December fell 2.8 percent to $462 billion from the revised November estimate of $475.1 billion. (CAR, 2/6)
Las Vegas tops foreclosure list – the Nevada area has 7 of the top 10 zip codes hardest hit by the housing meltdown (CNNMoney, 2/5)
Stockton highlighted in National News - The CBS news magazine "60 Minutes" recently identified Stockton as “ground zero” for the nation’s foreclosure crisis. (Stockton Record, 2/3)
Freddie Mac Looks at Apartment Financing - Freddie Mac is looking to expand into financing multi-family buildings in an effort to bolster its competitive edge with Wall Street. (NY Times, 2/4)
Mortgage Rates Forecast to Rise Slowly This Year - The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9 percent range in the fourth quarter, and then average 6.3 percent in 2009. (NAR, 2/7)
Banks Tighten Mortgage Loan Standards - The rise in mortgage defaults and construction costs are making the process of obtaining a home or building construction loan more difficult, according a Federal Reserve survey released Monday. More than half of the U.S. lenders who responded to the January 2008 Senior Loan Officer Opinion Survey reported having tightened standards for prime mortgages during the quarter, an increase of 40 percent from the Fed's survey conducted during the previous quarter. (CAR, 2/6; NAR, 2/5)
Harder to get Refi – Lenders are studying applicants credit scores and the home’s appraisal numbers in much more detail than before. (CNNMoney, 2/8)
Mortgage Rates Flat – on news of slowing service sector report earlier in the week, the 30-year fixed-rate loan averaged 5.67% for the week ending Thursday, down from 5.68% last week, and still well below rates at this time last year Freddie Mac noted. At this time last year, the 30-year fixed-rate mortgage averaged 6.28%. 15-year fixed-rate loans averaged 5.15%, down from 5.17% last week. A year ago, the 15-year rate averaged 6.02%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.21%, down from 5.32% last week. The 5-year rate averaged 5.99% at this time last year. One-year Treasury-indexed ARMs averaged 5.03%, down from 5.05% last week. At this time a year ago, the 1-year ARM averaged 5.49%. Mortgage application volume increased 3% during the week ending 2/1. (CNNMoney, 2/7; MSNBC, 2/6)
Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Perspectives: “Foreclosures up 75% in 2007” – RealtyTrac.
* Foreclosures were lower prior to last year, and that causes the numbers to appear to be soaring only when looked at purely in terms of percentage gains.
* RealtyTrac reports defaults on loans, not on properties, so one household that defaults on a primary loan and an equity line will be counted as two defaults, even though both loans were for the same house. This could artificially inflate foreclosure statistics.
* A foreclosure filing includes default notices, auction sale notices and bank repossessions. One home may fall into each of these categories as it moves through the long foreclosure process. RealtyTrac counts each step along the way separately. This also skews foreclosure statistics.
* The overwhelming majority of homes are not in danger of foreclosure. If slightly more than 1 percent of U.S. homes were in some stage of foreclosure last year, then 99 percent of homes were not. Although some of the hardest hit communities with high concentrations of defaults are suffering, those communities do not reflect California overall.
* There are tremendous differences between counties and cities as well as neighborhoods in the same town—all the more reason consumers need a REALTOR® who is a local community expert. (CAR, 2/6)
Perspectives: “Even in today’s market, homeowners needn’t have a stratospheric down payment and the squeakiest of credit histories to get into a house.” – USA Today
* Clients who don’t have 20 percent to put down will find a 10 percent down payment is often acceptable with good credit.
* Loans for 100 percent of the purchase price are extremely rare but are still available for a conforming loan of $417,000 or less and for consumers with a credit score of 700 or higher.
* Congress is considering loosening rules on the Federal Housing Administration’s mortgage-insurance program, which gives buyers with imperfect credit better odds of approval.
* Over the long-run, the median home price of an existing single-family home in California has increased about 9 percent a year since 1969, according to the CALIFORNIA ASSOCIATION OF REALTORS®.
* The Mortgage Bankers Association in Washington said Wednesday that its index of total mortgage applications rose 3 percent last week to its highest level since March 2004, and applications were up 73 percent from a year earlier. This could be a sign that potential buyers are regaining confidence in the market.
* Homeowners accumulate significantly more wealth than renters. According to the most recent Federal Reserve Survey of Consumer Finances, the median net wealth of a renter household is $4,800, while the median net wealth of a homeowner household is $171,700. (CAR, 2/6)
Web Spotlight:
RottenNeighbor.com is a Web site that lets people dish about their neighbors — both the good and the bad. Type in any address and if someone has posted something negative about it, a bright red house pops up on top of the satellite image. Green house icons show up where the nice neighbors live. (Orlando Sentinel, 2/1; NAR 2/4)
Overseas Spotlight:
British Housing Repossessions Rose to Highest Level Since 1999 Last Year - U.K. housing repossessions reached the highest since 1999 last year and will increase further this year as banks curb lending and the economy slows, the Council for Mortgage Lenders said. (Bloomberg, 2/8)
Ending with Interesting News:
Bear Stearns Makes $1 Billion Bet That Subprime Market Will Continue Slide - Bear Stearns Cos., the U.S. securities firm that posted its first-ever loss last quarter on mortgage writedowns, has more than $1 billion of trades that profit if subprime home loans and bonds continue to deteriorate. (Bloomberg, 2/8)
Sources: CNBC, Associated Press, National Association of REALTORS, San Jose Mercury-News, Reuters, Stockton Record, New York Times, California Association of REALTORS, Zillow.com, CNNMoney, MSNBC, Orlando Sentinel.
Friday, February 8, 2008
SPECIAL: Economic Stimulus Bill Awaits President’s Signature
Economic Stimulus Bill Awaits President’s Signature
Passes House and Senate Same Day
In an unprecedented move, the House of Representatives passed the same legislation as one that passed the Senate within hours of the Senate’s vote on Thursday, February 7.
A summary of the $170 billion economic stimulus bill:
* $600 per person with adjusted gross income between $3,000 and $75,000 plus $300 per child
* Couples earning up to $150,000 in 2007 will receive $1,200.
* Tax filers who do not owe income taxes because of various credits and deductions but have at least $3,000 in income in 2007- which can include Social Security and disability payments - will get $300 rebates per person or $600 per couple.
An example: A couple with one child and $100,000 in AGI will get a rebate of $1,500 ($1,200 + $300). If they have two children, they will get $1,800 ($1,200 + $600).
If you make more than the limits above, you may be eligible for a partial refund.
Not included in this legislation:
* Extension of employment benefits
* Checks for people aided by the food stamp program and the low-income home energy assistance program
The Senate bill also fixed a “glitch” that would have allowed illegal immigrants to receive checks.
The IRS will handle the “rebate checks” after the bulk of the tax season. Most news reports estimate that first checks will be mailed in May. You must file a federal tax return for 2007 to be eligible for these rebate checks. “Some people are normally not required to file a return,” says CNN. “To get the rebate, however, they have to file a federal return.”
The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds next tax season, says CNBC. CNN states, “Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.” As I haven’t seen the actual legislation (and even if I did, it doesn’t mean I can understand it), I don’t know what the effect of the rebate is on next year’s taxes.
Nearly half (46 percent) of Americans said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.
Some are using the bills’ new housing provisions to buy their next home or to refinance. The bill temporarily raises conforming mortgage loan limits from $417,000 to as high as $729,750 in areas such as California. People with homes between these figures who currently have jumbo loans are looking to refinance to the cheaper conforming loans. Conforming loans are mortgages that can be sold to Fannie Mae or Freddie Mac in the secondary market and carry interest rates of up to 1% less than jumbo loans.
There is also a similar change for loans backed by the Federal Housing Administration, a government agency that insures loans to borrowers with poor credit. They would be able to back $10 billion in additional loan guarantees with higher limits through 2008.
The impact of the Federal Housing Administration change is likely to be smaller. The Congressional Budget Office estimated the agency could back $10 billion in additional loan guarantees through 2008 with higher limits - a tiny fraction of the more than $2 trillion in new mortgage loans made last year.
Written and Edited by Wayne W. Chang with information from CNN.com, CBS Radio, CNBC, and the Associated Pres as of 11pm PT, February 8, 2008. Revised February 10.
The following text comes from an “eNews” from HR Block released February 8, 2008:
Economic Stimulus Act of 2008 (HR 5140)
Congress has passed the Economic Stimulus Act of 2008 and it is expected that the President will sign the bill to law shortly. The major provision of the Act is the advance refund or “rebate” provision. Treasury Secretary Henry Paulson has indicated that the IRS will begin preparations for processing rebate checks immediately and the checks will be issued starting in May.
RECOVERY REBATES
Amount of Rebate
* $600 ($1,200 for joint returns), or
* Net income tax liability, if lower, but not less than $300 ($600 for joint returns)
* Rebate increased by $300 for each qualifying child (generally, a child that qualifies for the child tax credit)
* Fully refundable
Eligible Individuals:
* Must have either
(1) Qualifying Income of at least $3,000 - Qualifying income is defined as earned income, social security benefits and/or disability benefits paid to veterans and surviving spouses, or
(2) Net income tax liability of at least $1 and gross income that is more than the applicable standard deduction + 1 exemption amount (2 exemptions for MFJ) - Generally, net income tax liability is the regular tax + AMT (if any) less allowable credits other than the child tax credit and refundable credits, such as EIC
* Does not apply to nonresident aliens, individuals who could be claimed as dependents, individuals who do not have valid SSNs, and estates and trusts.
Phaseout:
* Reduced by 5% of AGI over $75,000 ($150,000 for joint returns)
* Thus for taxpayers without children, maximum rebate is fully phased out at $87,000 ($174,000 for joint returns)
Timing and reconciliation:
* Generally, based on 2007 return
* Checks ASAP; no later than 12/31/08 (expected to start in May)
* Actual credit to be calculated on 2008 return
* Taxpayer will receive any additional credit due
* Excess credit will not have to be repaid
BUSINESS PROVSIONS
* Section 179 deduction increased to $250,000 (phaseout to start at $800,000) for 2008
* 2008 amounts would have been $128,000 and $510,000 respectively
* 50% bonus depreciation for property placed in service in 2008
* Both provisions apply to 2008 only
Passes House and Senate Same Day
In an unprecedented move, the House of Representatives passed the same legislation as one that passed the Senate within hours of the Senate’s vote on Thursday, February 7.
A summary of the $170 billion economic stimulus bill:
* $600 per person with adjusted gross income between $3,000 and $75,000 plus $300 per child
* Couples earning up to $150,000 in 2007 will receive $1,200.
* Tax filers who do not owe income taxes because of various credits and deductions but have at least $3,000 in income in 2007- which can include Social Security and disability payments - will get $300 rebates per person or $600 per couple.
An example: A couple with one child and $100,000 in AGI will get a rebate of $1,500 ($1,200 + $300). If they have two children, they will get $1,800 ($1,200 + $600).
If you make more than the limits above, you may be eligible for a partial refund.
Not included in this legislation:
* Extension of employment benefits
* Checks for people aided by the food stamp program and the low-income home energy assistance program
The Senate bill also fixed a “glitch” that would have allowed illegal immigrants to receive checks.
The IRS will handle the “rebate checks” after the bulk of the tax season. Most news reports estimate that first checks will be mailed in May. You must file a federal tax return for 2007 to be eligible for these rebate checks. “Some people are normally not required to file a return,” says CNN. “To get the rebate, however, they have to file a federal return.”
The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds next tax season, says CNBC. CNN states, “Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.” As I haven’t seen the actual legislation (and even if I did, it doesn’t mean I can understand it), I don’t know what the effect of the rebate is on next year’s taxes.
Nearly half (46 percent) of Americans said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.
Some are using the bills’ new housing provisions to buy their next home or to refinance. The bill temporarily raises conforming mortgage loan limits from $417,000 to as high as $729,750 in areas such as California. People with homes between these figures who currently have jumbo loans are looking to refinance to the cheaper conforming loans. Conforming loans are mortgages that can be sold to Fannie Mae or Freddie Mac in the secondary market and carry interest rates of up to 1% less than jumbo loans.
There is also a similar change for loans backed by the Federal Housing Administration, a government agency that insures loans to borrowers with poor credit. They would be able to back $10 billion in additional loan guarantees with higher limits through 2008.
The impact of the Federal Housing Administration change is likely to be smaller. The Congressional Budget Office estimated the agency could back $10 billion in additional loan guarantees through 2008 with higher limits - a tiny fraction of the more than $2 trillion in new mortgage loans made last year.
Written and Edited by Wayne W. Chang with information from CNN.com, CBS Radio, CNBC, and the Associated Pres as of 11pm PT, February 8, 2008. Revised February 10.
The following text comes from an “eNews” from HR Block released February 8, 2008:
Economic Stimulus Act of 2008 (HR 5140)
Congress has passed the Economic Stimulus Act of 2008 and it is expected that the President will sign the bill to law shortly. The major provision of the Act is the advance refund or “rebate” provision. Treasury Secretary Henry Paulson has indicated that the IRS will begin preparations for processing rebate checks immediately and the checks will be issued starting in May.
RECOVERY REBATES
Amount of Rebate
* $600 ($1,200 for joint returns), or
* Net income tax liability, if lower, but not less than $300 ($600 for joint returns)
* Rebate increased by $300 for each qualifying child (generally, a child that qualifies for the child tax credit)
* Fully refundable
Eligible Individuals:
* Must have either
(1) Qualifying Income of at least $3,000 - Qualifying income is defined as earned income, social security benefits and/or disability benefits paid to veterans and surviving spouses, or
(2) Net income tax liability of at least $1 and gross income that is more than the applicable standard deduction + 1 exemption amount (2 exemptions for MFJ) - Generally, net income tax liability is the regular tax + AMT (if any) less allowable credits other than the child tax credit and refundable credits, such as EIC
* Does not apply to nonresident aliens, individuals who could be claimed as dependents, individuals who do not have valid SSNs, and estates and trusts.
Phaseout:
* Reduced by 5% of AGI over $75,000 ($150,000 for joint returns)
* Thus for taxpayers without children, maximum rebate is fully phased out at $87,000 ($174,000 for joint returns)
Timing and reconciliation:
* Generally, based on 2007 return
* Checks ASAP; no later than 12/31/08 (expected to start in May)
* Actual credit to be calculated on 2008 return
* Taxpayer will receive any additional credit due
* Excess credit will not have to be repaid
BUSINESS PROVSIONS
* Section 179 deduction increased to $250,000 (phaseout to start at $800,000) for 2008
* 2008 amounts would have been $128,000 and $510,000 respectively
* 50% bonus depreciation for property placed in service in 2008
* Both provisions apply to 2008 only
Sunday, February 3, 2008
Heavy News Week Wraps Up January: Week in Review, Jan 2
... but I worked hard to keep the Summary short!
Housing Facts from CAR (1/31):
• Interest rates continue to remain near their historic lows. The fixed-rate mortgage was 6.10 percent in December, below November’s 6.21 percent, and slightly lower than 6.14 percent from December 2006.
• December’s fixed-rate was at its lowest level in the past five months, having peaked in July 2007 at 6.7 percent.
• Month-to-month sales increased for the second month in a row, rising 4.7 percent in December compared with November.
• The time a home remained on the market prior to selling improved to 67.2 days in December compared to 72.1 days for the same period a year ago.
• In December, it would have taken 14.5 months to sell all the homes on the market at the current sales rate, an improvement compared with November, when it would have taken 15.4 months.
• Although seasonally adjusted sales fell 33.4 percent year to year in December 2007 compared with 2006, they were above the 300,000-unit level for the first time since August 2007.
Fed Cuts Interest Rates by 1/2-point. This is in addition to a 3/4-point cut last week. Can you believe that interest rates went down 1.25% in less than a week? (Washington Post, via CAR 1/31, 1/30; CNN, 1/30)
Mortgage Interest Rates Rise this week, ending 5-week decent, but still well below historical averages, per Freddie Mac. If you read last week’s blog, you would have expected this. (CNNMoney, 1/31)
FBI Probes 14 Companies in Subprime mess. New York Attorney General and the SEC also conducting probes. WSJ names UBS and Merrill Lynch as being under New York’s and SEC’s scrutiny. (MSNBC, 1/30; CNBC, 1/30; Reuters, 1/30; and Washington Post, 1/30)
House passes $146 billion economic stimulus package on Tuesday, January 29. It includes a provision increasing conforming loan limits. As mentioned in last week’s blog, it would help people who got homes between $417k and $729k to get up to possibly 1% lower interest rates by moving from a Jumbo Mortgage to a conventional one. Senate Finance Committee is to vote this Wednesday, February 6 on its version. This stimulus plan is expected to spark the housing market. (CAR, 1/30; CNNMoney, 1/25 and 1/29;.NY Times, 1/30)
Foreclosure Bill Rejected in CA Senate by 1 vote. (LA Times, 1/30)
New $20 billion subprime bailout being proposed in the U.S. Senate. Senator Chris Dodd proposes setting up a fund that would buy defaulting subprime mortgages and restructure loans for borrowers. (CNNMoney, 2/3)
Housing Slump gives rise to Repo Tours. NBC’s Michael Okwu reports potiental buyers can take bus tours of repossessed homes. (MSNBC, 2/3)
UCLA’s Anderson Forecast Center still says no recession. GDP for the 4th quarter showed a growth of a measly 0.6%. (KNX-AM, 2/3)
Home Sales decreased 33.4% in December in California compared with the same period a year ago, while median price of an existing home fell 16.5%. (CAR, 1/29)
Sales of New Homes down 26.4% for the year, down 4.7% for December, per U.S. Commerce Department, and down 40.7% year-over-year. Dr. Lawrence Yun of the National Association of REALTORS says that this is a proper adjustment that is needed and is positive. Existing home sales will pick up. (KNX-AM, 1/28; AP, 1/28; CAR 1/30)
Riverside and SB counties’ foreclosure rates among the worst in the U.S. (Riverside Press-Enterprise, 1/29)
Home ownership plunges 1.1%. U.S. Census Bureau reports homeowners accounted for 67.8% of occupied homes in the 4th quarter, down 1.1 points from the prior year and the largest year-over-year decline on record (CNNMoney, 1/29)
Construction Spending Drops by record 2.6%, driven by 18.3% drop in residential projects by private companies, per U.S. Commerce Department (CNNMoney, 2/3)
Most Middle Class Still Cannot Buy Home. Prices have fallen but not by enough to make it possible for nurses, fireman or teachers to buy homes of their own. (CNNMoney, 1/30)
Beazer closes mortgage division and promotes Countrywide as preferred lender. (CNNMoney 2/3)
Sources: Associated Press, MSNBC, CNBC, CNNMoney, Reuters, Washington Post, Wall Street Journal,California Association of REALTORS, National Association of REALTORS, CNN Money, Riverside Press-Enterprise, Los Angeles Times, KNX-AM.
Housing Facts from CAR (1/31):
• Interest rates continue to remain near their historic lows. The fixed-rate mortgage was 6.10 percent in December, below November’s 6.21 percent, and slightly lower than 6.14 percent from December 2006.
• December’s fixed-rate was at its lowest level in the past five months, having peaked in July 2007 at 6.7 percent.
• Month-to-month sales increased for the second month in a row, rising 4.7 percent in December compared with November.
• The time a home remained on the market prior to selling improved to 67.2 days in December compared to 72.1 days for the same period a year ago.
• In December, it would have taken 14.5 months to sell all the homes on the market at the current sales rate, an improvement compared with November, when it would have taken 15.4 months.
• Although seasonally adjusted sales fell 33.4 percent year to year in December 2007 compared with 2006, they were above the 300,000-unit level for the first time since August 2007.
Fed Cuts Interest Rates by 1/2-point. This is in addition to a 3/4-point cut last week. Can you believe that interest rates went down 1.25% in less than a week? (Washington Post, via CAR 1/31, 1/30; CNN, 1/30)
Mortgage Interest Rates Rise this week, ending 5-week decent, but still well below historical averages, per Freddie Mac. If you read last week’s blog, you would have expected this. (CNNMoney, 1/31)
FBI Probes 14 Companies in Subprime mess. New York Attorney General and the SEC also conducting probes. WSJ names UBS and Merrill Lynch as being under New York’s and SEC’s scrutiny. (MSNBC, 1/30; CNBC, 1/30; Reuters, 1/30; and Washington Post, 1/30)
House passes $146 billion economic stimulus package on Tuesday, January 29. It includes a provision increasing conforming loan limits. As mentioned in last week’s blog, it would help people who got homes between $417k and $729k to get up to possibly 1% lower interest rates by moving from a Jumbo Mortgage to a conventional one. Senate Finance Committee is to vote this Wednesday, February 6 on its version. This stimulus plan is expected to spark the housing market. (CAR, 1/30; CNNMoney, 1/25 and 1/29;.NY Times, 1/30)
Foreclosure Bill Rejected in CA Senate by 1 vote. (LA Times, 1/30)
New $20 billion subprime bailout being proposed in the U.S. Senate. Senator Chris Dodd proposes setting up a fund that would buy defaulting subprime mortgages and restructure loans for borrowers. (CNNMoney, 2/3)
Housing Slump gives rise to Repo Tours. NBC’s Michael Okwu reports potiental buyers can take bus tours of repossessed homes. (MSNBC, 2/3)
UCLA’s Anderson Forecast Center still says no recession. GDP for the 4th quarter showed a growth of a measly 0.6%. (KNX-AM, 2/3)
Home Sales decreased 33.4% in December in California compared with the same period a year ago, while median price of an existing home fell 16.5%. (CAR, 1/29)
Sales of New Homes down 26.4% for the year, down 4.7% for December, per U.S. Commerce Department, and down 40.7% year-over-year. Dr. Lawrence Yun of the National Association of REALTORS says that this is a proper adjustment that is needed and is positive. Existing home sales will pick up. (KNX-AM, 1/28; AP, 1/28; CAR 1/30)
Riverside and SB counties’ foreclosure rates among the worst in the U.S. (Riverside Press-Enterprise, 1/29)
Home ownership plunges 1.1%. U.S. Census Bureau reports homeowners accounted for 67.8% of occupied homes in the 4th quarter, down 1.1 points from the prior year and the largest year-over-year decline on record (CNNMoney, 1/29)
Construction Spending Drops by record 2.6%, driven by 18.3% drop in residential projects by private companies, per U.S. Commerce Department (CNNMoney, 2/3)
Most Middle Class Still Cannot Buy Home. Prices have fallen but not by enough to make it possible for nurses, fireman or teachers to buy homes of their own. (CNNMoney, 1/30)
Beazer closes mortgage division and promotes Countrywide as preferred lender. (CNNMoney 2/3)
Sources: Associated Press, MSNBC, CNBC, CNNMoney, Reuters, Washington Post, Wall Street Journal,California Association of REALTORS, National Association of REALTORS, CNN Money, Riverside Press-Enterprise, Los Angeles Times, KNX-AM.
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