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.
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