Fed Rates Below 1% Possible, ShakeOut Invitation - Sunday, October 26, 2008

The Federal Reserve is widely expected to cut interest rates again next week - Many investors believe the central bank will cut rates by at least another half-percentage point following the end of a two-day meeting on Oct. 29. Rate cuts have been a key tool the central bank has used in the past to boost a weak economy. A variety of lending rates, including credit cards and home equity lines, as well as the prime rate used to set many business loan rates, are pegged to the fed funds rate.So lower rates usually lead to cheaper credit, thus spurring businesses and consumers to spend money more freely. But in the current credit crisis, with banks afraid to make loans due to worries about their firms' own need for cash in the near term, already relatively low short-term rates have done little to get credit flowing. (CNNMoney.com, 10/24)

ShakeOut Invite - The Earthquake Country Alliance has organized the Great Southern California ShakeOut, a week of special events featuring a massive earthquake drill at 10 AM on November 13, 2008, to prepare our region for "The Big One." The ShakeOut drill centers on the ShakeOut Earthquake Scenario, a realistic portrayal of what could happen in a major earthquake on the southern end of the San Andreas Fault. Created by over 300 experts led by Dr. Lucy Jones of the U.S. Geological Survey, the scenario outlines a hypothetical 7.8 magnitude earthquake originating near the Salton Sea, which would have the potential to devastate the region. Many of you know I am an emergency services volunteer for the City of Santa Clarita, LAFD and LA County Sheriff. Please join me in this training event by signing up at http://participate.shakeout.org/personalpage/changhomes. You can participate from anywhere, because you never know where or when an emergency will strike!

CONGRESS SERIOUS ABOUT LAME-DUCK ECONOMIC STIMULUS PACKAGE - The Senate, House of Representatives and the White House have all stated their willingness to work through a lame-duck session to pass a second economic stimulus package prior to the end of the year. While many ideas have been circulated, few, if any, appear certain to be included in a stimulus package. Some of the ideas under discussion include: An additional round of stimulus checks; extending the temporary loan limit of $729,750 for the Government Sponsored Enterprises (GSE) and Federal Housing Administration (FHA); infrastructure spending; financial aid for states; a temporary increase in block grants; and an extension of unemployment and welfare benefits. The primary factor determining what, if anything, will be done during a lame-duck session is the outcome of the upcoming presidential election. Should the Democrats take the White House and secure a filibuster-proof majority in the Senate, they may wish to wait till after Jan. 20 before proposing or enacting legislation. Should the Republican nominee take the White House, Democrats may feel the Bush administration is more willing to compromise in order to pass last-minute initiatives prior to leaving office. (CAR, 10/22)

FHA POSTS LIST OF LENDERS IN HOPE FOR HOMEOWNERS PROGRAM - The Federal Housing Administration (FHA) of the U.S. Dept. of Housing and Urban Development has posted a list of lenders participating in the HOPE for Homeowners program. Participating lenders have indicated an interest in refinancing loans under the HOPE for Homeowners program. The FHA plans to update the list weekly on Fridays. ( CAR, 10/22)

I have received many questions regarding the H4H program (above). Check with your mortgage lender first to see if they participate and if you qualify for the refinancing programs. To see if your lender participates, call them or go to the FHA website.

Mortgage Market Still Open for Business - Lenders emphasize that loans continue to be available for a range of potential home buyers, not just those who are putting down 20 percent and have a credit score higher than 720. Although credit underwriting is tougher and loan terms stricter, borrowers can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on some Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA standards are designed to help people with problem credit and those with scores in the upper 600s can still qualify for loans with reasonable rates offered by Fannie Mae and Freddie Mac. (Washington Post Writer's Group, 10/18)

NAR: Home Sales Rise as Affordability Improves - Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007. Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains, but there may still be market disruptions. NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers. Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street. A Closer Look at the Numbers:

• Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.
• National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500.
• Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.
• Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago. (NAR, 10/24)

CALIFORNIA HOUSING PRODUCTION DECLINE CONTINUES IN SEPT. - Housing production continued to decline in September, when 4,364 permits were pulled throughout California, down 32 percent compared with the same month a year ago and down 6 percent from August, according to statistics compiled by the Construction Industry Research Board. Single-family permits totaled 2,326, down 35 percent from September 2007 but up 4 percent from August. Multifamily permits totaled 2,038, down 29 percent when compared with September 2007 and down 14 percent from the previous month. (CAR, 10/22)

Mortgage Rates Drop to 5-Week Low - Mortgage rates moved south this week, reaching their lowest point in five weeks, according to Freddie Mac's nationwide survey. The company reported a drop in the average interest on a 30-year fixed loan to 6.04 percent from 6.46 percent last week and a slide in the 15-year fixed rate to 5.72 percent from 6.14 percent. Meanwhile, interest on adjustable-rate mortgages slipped to 6.06 percent from 6.14 percent for five-year ARMs but bumped up to 5.23 percent from 5.16 percent for one-year ARMs. (San Diego Union-Tribune, 10/24)

Fast Facts:

• Calif. median home price - August 08: $350,140
• Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000
• Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200
• Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent

Sources: CNN/Money, Washington Post Writer's Group, California Association of REALTORS, National Association of REALTORS, San Diego Union-Tribune..

State Home Prices to Level Out in 2009 - Sunday, October 19, 2008

Palmdale Emergency Preparedness - Palmdale's Public Safety Department is hosting a free Emergency Preparedness Workshop on Thursday, October 23 at 7pm in the City Council Chambers at 38300 Sierra Hwy, Suite B. Are you ready for the big one? The City of Palmdale sits on the San Andreas fault and every resident should be properly prepared and self-sufficient in case of an emergency. Come to this workshop to learn how you and your family can become properly prepared. Displays and information will be available from the LA County Fire Deparmtent, Red Cross and the Public Safety Department. For more information contact Ruth Oschmann at 661/267-5170. (City of Palmdale email)

FED ANNOUNCES PLAN TO PURCHASE EQUITY STAKES IN BANKS AND THRIFTS - The federal government on Tuesday announced the launch of a new program designed to assist with ongoing efforts to help stabilize the U.S. banking system and restore confidence in the country's financial markets, as well as those abroad. So far, nine of the nation's largest banks have agreed to participate in the program, which will allow the government to inject $250 billion into the country's financial institutions in exchange for mandatory preferred stock shares for taxpayers and limited pay for company executives. The Fed's plan will provide money to banks at a fairly low cost for five years to help unfreeze the nation's credit markets, which have been faltering under bad debt tied to the mortgage lending sector. In announcing the plan, the Fed made it clear: this was not a preferred action, but a necessary one. (CAR, 10/15)

C.A.R. FORECAST CALLS FOR PRICES TO LEVEL OUT AND SALES TO RISE IN 2009 - Home prices throughout most areas of California will post declines next year, while sales of existing homes will continue to rise in 2009, according to C.A.R.'s "2009 California Housing Market Forecast," released during the CALIFORNIA REALTOR® EXPO 2008. The median home price in California will decline 6 percent to $358,000 in 2009 compared with a projected median of $381,000 this year, according to the forecast. Sales for 2009 are projected to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008. (CAR, 10/15)

JOB LOSSES TO CONTINUE INTO 2009, NEW DATA SUGGESTS - Employment figures fell 0.8 percent in September to 108.4, a 10 percent decline from where they were one year ago, according to the latest Conference Board Employment Trends Index from The Conference Board, which is predicting the trend in job losses to continue well into the first quarter of 2009. (CAR, 10/15)

NEW HOMES SALES DECLINE 39 PERCENT IN AUGUST - The pace of new home sales across California in August declined 39 percent from August 2007, according to the latest CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report released today, representing a significantly smaller decrease than the 57 percent year-over-year decline a month earlier, according to the report. Sales of new single-family homes were down 41 percent in August, while sales of townhomes and "plexes," (duplexes, triplexes, etc.) were down 17 percent, and sales of condominiums were down by nearly 43 percent, according to the report. (CAR, 10/15)

Co-Ownership Gets Popular as Lending Tightens - Real estate co-ownership arrangements are becoming increasingly popular, especially in cities where prices—even after the real estate meltdown—remain out of reach for many buyers. While financing is easier, these arrangements have the capacity to fail. He recommends that people who are considering a joint purchase hire a lawyer to draw up a co-ownership agreement, including a plan to get out of the arrangement. Here are some other tips for co-buyers:
• Before you begin looking for property, decide the geographic and financial ranges for the search.
• Understand potential co-buyers’ finances; lenders will look hard at the finances of all partners in the deal.
• If the property is a condo, understand the rules regarding rentals, just in case one partner needs to move out.
• Put everything in writing, particularly the escape plan. (Chicago Tribune, 10/13)

Mortgage Lending for Sellers - Due to stricter loan underwriting standards and increased difficulty for some borrowers to qualify for a loan, even for those who are well-qualified, more sellers are offering financing to potential home buyers, which some believe can be mutually beneficial to both buyers and sellers, and can give sellers a competitive edge. (Wall Street Journal, 10/12)
• In addition to sellers receiving a steady flow of income by providing financing to home buyers, sellers also can profit from the interest payments. Sellers also may be able to sell the mortgage on the secondary market, thus reducing their risk. However, seller-financing is not always the best option. Sellers who need the equity from their current home to purchase their next one are advised to not offer seller financing.
• Buyers, especially those who are self employed, work on commission or have lower credit scores, but can explain the circumstances that led to it, also may benefit from seller financing. Often times, these buyers do not qualify for traditional, conforming loans, reducing their ability to become homeowners.
• To reduce the risk of possible loan default, most real estate professionals recommend that sellers request a down payment of at least 10 percent, especially if the buyer does not have an ideal credit score. Buyers who do not have a large financial stake in the home may be more likely to default than those with a more substantial down payment. It also is recommended that sellers work with a real estate attorney to draft a contract that includes possible implications if the buyer issues a late payment, defaults on the loan or neglects to adequately insure the property. Sellers also should work with an experienced loan servicer who can collect payments and keep records. (CAR, 10/16)

California REALTORS® forecast lower home prices, rising sales in 2009 - The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) on Wednesday presented its “2009 Housing Market Forecast,” at CALIFORNIA REALTOR® EXPO 2008 in Long Beach, Calif. The annual forecast drew a crowd of more than 1,200 real estate industry professionals who learned what consumers and the real estate industry can expect for California’s housing market next year. (LA Times, 10/16)
• Sales of existing single-family homes are expected to increase in 2009 by 12.5 percent, to 445,000 units. In August, sales were 85 percent above the monthly low for the current cycle and for the first time this year were ahead of 2007 in year-to-date terms.
• Although the median home price is expected to decline by 6 percent in 2009, to $358,000, the lower home price likely will increase the state’s affordability rate, currently at 48 percent, enabling more first-time home buyers to enter the market. C.A.R. anticipates home prices will stabilize once inventory thins out. In August, the Unsold Inventory Index stood at 6.7 months, down from 16.9 months in January 2008, meaning that it would take approximately 6.7 months to deplete the market at the current sales rate.
• The ability of consumers to obtain financing continues to play a vital role in stabilizing home prices. Currently, buyers with at least 10 percent available for a down payment, proof of income and excellent credit scores may qualify for conforming loans – mortgage loans that are $729,750 or less. (CAR, 10/16)

No quick fix for Housing Prices - The recently enacted government rescue plan, which includes the U.S. government taking stakes in major financial institutions and temporarily guaranteeing new bank debt, is expected to help stabilize the economy. However, some economists believe that additional measures are needed to help stimulate the demand for housing and reduce mortgage delinquencies and foreclosures. (Wall Street Journal, 10/15)
• In July, the government approved a permanent loan limit increase -- from $417,000 to $625,500 -- on mortgages backed by the Federal Housing Administration (FHA), which some analysts believe is helping more homeowners obtain mortgages, especially in high-cost areas like California. In September, 28 percent of home purchases were financed with FHA mortgages, an increase from 19 percent in August. This year, more than twice as many home buyers sought government-backed mortgages than did those who did so last year.
• Although the government program, Hope for Homeowners, aims to assist homeowners by helping them refinance their current mortgage loans into more affordable ones in exchange for the homeowners sharing price appreciation with the government, some experts believe that the program will not assist enough homeowners. Hope for Homeowners will help 400,000 homeowners who are in default or foreclosure; however, some estimates show that there are nearly 12 million Americans who owe more on their mortgages than their homes are currently worth. Homeowners at risk of defaulting on their mortgage should contact their mortgage company as soon as possible to explore options including loan modification.
• Some economists believe that mortgage rates, although still at historic lows, need to decline to 5.25 percent in order to attract more home buyers and deplete the current supply of homes on the market. (CAR, 10/16)


Fast Facts:
○ Calif. median home price - August 08: $350,140(Source: C.A.R.)
○ Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000 (Source: C.A.R.)
○ Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200 (Source: C.A.R.)
○ Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)


Sources: City of Palmdale, California Association of REALTORS, Freddie Mac, Wall Street Journal, Los Angeles Times, Chicago Tribune.

Relief for Countrywide Borrowers and Santa Clarita Give-aways! - Sunday, October 12, 2008

BOA to modify Countrywide Loans - Bank of America will modify 400,000 mortgages with up to $8.4 billion in interest rate and principal reductions for customers in 11 states, including California with $3.4 billion. Some borrowers may qualify to pay nothing but interest for a decade. Bank of America will launch the program in December. (AP, California Attorney General, 10/6)

City of Santa Clarita Giveaways - In celebration of oak trees and to promote their protection, the City of Santa Clarita's Urban Forestry division is giving away FREE 15-gallon oak trees as part of their "Oaktober" program. The trees will be given away:

• Friday, October 17th, 8:00 a.m. to 10:00 a.m. at the Central Park Nursery
• Friday, October 24th, 8:00 a.m. to 10:00 a.m. at the Central Park Nursery
• Saturday, October 25th, begins at 9:00 a.m. at Todd Longshore Park. (City of Santa Clarita email, 10/10)

Wells Fargo gets Wachovia - The Federal Reserve on Sunday approved Wells Fargo & Co.'s $11.7 billion acquisition of Wachovia Corp., removing the deal's last major regulatory hurdle. Citigroup Inc. on Thursday walked away from its own efforts to buy Wachovia. (CNNMoney, 10/12)

Central Banks Coordinate Global Cut in Interest Rates - Hoping to thaw the current credit freeze, the Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada and Sweden reduced their primary lending rates by a half percentage point Wednesday. The Chinese central bank also reduced its key interest rate and lowered bank reserve requirements, while the Bank of Japan’s rates remained unchanged. (NY Times, 10/9)

· The purpose of the rate cut is to increase consumer confidence, which in turn should help stimulate the economy. When consumers and businesses have more confidence in the economy, they usually spend more money, which bolsters the economy by enabling retailers to increase sales and prevent future layoffs.

· The Federal Reserve controls the interest rate that banks charge each other for short-term loans. Usually this leads to banks lowering the rates they charge consumers and businesses. The short-term loan-rate reduction, from 2 percent to 1.5 percent, should have an almost immediate effect on credit-card rates, according to financial analysts. Interest rates on automobile and business loans also should decline. Generally, the short-term loan-rate reduction also leads to a reduction in mortgage rates; however, it is too soon to predict if that will happen in this case given the way the market has reacted to recent economic news.

· Some credit card companies already have reduced their credit card rates. Although there may be room for further reductions for some consumers, many experts believe that only consumers with the best credit scores and payment history will benefit from the rate reduction. Most credit card companies deem consumers with high credit scores as providing the least amount of risk.

· Consumers with fixed-rate mortgages will not benefit from the rate cut; however, those with adjustable-rate mortgages (ARMs) may. When banks receive an interest rate cut, they may pass along the savings to consumers. Homeowners with ARMs could receive a payment reduction. (CAR 10/9)

Sell your home fast in any market - Due to the large number of available homes on the market, and the fact that the traditional home-buying season is coming to a close, sellers need to be aware of key factors that can determine whether their home sells quickly or lingers on the market. (MSN, n.d.)

· Accurately pricing a home continues to be the number one factor to conclude a successful sale. Most REALTORS® guide sellers in determining an accurate listing price for their home by tracking comparable properties in their neighborhood that have sold within the previous three to four months. Since the market can greatly fluctuate from one neighborhood to another, some REALTORS® believe that setting a price based on comps older than three to four months will not accurately reflect the current market and could result in pricing a home at odds with current market conditions.

· Even in today’s market, sellers do have some control over many contingencies. Some buyers may request that their contracts include contingencies based on their ability to obtain financing. To avoid risks associated with this contingency, some REALTORS® advise their clients to request buyers to provide a pre-approval letter from a well-established lender; a financial information sheet outlining the buyer’s employment history, income, assets and liabilities; and a recent bank statement showing that the buyer has enough funding reserves for the required down payment. This ensures that the buyer is likely to be approved for a mortgage loan, and reduces the risk to the seller.

· Some buyers may use a home’s inspection report as a bargaining chip to negotiate a lower price. When this occurs, some sellers offer buyers a lump sum of money so the buyer can make the repairs, rather than the seller repairing each item listed on the report. Sellers may be able to avoid paying a lump sum to the buyer by having the home pre-inspected prior to listing. This enables the seller to obtain accurate estimates for the cost of repairs ahead of time and provides the seller with the option of making the repairs before listing the home. (CAR, 10/9)

PENDING HOME SALES UP 7.4 PERCENT IN AUGUST - Pending home sales based on signed contracts rose 7.4 percent from July to August, the highest reading since June 2007, according to NAR's Pending Home Sales Index released today. The Index jumped to 93.4 from an upwardly revised reading of 87 in July, an 8.8 percent increase from August 2007 when it stood at 85.8. (CAR, 10/8)

MORTGAGE COMPANY PRODUCTION PROFITS DECLINE - Mortgage companies lost an average of $560 on every loan they originated in 2007, a sharp decline from the $50 per loan they are reported to have lost in 2006, according to the Mortgage Bankers Association's annual cost study released Tuesday. While loan origination and other fees did increase on a per-loan basis, they were outpaced by hikes in production and operating expenses, which increased 7 percent to $3,663 per loan, the study shows. (CAR, 10/8)

Fast Facts

• Calif. median home price - August 08: $350,140(Source: C.A.R.)
• Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000 (Source: C.A.R.)
• Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200 (Source: C.A.R.)
• Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
• Mortgage rates - week ending 10/2/08 30-yr. fixed: 6.10% Fees/points: 0.6% 15-yr. fixed: 5.78% Fees/points: 0.6% 1-yr. adjustable: 5.12% Fees/points: 0.5%(Source: Freddie Mac)

Sources: Associated Press, MSNBC, State of California Office of the Attorney General, City of Santa Clarita, California Association of REALTORS, New York Times, CNNMoney, Freddie Mac.

Santa Clarita sets up eAlert and Emergency Economic Stabilization Act passes - Sunday, October 5, 2008

Something is better than nothing - Despite last week's confidence that the initial "Emergency Economic Stabilization Act of 2008" bill would pass, it took additions from the Senate and its passage on Wednesday before the House of Representatives passed it on Friday. President Bush signed the bill into legislation within a couple hours. Some provisions in the bill include:

o Helps American families keep their homes by requiring the Treasury Dept. and any federal agency that owns or controls troubled mortgages to modify those mortgages wherever possible; this may include reducing the principal or interest rate; and extends till the end of 2012 the exclusion from federal income tax of mortgage debt forgiveness.

o Addresses the credit crisis by allowing financial institutions to immediately sell $250 billion in troubled assets to the U.S. Treasury Department under the newly created Troubled Assets Relief Program (TARP). Another $100 billion would be made available upon the President’s request. Should the President deem it necessary, and with Congressional review, the Treasury Dept. may utilize the remaining $350 billion;

o Protects taxpayers by allowing the Treasury Dept. to take an ownership stake in participating companies. In addition, if after five years TARP has incurred a net loss, the President must propose legislation that would force participating companies to reimburse the government to make up the difference;

o Sets up an insurance program, funded by the financial industry, to guarantee companies’ troubled assets, including mortgage-backed securities purchased prior to March 14 this year;

o Curbs executive pay for companies utilizing TARP;

o Sets up two oversight committees, a Financial Stability Board, and a congressional oversight panel, to which the Financial Stability Board would report;

o Creates renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels; as well as continuing other tax breaks that were set to expire; and extends relief from the Alternative Minimum Tax (AMT) by another year;

o Allows the SEC to suspend the required mark-to-market accounting standards and orders a study to be done on the rule’s impact on financial institutions;

o Shields bank deposits by temporarily raising the FDIC insurance cap to $250,000 from $100,000; and temporarily increases the federal insurance level for credit union savings to $250,000, both till the end of 2009. (KNX-AM, CNN, and other sources throughout the week)

Many of you this week have asked me of my opinion of this bill. I agree that this is not a perfect bill as it appears we are "paying the poor decisions of bad-running institutions." But without this "rescue," I believe we will be in for such a sharp and deep recession. I have seen credit markets tighten up before my eyes throughout September. A couple of my buyers who had been pre-approved for a loan with reputable lenders but were unable to find a home during this time (see prior posts about bidding wars) are unable to currently obtain the same pre-approval terms. And no, they have not been reckless in their spending during this time of home-shopping. Their credit scores are near and above 700. I expect this bill will loosen up the credit markets for such buyers in the short term, but prolog the economic hardship. In other words, our economic problems will not be as deep, but will stretch out in time for a bit longer.

Santa Clarita sets up eAlert system - As Santa Clarita approaches the one year anniversaries of the I-5 Tunnel Accident and the Buckweed Wild Fire, the City has developed a new system that will allow its residents to subscribe and receive mobile phone text alerts concerning emergencies impacting the community. All residents can subscribe to automatically receive emergency related text alerts (eAlerts) from the City by simply texting the term "SCEMERGENCY" to 41411 from any mobile phone device and mobile service provider. As a City of Santa Clarita and LAFD CERT Volunteer, I encourage you to join me in signing up for this helpful service. More details at http://www.santa-clarita.com/emergency. (email from City of Santa Clarita dated 9/26/2008)

European Countries Rescue their Banks - The leaders of Germany, France, Britain and Italy met Saturday to discuss the meltdown that has leapfrogged across the Atlantic from the United States to Europe, but shied away from action on the scale of the massive $700 billion bailout passed by the U.S. Congress on Friday and later signed into law by President Bush. Their failure to agree to an EU-wide plan showcased the divisions in Europe on how to deal with the crisis. France had suggested a multibillion-euro (multibillion-dollar) EU-wide government bailout plan, but backed off after Germany said banks must find their own way out. Individual countries intervened within their own countries:

o Germany is in crisis talks on the collapse of a ballyhooed 35 billion euro ($48.4 billion) bailout of Hypo Real Estate AG, the country's second-biggest property lender.

o Germany has set up a guarantee for all investors with money in its banks. Finance Ministry spokesman Torsten Albig said the unlimited guarantee covered some 568 billion euros ($785 billion) in savings and checking accounts as well as time deposits, or CDs.

o Belgian Prime Minister Yves Leterme said he aims to find a new owner for troubled bank Fortis NV to restore confidence in the company before the opening of markets on Monday.

o British treasury chief Alistair Darling said that he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch. In the past year the government has nationalized struggling mortgage lenders Northern Rock and Bradford & Bingley.

o The Icelandic government last week took over Iceland's third-largest bank, Glitnir, a decision that prompted major credit ratings agencies to downgrade both Iceland's four major banks and its government credit rating. Icelandic banks expanded rapidly after deregulation of the domestic financial market in the 1990s and now have combined foreign liabilities in excess of 100 billion euros ($138.34 billion) -- dwarfing the tiny country's gross domestic product of 14 billion euros ($19.4 billion).

o None of the banks, including the European Central Bank and Bank of England, have commented on potential rate hikes or cuts. But analysts believe the Bank of England, which meets this Thursday, will likely lower its rate below 5 percent. The ECB left its rate unchanged at 4.25 percent on Thursday, but opened the door to a rate cut. (CNN, 10/5)

Good News - Local Markets still show upswing in number of closed transactions. See prior blog entitled "Monthly Home Market Analysis"

Wells Fargo Named Among Safest Banks Worldwide - Corporate financial magazine Global Finance named Wells Fargo among the top 10 safest banks worldwide in an article expected to be published in its October 2008 edition. It is the only U.S. bank in the top-10 list, which was dominated by European banks from Germany and France. Netherland bank RaboBank, with retail offices in Ventura to San Luis Obispo Counties was also in the Top-10 list. (per undated distributed document from Global Finance received 9/30. Wells Fargo has a news release dated 9/4/2008 online, but I was unable to view)

Wachovia ownership uncertain - After J.P. Morgan Chase's takeover of Washington Mutual, rumblings emerged of a bidding war for Wachovia Bank, which took over World Savings just in the last couple of years. Citibank was apparently the winner early in the week, stating it would buy the troubled bank with the help from the FDIC. An announcement from Wachovia and Wells Fargo on Friday stated that the Wachovia Board of Directors approved an all-stock takeover bid from Wells Fargo that did not need FDIC or other federal monies. Citibank cried foul stating it had an "exclusivity agreement" with Wachovia, demanded that Wachovia abide by the agreement, and succeeded Saturday in getting an injunction halting all deals from a New York Supreme Court judge. Wachovia and Citibank will appear in front of this judge on Friday. Meanwhile, the FDIC says it stands by its agreement with Citibank in its takeover bid for Wachovia. (KNX-AM, 10/1, 10/3, 10/4; CNNMoney, 10/5)

LA Not Among Cities With "Greatest Exposure to Financial Crisis" - BusinessWeek identified the top-10 communities across the country that are most likely to be most affected by the financial crisis, based on how many people are employed in finance, real estate, and insurance, and leasing.

· Darien, Conn.: 27.23 percent employed in finance and real estate

· Bloomington, Ill.: 26.31 percent

· Hoboken, N.J.: 23.33 percent

· West Des Moines, Iowa: 22.15 percent

· Garden City, N.Y.: 20.22 percent

· Summit, N.J.: 19.74

· Westport, Conn.: 19.39 percent

· University Park, Texas: 18.83 percent

· Wethersfield, Conn.: 18.73 percent

· Mountain Brook, Ala.: 18.66 percent (Business Week, 9/25)

Greater Oversight Likely to Accompany Rescue Plan - Once a financial rescue plan is executed, legal and political observers expect Capitol Hill legislators to turn their attention to tightening the regulation of mortgage lending—an especially obvious target due to the fact that so much of the troubled debt handcuffing the nation's banks originated with the lax practices of mortgage brokers and lenders. In addition, lawmakers may try to overhaul the patchwork of government authority over the nation's banks, which are currently regulated by four agencies with overlapping jurisdictions: the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision, and the Federal Reserve. Finally, legislators may try to bring unregulated markets, such as those for credit default swaps, under control. The market for credit default swaps alone has mushroomed to $44 trillion in face value, so vast that a problem at any one of the major participants poses a global risk. (LA Times, 9/25)

C.A.R. REPORTS SALES INCREASED 56.7 PERCENT; MEDIAN HOME PRICE FELL 40.5 PERCENT IN AUGUST - Home sales increased 56.7 percent in August in California compared with the same period a year ago, while the median price of an existing home fell 40.5 percent, C.A.R. reported Sept. 25. The median price of an existing, single-family detached home in California during August 2008 was $350,140, a 40.5 percent decrease from the revised $588,670 median for August 2007, C.A.R. reported. The August 2008 median price fell 0.2 percent compared with July's revised $350,890 median price. (CAR, 10/3)

"All The News That's Fit To Blog"TM

Sources: KNX-AM, CNNMoney, California Association of REALTORS, Global Finance, BBC, National Association of REALTORS, Business Week, Los Angeles Times.

Monthly Home Market Analysis - October 5, 2008

Briefings of the Tri-Valley Market area begin with a summary of Santa Clarita and San Fernando Valleys and end with the latest unfiltered data from Antelope Valley.

Santa Clarita Valley Home Sales Rise 7% in August

From the Southland Regional Association of REALTORS® (SRAR)

Single-family home sales increased 7.0 percent during August throughout the Santa Clarita Valley, the Southland Regional Association of Realtors reported.

The 199 closed escrows were 13 sales higher than a year ago, but down 16.0 percent from this July when 237 homes sold.

While buyers generally are focusing more on single-family home opportunities, condominium sales increased 31.7 percent to 83 closed escrows during August.

July and August were the first months that saw the conforming loan limit at its new level of $729,000, which means loans up to that amount can be obtained at a lower interest rate than ever before.

The median price of homes sold during August decreased 19.6 percent to $450,000. That was $110,000 below the $560,000 median price of August 2007 and $9,000 higher than the $441,000 median posted this July.

The condo median during August came in at $269,500, down 25.6 percent from a year ago and off 5.4 percent from this July.

Activity throughout the Santa Clarita Valley picked up during August, a fact supported by the Association's statistics reporting pending escrows - a measure of future resale activity.

Pending escrows increased 89.3 percent during August compared to a year ago, suggesting that a growing number of people are getting of the fence and into the market.

There were 1,684 active listings throughout the Santa Clarita Valley at the end of August. That was down 825 listings for a drop of 32.9 percent compared to a year ago. Active listings also declined 5.3 percent from the July total.

At the current pace of sales the inventory represents a 6.0-month supply - right at the top of what industry leaders call a balanced market where neither the buyer nor the seller have a clear cut advantage in negotiations.

San Fernando Valley Homes Sales Surge 21% in August

From the Southland Regional Association of REALTORS® (SRAR)

Sales of existing single-family homes surged 20.7 percent during August throughout the San Fernando Valley, the Southland Regional Association of Realtors reported.

Realtors closed escrow on 666 homes, up 114 transactions from a year ago August.

With the purchase of a single-family home now within reach of more buyers, condominium resale activity has not picked up as much momentum. A total of 172 condos changed owners, down 8.5 percent compared to 188 condo sales in August of 2007.

The median price of homes sold last month fell 34.1 percent to this August's median of $425,000 - down $220,000 from the figure reported in 2007, a steep drop from last year, although from month-to-month the rate of decline appears to be ,flattening out.

The August median was in a range not seen since 2004 when prices were increasing at a 26.3 percent annual pace.

The condo median price of $275,000 was off 29.3 percent from August 2007. There were 6,447 active listings throughout the San Fernando Valley at the end of August. That was down 16.3 percent from a year ago and off 7.2 percent from July of this year.

At the current pace of sales, the inventory represents a 7.7-month supply, just above the 5- to 6-month supply indicative of a balanced market.

Pending escrows - a measure of future resale activity - increased 82.6 percent from a year ago, supporting the conclusion that more people are taking advantage of the best buyers' market in decades.

Antelope Valley Stats from the Greater Antelope Valley Association of REALTORS® (GAVAR)

As of the beginning of October, number of residential listings decreased 20% over October 2007 and list price fell 34%.

Active Listing Comparisons are available at:

http://www.gavar.org/Stats/ActiveListingComparisons.pdf

Month-Year Sales Comps are available at:

http://www.gavar.org/Stats/SoldStats.pdf

* - August is the last month available.

Recorded Sales by Month report is available at:

http://www.gavar.org/Stats/RecordedSalesbyMonth.pdf

* - July is the last month available.

Active & Pending Inventory is found at:

http://www.gavar.org/Stats/ActiveandPending.pdf