Weekly Digest

Home Sales Up Significantly in Santa Clarita and San Fernando Valleys

2009-01-04T17:23:00.000-08:00

Santa Clarita Home Sales Up 55%

Continuing an upward trend in sales that started in April, more homes sold throughout the Santa Clarita Valley than a year ago with the 172 closed escrows reported this November up 55.0 percent over November 2007, the Southland Regional Association of Realtors® reported.

Realtors® also closed escrow on 62 condominiums during November, up 63.2 percent from a year ago.That compares with the record high of 204 condo sales set in April of 2003.

The median price of single-family homes sold during November throughout Santa Clarita was $400,000, off 23.4 percent from a year ago and dramatically below the record high of $643,000 which came in April 2006.

The drop off in the condo median price was even steeper during November - down 33.5 percent to a median of $210,000, well below the record high of $397,000 set in January 2006.

Even with the financing difficulties and approach of the holidays, pending escrows - a measure of future sales activity - suggest that resale activity will remain relatively upbeat through the end of the year and beyond.

A total of 270 open escrows were reported at the end of November - up 65.6 percent from a year ago.

The Southland Regional Association of Realtors also reported 1,487 active listings throughout the Santa Clarita Valley as of the end of November. That was 36.5 percent below November 2007.

At the current pace of sales, the inventory represents a 6.4-month supply, up slightly from prior months but still just on the high side of the 5- to 6-month supply that real estate experts believe represents a balanced market.

San Fernando Valley Home Sales Jump 78%

For the fifth consecutive month, sales of existing single-family homes in the San Fernando Valley improved over 2007 totals with the 633 closed escrows of this November up 78.3 percent from a year ago, the Southland Regional Association of Realtors® reported.

Total single-family transactions this year already exceed all of 2007, although 2008 will still rank as the second slowest year for sales on record even if December exceeds expectations.

Condominium sales also increased over November 2007, up 41.1 percent with 199 closed escrows. It was the third consecutive month that condo sales improved over year-ago totals.

Sales activity has been picking up over recent months as prices continue to fall, down 32.7 percent from a year ago to this November's median resale price of $375,000 - a number not seen since 2003. For comparison, the record-high single-family median price of $655,000 was set in June 2007.

The condominium median price of $220,000 was off 41.3 percent from a year ago when it stood at $375,000. The condo record high median of $41 5,000 was set in February 2006.

There were 5,598 active listings throughout the San Fernando Valley at the end of November, a number that was down 25.4 percent from year ago totals. The inventory also declined on a month-to-month basis, down 5.4 percent from this October.

At the current pace of sales, the inventory represents a 6.7-month supply -- on the high side of the 5- to 6-month supply that real estate experts believe represents a balanced market.

During the boom years the supply frequently hovered at less than a 1 -month supply while during the recession of the 1990s it soared to a record-high 23-months. During this cycle, the inventory peaked at a 16.2-month supply this January and has been declining ever since.

While seasonal factors, tight credit and continued fears about the economy appear to be tempering resales, pending escrows - a measure of future sales activity - support reports that buyers have returned.

There were 951 open escrows throughout the San Fernando Valley at the end of November.

That was up 70.1 percent from a year ago as the market hit its low point in October 2007.

Santa Clarita Online Store, More than Half of Modified Loans Delinquent within 6 months

2008-12-14T20:38:00.000-08:00

Start off with interesting news:

More than Half of Modified Loans Delinquent within 6 months

"After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent," said U.S. Comptroller of the Currency John C. Dugan. >>More at http://changhomes2.blogspot.com/2008/12/more-than-half-of-modified-loans.html

Add some local news:

City of Santa Clarita starts an online store

The City of Santa Clarita just launched its first online boutique, featuring specialty Santa Clarita-branded items designed to help residents and visitors enjoy the good life in Santa Clarita. >> More at http://changhomes2.blogspot.com/2008/12/city-of-santa-clarita-has-online-store.html

Opportunity is Ripe:

Low Prices, Low Rates Mean Opportunity: 30-Year Rates at Lowest in 4 Years

Since housing prices have also fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent, experts say it's possible, with government encouragement, that rates will fall as low as 4.5 percent. >>More at http://changhomes2.blogspot.com/2008/12/low-prices-low-rates-mean-opportunity.html

The Rest of the News

Pending Home Sales Holding Steady

>>http://changhomes2.blogspot.com/2008/12/nar-pending-home-sales-holding-steady.html

Delinquencies Increase, Foreclosure Starts Flat

>>http://changhomes2.blogspot.com/2008/12/dellinquencies-increase-foreclosure.html

California Fast Facts:

Calif. median home price - October 08: $311,060(Source: C.A.R.)
Calif. highest median home price by C.A.R. region October 08: Santa Barbara So. Coast $860,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region October 08: High Desert $154,660 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 08: 53 percent (Source: C.A.R.)
Mortgage rates - week ending 12/4/08 3
0-yr. fixed: 5.53% Fees/points: 0.7%
15-yr. fixed: 5.33% Fees/points: 0.7%
1-yr. adjustable: 5.02% Fees/points: 0.5%
(Source: Freddie Mac)

2009 Home Forecast by RE/MAX Founder; Southland AOR Declares, "Balanced Market"

2008-12-07T16:20:00.000-08:00

I hope everyone had a wonderful and restful Thanksgiving. Blogging continues as we go through a beta testing phase. Please pardon the dust.

Below are summaries of articles with links to more detailed articles (if hyperlinked). You are welcome and encouraged to click-through.

Countrywide to close Lancaster Call Center?

I am hearing that Countrywide/Bank of America will close its Lancaster, California, call-center facility and distribute those positions (may not be ALL those positions) in its other facilities in Simi Valley and Calabasas, among others. I am attempting to confirm.

RE/MAX Founder thinks 2009 will be like 2008

My broker went to a RE/MAX meeting in Pasadena on December 4, where RE/MAX founder, Dave Liniger, was speaking. In addition to being a consultant to Congress, he states that he believes 2009 home market will be like 2008.

Upcoming Santa Clarita Events, Now through February

Kid's Night Out! (December 12) - Parents can enjoy going to dinner, shopping, or just a night out while your children are participating in supervised fun. Children (ages 4-11) will enjoy food, a movie, crafts, and games inside the community room at Santa Clarita Park, while you have a night to yourself. All City staff are fingerprinted and CPR/First Aid certified. The cost is $18 per child. For more information, please call (661) 284-1465.

Unique Homebuying Opportunities Abound

Southland Association of REALTORS published a list of aid programs designed to help homebuyers. Click the link above.

Santa Clarita Valley October Home Sales up 78%

Driven by the continued presence of foreclosures at extremely favorable resale prices, sales of existing single-family homes during October in the Santa Clarita Valley increased 78.4 percent compared to a year ago. At the current pace of sales, the inventory of homes listed for sale represents a mere 5.3-month supply – precisely where experts believe a balance exists between buyers and sellers.

San Fernando Valley October Home Sales Soar 111%

Home sales increased 110.5 percent during October throughout the San Fernando Valley, propelled by a 30.5 percent decline in the median price.

At the current pace of sales the inventory represents a 6.0-month supply. Except for the presence of many foreclosed properties, a 6-month supply would represent a balanced market, where neither buyers nor sellers hold a negotiating edge.

Have a great week!

More articles (both self-written and sourced) can be found at:

* http://snipurl.com/waynesworld - Wayne's (Real Estate) World
* http://changhomes2.blogspot.com/ - Blog Repository

Happy Thanksgiving!

2008-11-26T17:48:00.000-08:00

Just a quick note to wish you all a happy and safe Thanksgiving!

I am actively working on improving all my blogs sites and other internet feeds to provide you the best and most pertinent information. Please pardon the dust! I expect to be back on with a routine blog next week!

Obama's Plans for Housing & HUD Info to Prevent Foreclosures - Weekly Digest, 11/2/2008

2008-11-09T21:30:00.000-08:00

HUD Guide to Prevent Foreclosure - The guide provides consumers with information such as how to contact a housing counselor; when and how to talk to their lender, how to find foreclosure resources, tips on avoiding foreclosure and foreclosure scams, as well as information for consumers who cannot keep their home. The guide to preventing foreclosure can be accessed by visiting http://www.hud.gov/foreclosure/. (CAR, 11/6)

In the continuing revamp of my blog sites, I will be adding more original articles and FAQ answers to my weekly digest. Next week I'll spotlight "Hope For Homeowners" in detail, due to many questions I have received regarding people "wanting to refinance" their current property. Everything I know.

Obama Will Support Housing - President-elect Barack Obama is likely to make a housing market recovery a central part of his economic revival plan, says the National Association of REALTORS. Obama has long made housing a priority, said Illinois Association of REALTORS® CEO Gary Clayton, who knows the president-elect from his days as a state senator. Clayton said with a chuckle that he now regrets not joining Obama's weekly poker game. In Illinois, Obama advocated tax credits for property owners and fought to end predatory lending, Clayton said. As a U.S. senator, he's advocated for a stronger FHA and voted for the NAR-backed economic stimulus bill, which increased loan limits in high-cost areas. http://changhomes.blogspot.com/2008/11/obama-will-support-housing-says-nar.html

Housing Moves Independently from the Economy - National Association of REALTORS Chief Economist Lawrence Yun releases an economic outlook in the same article. "We are in a recession," Yun said. "In the next six months, we may lose up to 1 million jobs. But the good news is, historically housing moves independently from the economy. We are seeing a 20 percent improvement in home sales in states like California, Florida, and Virginia. The economy will not improve without a housing recovery." See Last Week's Blog regarding September home sales - http://changhomesnews.blogspot.com/2008/11/new-home-sales-mortgage-rates-up-in.html

Finding an area with appreciation potential - Some real estate experts believe that home buyers who purchase a house during the current market will gain equity if they stay in the house for at least five years and purchase in a desirable neighborhood. (Chicago Tribune 10/31)

· Neighborhoods with strong employment bases, such as hospitals, universities, and government, tend to be recession-proof. People desire to live near their jobs, so housing that is in close proximity to these types of industries are generally in higher demand than those in other areas.

· High gas prices and roadway congestion have led many people to seek "walkable" communities - neighborhoods that offer both daily needs such as grocery stores and coffee shops to more specialty items like hair salons, all within walking distance. Walkable communities also provide public transportation, which is becoming more desirable to many home buyers and is increasing demand for housing in these areas. One Web site, walkscore.com, calculates the walkability of a community by locating stores, restaurants, schools, parks, and other attractions that are within walking distance. The scores are based on a 100-point scale with 100 points being a "walker's paradise."

· Home buyers who seek a new or nearly-new home should search in areas where the homebuilder is known for honoring warranties and building high-quality homes that are structurally sound. Homes in these areas are more likely to weather well and gain value in the future than homes in areas where the homebuilder is unknown.

· Homes in neighborhoods with sales momentum generally appreciate at a faster pace than areas where sales are flat. Some real estate industry consultants advise clients to pay close attention to the "list to sale" numbers, which reflect the difference between the asking price and the final closing price. Usually, if the gap in list-to-sale numbers is narrow, then the real estate market in that area is improving. (CAR, 11/6)

Meltdown 101: How we'll know we're in a recession - Recent economic reports and many news stories have led some Americans to believe the country is in a recession. Although unemployment is high and incomes have failed to keep pace with inflation, the country is not yet in a recession, which must be declared by the National Bureau of Economic Research (NBER). (Washington Post, 10/31)

· The National Bureau of Economic Research (NBER) is the entity that officially declares the country is in a recession. Founded in 1920, NBER consists of more than 1,000 university professors and researchers who study the economy. The Business Cycle Dating Committee within NBER makes the call on recessions. Often times NBER doesn't declare a recession until after it is over.

· Contrary to popular belief, a recession is not defined as two consecutive quarters of negative gross domestic product growth. NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months. This is usually based on reports such as the gross domestic product - a measure of the value of all goods and services produced within the United States; real income, employment, industrial production, and wholesale and retail trade.

· A recession's start and end dates are based on the high and low points within the nation's "business cycle" - periods of economic growth and contraction. A recession begins when the economy peaks at the top of an expansion period. It continues as the economy contracts until it hits the "trough," the lowest point in the downward cycle. After that, the economy begins to recover. The "peak" date is the beginning of a recession and the "trough" date is its end. The last official recession began in March 2001 and lasted eight months before ending in November 2001. (CAR, 11/6)

'Green' improvements can add to a home's appeal - Many home buyers are seeking 'green' homes to offset their carbon footprints and pocketbooks. Although most green homes are new houses, owners of existing homes for sale can make "green" adjustments to be more competitive in the market. (Los Angeles Times, 11/2)

· C.A.R. recently launched a new Green Web site, "At home with green™," which provides information to consumers and REALTORS® about how to find and sell green homes; how to make green home improvements; and other tactics for greening their homes, offices and lives. To visit "At home with green™," please go to http://green.car.org.

· Consumers can work with their local utility company to conduct an energy audit to determine how green a home is and to get pointers on how to further green the home. Although the changes could be costly and the homeowner likely will not recoup all the money spent making the green upgrades, the home could sell faster with the improvements. Some home buyers may make an offer on the home as is, but might request a credit towards making the green improvements. Often times the credit will be nearly twice the amount that it would have cost had the homeowner made the improvements prior to listing the home.

· Homeowners can make green improvements in their homes by making simple changes, such as replacing regular light bulbs with compact fluorescent bulbs (CFLs), which use only one-fifth the energy of regular bulbs and last almost 12 times longer, or more substantial improvements like replacing appliances with ENERGY STAR-rated ones, which can use as little as one-quarter the energy of older models. (CAR, 11/6)

New Home Sales, Mortgage Rates Up in Past Week - Weekly Digest, 11/2/2008

2008-11-02T23:07:00.000-08:00

Beginning November 1, I have slightly changed the format for my weekly blogs. The weekly blog has become longer and longer, so I have moved the full story and articles to a sister site, http://changhomes.blogspot.com/.

This blog, which continues to be emailed to all subscribers, will summarize newsworthy housing, economic, and real estate events of the week, and will have links to the full story at the sister site.

During the month of November, I will continue to make improvements to interconnect the blog with distribution methods and the website. As always, I look forward to your comments and feedback. Just send me an email at changhomes@gmail.com. Thank you for your continued interest and support!

New Home Sales Up in September - Often considered a precursor to home sales in general, sales of newly built single-family homes posted a slight increase in September, rising 2.7 percent to a seasonally adjusted annual rate of 464,000 units, according to a U.S. Dept. of Commerce report released Monday. The report also indicated that builders are making substantial progress depleting the supply of unsold units on the market. http://changhomes.blogspot.com/2008/11/new-home-sales-rise-27-percent-in.html (CAR, 10/29)

New statistics have been released from the Southland Association of REALTORS(R), but I am unable to retrieve that tonight as I write this. Please view the link above to the article repository. As soon as I can retrieve it, the statistics for San Fernando and Santa Clarita Valleys will be posted there.

Mortgage Rates Inch Up - News Freddie Mac reports a jump in the 30-year fixed mortgage rate to 6.46 percent during the week ended Oct. 30 from 6.04 percent the prior week, as long-term mortgages rates moved in line with long-term Treasury bonds. The 15-year fixed mortgage rate rose as well, climbing to 6.19 percent from 5.72 percent. Meanwhile, the five-year hybrid adjustable mortgage rate moved up to 6.36 percent from 6.06 percent; and the one-year ARM increased to 5.38 percent from 5.23 percent. Freddie Mac chief economist Frank Nothaft expects short-term rates to remain low due to the Federal Reserve’s recent cut in the discount and federal-funds rates, and he notes that falling home prices have jump-started residential sales in some markets by making properties more affordable. http://changhomes.blogspot.com/2008/11/mortgage-rates-inch-up-this-week.html (WSJ, 10/31, via Real Estate Daily News)

Bargain Hunters are out! I was representing clients at a home auction this weekend, and it's incredible the deals you can get. Homes as low as $40,000. Are you a bargain hunter? Call me and lets start shopping!

Plan your Winter with these Santa Clarita Events! -

Fine Craft Show (November 15-16) - Join us at Old Orchard Park for a relaxed and enjoyable weekend of shopping featuring fine handcrafted items, specialty foods, coffees and jazz music. You will find many one-of-a-kind gifts including intricate and colorful handcrafted jewelry, pottery, woodwork, ceramics, floral arrangements, and much more. For more information, please visit www.santa-clarita.com/crafts.
Veterans Day (November 11) The Veterans Day Ceremony is held annually on November 11th at the Veterans Memorial in Old Town Newhall. The event is a partnership between the City of Santa Clarita and the Veterans’ Historical Committee, the SCV Chapter 91 Blue Star Moms, Blue Star Moms of the Canyons Chapter 82, Prayer Angels for the Military, and the Knights of Columbus. The Ceremony honors Veterans and individuals serving in the military and their families. For more information, please call (661) 286-4018.
Paint the Town (December 5) In celebration of the holiday season, and to create a joyful holiday setting in Old Town Newhall, the City of Santa Clarita presents a ‘Holiday Window Painting Contest.’ For more information, please visit www.santa-clarita.com/arts.
Literacy and Arts Festival (December 6) On Saturday, December 6, celebrate the holidays with the second annual Literacy and Arts Festival, presented by the Santa Clarita Valley Education Foundation and the City of Santa Clarita. For more information, please visit www.scveducationfoundation.org.
Old Town Newhall Holiday Parade (December 6, 2008) All Santa Clarita Valley children are encouraged to participate by walking in the parade and dressing up according to their family’s holiday traditions. For more information, please visit www.santa-clarita.com/arts.
Disney’s High School Musical: The Ice Tour (December 27) Celebrate the holidays with the gang from the High School Musical located at the Honda Center in Anaheim. This trip includes transportation by bus and reserved seats in the lower level at the Honda Center. For more information, email trips&tours@santa-clarita.com.
Tournament of Roses Parade 2009 (January 1) Pasadena’s 120th annual Tournament of Roses Parade, “Hat’s Off to Entertainment” will be making its way down Colorado Boulevard and we have reserved a seat just for you! For more information, email trips&tours@santa-clarita.com.
Glacier Slide Polar Bear Swim (January 1) Join the official Santa Clarita Polar Bear Club by taking a chilly plunge in the Aquatic Center’s waterslide pool on New Year’s Day. For more information, please contact (661) 250-3766.
Santa Clarita Valley Film Festival (January 8-11) The 4th Annual SCV Film Festival provides local filmmakers with opportunities to show their work and to come together with an audience to enjoy quality independent films. For more information, please visit www.scvfilmfestival.com.

During the Week, look for the following articles to be posted on the Sister Site -

Home sales statistics for Santa Clarita and San Fernando Valleys
Foreclosure: When Must I Move Out?
Don't Wait Until Selling to Make Repairs
Will Shopping Multiple Lenders Hurt Credit?
When It Makes Sense to Overpay for House
Buy Now, Sell Later?

Already in the Repository -

Search these articles and more at - http://changhomes.blogspot.com/.

Sources: CAR, NAR, Wall Street Journal, Real Estate Daily News, USA Today, City of Santa Clarita.

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

2008-10-26T22:37:00.000-07:00

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

2008-10-19T18:26:00.000-07:00

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

2008-10-12T21:31:00.000-07:00

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

2008-10-05T17:20:00.000-07:00

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

2008-10-05T17:17:00.000-07:00

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

What's in the Bailout for Homeowners - Sunday, September 28, 2008

2008-09-28T23:17:00.000-07:00

Emergency Economic Stabilization Act of 2008 - The $700 billion bill is expected to pass the House on Monday and the Senate by Wednesday this week. Includes plan to stem foreclosures and to work with servicers to modify loans. In Sunday's version of the bill, federal agencies holding mortgages and mortgage securities would be required to identify loans that could be modified without causing big losses for taxpayers. However, exactly how that would be done isn't totally clear. It also allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures, though on a press call Treasury officials declined to elaborate on these provisions. Servicers have been under pressure to modify loans since the mortgage meltdown began a year ago. However, they say the biggest roadblock to changing loan terms are the investors who hold the securities created from those mortgages. (KNX-AM, 9/28, CNNMoney, 9/28)

In a separate bill, the Senate on a 78-12 vote sent a $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked. The measure is needed to keep the government operating beyond the current budget year, which ends Tuesday. As a result, the legislation is one of the few bills this election year that simply must pass. Bush's signature would mean Congress could avoid a lame-duck session after the Nov. 4 election. (CNNMoney, 9/27)

Homeowner Help At Last - The Hope for Homeowners program, which begins Oct. 1, allows borrowers who can't meet their current mortgage terms to refinance into more affordable, fixed-rate loans backed by the Federal Housing Administration. The legislation also calls for changes to strengthen the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures, but did not specify the enhancements.
(CNNMoney, 9/28)

Banks in a Domino Effect - In a week where WaMu was acquired by JPMorgan Chase, Wachovia is the subject of a bidding war between Citigroup and Wells Fargo. Across the Pond, the governments of Belgium, Luxembourg and the Netherlands agreed late on Sunday evening to invest £9bn in huge financial services group Fortis, in effect nationalizing it. Plus Spanish bank Santander will take over 20-billion British Pounds to take over UK's Bradford & Bingley a year after Northern Rock collapsed and was nationalized by the British government. (NYTimes, 9/28, BBC, 9/28)

Emergency Rate Cut - Some economists think that the Federal Reserve will try to boost battered confidence in banks and the economy by cutting the Federal Funds Rage by at least a quarter percentage point as early as Tuesday, although the Fed's next scheduled meeting to discuss interest rates is a two-day session that ends on October 29. (CNNMoney, 9/26)

Current Mortgage Rates:

30-year fixed - 5.98%
15-year fixed - 5.65%
5/1 ARM - 5.98% (CNNMoney, 9/25)

Schwarzenegger signs 10 housing-related bills, vetoes one - The bill he vetoed would have banned negative amortization loans, in which homeowners pay less than the interest on their loan and can end up owing more than their homes are worth. It also would have prevented mortgage brokers from steering borrowers into more profitable but higher-risk loans if those buyers actually qualified for lower-cost mortgages. In addition, prepayment penalties would have been capped. Schwarzenegger said he vetoed the bill because it would have applied only to state-regulated brokers, leading to unequal protections for consumers. He also said it could have prompted unfair lawsuits against brokers. Lieu's bill was part of a more ambitious package of eight Assembly bills earlier this year aimed at risky lending practices. Four of the eight died in a Senate committee after bankers and mortgage brokers objected, and two others were watered down. Among the housing bills the governor signed are ones that will allow more oversight of mortgage brokers, require brokers to disclose more information to consumers and regulators, and help create new mortgage-refinancing programs. (CNN, 9/26)

Sources: CNNMoney, New York Times, BBC, KNX-AM, CNN

30-Year Mortgage Rates Reach 7-Month Low , Sunday, September 21, 2008

2008-09-21T22:14:00.000-07:00

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.78 percent during the week ended Sept. 18 from 5.93 percent the prior week, marking the lowest level in seven months. During the same period, the 15-year mortgage rate dropped to 5.35 percent from 5.54 percent. Meanwhile, interest on five-year adjustable mortgages slipped to 5.67 percent from 5.87 percent; and the one-year ARM slid to 5.03 percent from 5.21 percent. (San Diego Union-Tribune, 09/19/08)

$700 Billion Proposed Bailout of the Banking System - According to the administration's proposal, the federal government would buy up as much as $700 billion of illiquid mortgage assets at a deep discount from banks. The Treasury Department would run the program directly, unlike the savings and loan crisis of the 1990s when Congress created the Resolution Trust Company to spearhead a financial bailout. Lawmakers are reviewing the plan and have scheduled hearings on the matter in the next few days. (CNN, 9/21)

The Federal Reserve voted yesterday to keep the federal funds target rate at 2 percent, where it has been since April. (Investor’s Business Daily, 09/16/2008)

The housing market is a year away from improvement, says Steven Preston, secretary of the U.S. Department of Housing and Urban Development. Preston predicts that it will be “the middle of next year or well into next year” before “we begin to see more consistency in buyers coming back into the marketplace.” The recovery from the housing crisis in 2009 is likely to be regional in nature, the HUD secretary says. “The crisis will begin abating in a number of regions of the country. That is what I am hopeful of. But I think it will be more intractable in other regions,” he says. “It is going to be some time” before recovery comes to certain communities in California, Florida, Arizona, and Nevada. (Christian Science Monitor, 09/16/08)

Refinance Applications Jump 88% from prior week - Homeowners rushed to take advantage of the drop in interest rates following the government's takeover of Fannie Mae and Freddie Mac, data released Wednesday showed. Applications by homeowners looking to refinance their mortgages spiked 88% last week, according to the Mortgage Bankers Association. Refinances accounted for nearly 52% of all application activity, up from 36% the previous week, the trade group said. The volume of purchase applications also edged up last week by 5%. The average rate for traditional, 30-year fixed-rate mortgages dropped to 5.82% from 6.06% the prior week. The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, fell to 5.54% from 5.73%. (CNN, 9/17)

Home Values Fall 34% in Southern California - The cost of new and resale homes and condos dropped to $330,000 last month in a six-county region. It was down from $500,000 in August 2007 and down 5.2% from $348,000 in July, MDA DataQuick said. A total of 19,366 homes and condos were sold last month, up about 9% from August 2007 but down almost 5% from July. MDA DataQuick president John Walsh said much of the sales activity has been logged in lower-priced inland areas where the market has been driven by foreclosures. Foreclosures accounted for almost 46% of all resold properties last month, up from 10% in August 2007 and almost 44% in July. (CNN, 9/17)

Sources: CNNMoney, Christian Science Monitor, Investor's Business Daily, San Diego Union-Tribune.

Interest Rates Drop – Sunday, September 14, 2008

2008-09-14T21:54:00.000-07:00

With the government conservatorship of Freddie Mac and Fannie Mae a week ago, mortgage interest rates dropped significantly the past week. Rates on 30-year fixed-rate mortgages (FRMs) averaged 5.93% for the week ended September 11, with an average 0.7 point discount. That's down from an average 6.35% last week, and down from an average of 6.31% recorded during the same week last year. Experts think these rates will pull the final holdout buyers off the fence and promote a turn-around in the housing market that we are already beginning to see in some markets. A 15-year FRM averaged 5.54%, falling from 5.90% last week and 5.97% from a year ago. The five-year adjustable rate mortgage (ARM) dropped to 5.87% from 5.97% last week, and 6.17% a year ago. One-year ARMs averaged 5.21%, a slight increase from a week ago when it stood at 5.15%. That's down from a year ago when the rate averaged 5.66%. (CNNMoney, 9/10, 9/11)

Other points regarding the government conservatorship of Freddie & Fannie:

· Under the conservatorship, the FHFA has the authority to take up to an 80 percent stake in the companies, and will review both GSEs’ financial condition quarterly. The federal government also may inject capital into Fannie Mae and Freddie Mac, if needed. Both GSEs will be allowed to increase their mortgage funding over the next year and a half, and their stock will continue to trade, with stockholders retaining all rights in the stock’s financial worth. However, the plan does call for a 10 percent reduction per year to GSEs’ portfolios, beginning in 2010, until they have been reduced to $250 billion.

· Although the conservatorship has resulted in lower interest rates for consumers, and restored investor confidence, C.A.R. is concerned that the Treasury and the new CEOs will change the mission and role of GSEs. Without GSEs, mortgage capital eventually will be less predictable and more expensive. This may result in adjustable-rate mortgages becoming the standard loan for home buyers, as well as higher down payment requirements, and the possible disappearance of the 30-year fixed-rate mortgage.

· C.A.R. supports a structure that maintains GSEs in their current countercyclical roles and is urging lawmakers to support continued government involvement in supporting the institutional secondary market. As a result of these concerns, C.A.R. will be asking Congress to enact legislation to ensure GSEs continue to fulfill their congressional mission of supplying an affordable and stable flow of capital for home loans. (CAR, 9/11)

Your home: When it’s wise to downsize - As a result of reaching retirement age and becoming empty nesters, more baby boomers are choosing to downsize from large, multi-room homes to ones with less square footage. While some buyers are choosing to downsize to save money, others -- especially those still in the workforce -- are opting for a lifestyle change, such as a shorter commute; the convenience of an onsite fitness center, often found in condominium communities; or energy savings. (CNNMoney, 9/5)

· Some buyers are choosing to downsize to condominiums, as they are often located in close-proximity to shops, restaurants, transportation; and everyday needs such as grocery stores, dry cleaners, or the pharmacy. Although this is convenient, buyers who wish to save money by downsizing should weigh all the facts before making the decision to downsize. While most single-family homes incur costs such as property taxes, utilities, and home maintenance, most condominium communities require owners to pay monthly homeowner association (HOA) fees, and sometimes special assessments. The monthly dues and special assessments are generally used for items such as replacing a swimming pool, upgrading the community clubhouse, or adding new amenities. Buyers concerned about these costs should ask how much HOA fees have risen over the past five years, and whether the association has plans for new assessments in the near future.

· Even with the added costs, many buyers will realize an annual savings when downsizing. Some experts estimate that the average annual savings in utility costs and property taxes could be as high as $3,900 if a buyer downsizes from a 2,800-square-foot residence to one that is 1,800 square feet.

· Buyers who are at or near retirement should consider acquiring a mortgage loan with a 15-year maturity or a traditional 30-year, fixed-rate loan that does not charge a prepayment penalty. Although payments on a 15-year mortgage are higher and the interest rate is only about .10 percent lower than a traditional 30-year, fixed-rate loan, borrowers can save approximately $141,000 in interest over the life of the loan.

· If a borrower elects for a traditional, 30-year, fixed-rate loan, they should consider one without a pre-payment penalty. This allows the borrower to make extra payments each month and pay off the mortgage more quickly, without adding additional pressure should their financial situation change. (CAR, 9/11)

Fast Facts:

· Calif. median home price - July 08: $350.760(Source: C.A.R.)
· Calif. highest median home price by C.A.R. region July 08: Santa Barbara So. Coast $940,000(Source: C.A.R.)
· Calif. lowest median home price by C.A.R. region July 08: High Desert $177,330(Source: C.A.R.)

· Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)

A sincere thank you to all of you who donated to Danielle's Avon Walk. With your help, not only did she meet her goal, but she surpassed it, raising nearly $2000. She tells me that she has never walked so far for so long ever (39 miles), and has ended up with sunburn and plenty of water blisters on her feet. But she has never had so much fun raising money for a good cause. Thank you again!

Sources: California Association of REALTORS®, CNNMoney.

Current Valley Housing Analyses and Freddie Mac/Fannie Mae Takeover, Sunday, September 7, 2008

2008-09-07T23:53:00.000-07:00

San Fernando Valley home sales surged 16% during July as buyers raced to grab bargains; median price down 31%

Buyers jumped into the resale housing market during July, pushing sales of existing single-family homes in the San Fernando Valley up 16.2 percent from a year ago and 6.9 percent higher than the June tally, the Southland Regional Association of Realtors reported on Thursday, Aug. 29.

While still at historically low levels, sales have increased every month this year since January.

Realtors across the San Fernando Valley report a resurgence of multiple offers on properties as buyers compete with each other over the most favorably priced homes. Many of those offers present ridiculously low prices which have virtually no chance of being accepted, especially by banks that have little negotiating latitude as they try to recoup investments on foreclosed properties.

As lenders adjust to new rules, lenders will start writing loans in the higher price ranges, thus fueling a resurgence in that segment of the market, too.

Because buyers are striving to take advantage of a rare opportunity to buy a single-family home at a favorable price, condominium sales lagged during July.

A total of 205 condos sold, down 25.7 percent from a year ago and off 10.9 percent from this June. Condo sales had been moving up every month since January with July being the first decline this year in month-to-month condo activity.

The real numbers of foreclosures and short sales are likely to wane in the coming months, especially as lenders implement new procedures and the recently-approved economic stimulus package plus other moves by federal authorities begin to take effect.

The single-family median price of $435,000 was down 31.0 percent compared to a year ago. However, it did post a modest gain compared to June, up 1.0 percent. The median has been falling since the record high of $655,000 was set in June 2007.

The condo median of $280,000 was off $127,500 or 31.3 percent compared to July 2007. The condo record high of $415,000 was set in February 2006.

Link said he expects the market to remain busy and perhaps pick up added momentum in the coming months. Pending escrows – a measure of future resale activity – support that view.

There were 1,141 open escrows at the end of July, 39.2 percent higher than a year ago and up 1.2 percent from this June. It marked the third consecutive month that the pending sale total has topped the 1,100 benchmark. The inventory of homes for sale while higher than just a few years ago is not excessive.

There were 6,950 active listings throughout the San Fernando Valley at the end of July, down 3.4 percent from a year ago. Of that total, single-family homes accounted for 75 percent of the active listings.

At the current pace of sales, the active inventory represents a 7.5-month supply – slightly higher than the 5- to 6-month supply deemed to represent a balanced market.

By comparison, the inventory during the recession of the 1990s hit a record high of 14,976 in July 1992 and the inventory compared to pace of sales was three-times higher at a 23-month supply.

Contrary to an inaccurate public perception, the active inventory in the San Fernando Valley has been trending lower since November 2007 when it stood at 7,505.

Buyers confident the housing market is recovering push Santa Clarita Valley home sales up 22%

Sales of existing single-family homes increased 22.2 percent throughout the Santa Clarita Valley during July with the 237 closed escrows up 43 transactions from the 194 total of a year ago, the Southland Regional Association of Realtors reported on Thursday, Aug. 28.

Home sales increased on a month-to-month basis for the sixth consecutive month, rising 3.5 percent in July compared to June.

Condominium sales also increased, rising 2.4 percent for a total of 85 closed escrows, two sales higher than a year ago and 10 sales ahead or 13.3 percent higher than this June.

While the market will not return to normal until foreclosed properties and so-called “short sales” work their way through the system, statistics released by the Southland Regional Association of Realtors indicate that the market has changed direction.

In a growing number of instances, Realtors across the Valley report, multiple offers have reappeared as people strive to capture homes that sold at much higher prices just a short while ago. Chastain-Shine said that one property listed at $450,000 recently attracted 32 purchase offer.

Most of the activity is concentrated on homes listed for less than $500,000, she said, which has the effect of pulling the overall median price lower.

The median price of single-family homes sold last month was $441,000, down 22.6 percent from a year ago, well below the record high of $643,000 set in April 2006. The median has been sliding on a consistent basis since then and its drop has accelerated as buyers focus on entry-level-priced housing.

The condo median price of $285,000 was down 20.8 percent from a year ago and unchanged on a month-to-month basis. While still above 20 percent, the decline in the median price for both single-family homes and condos appears to be slowing as sales activity begins to pick up.

That perspective was bolstered by statistics reporting pending escrows – a measure of future sales activity. The number of open escrows at the end of July increased 33.9 percent compared to a year ago and gained 3.5 percent over this June.

While higher than during the sellers’ boom market, the inventory of homes currently listed for sale is not excessive, despite the public’s inaccurate perception that there is a vast backlog of homes for sale.

There were 1,722 active listings throughout the Santa Clarita Valley at the end of July, down 24.6 percent from a year ago and 8.4 percent lower than this June, the Association reported. Of that total, 73 percent of the listings were single-family homes.

At the current pace of sales, the inventory represents a 5.5-month supply. Industry experts believe a balanced market – where neither buyer nor seller hold sway – appears when there is a 5- to 6-month supply.

The mismatch between the public’s view and reality often leads to fruitless negotiations as buyers think sellers must accept ridiculously low purchase offers.

Professional representation, especially when negotiating with a bank, is more vital than ever. Completing a purchase successfully today requires market knowledge and experience on the part of the Realtor and a realistic, informed view regarding prices on the part of the buyer.

Feds Takeover Fannie Mae and Freddie Mac - Federal officials on Sunday unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back. The move, which extends as much as $200 billion in Treasury support to the two companies. I believe this move affects the investors to Freddie Mac and Fannie Mae significantly, and we will see the market reaction on Monday. I do not see a big effect to current buyer and sellers. Taxpayers generally may be hit in the long term as more government funds are diverted to these two companies. (CNNMoney, 9/7)

Sources: Southland Regional Association of REALTORS®, CNNMoney.

Buyers Galore! – Sunday, August 24, 2008

2008-08-24T22:27:00.000-07:00

Personal Note: Trends I’m Noticing – Okay, moving away from all the data and news, I’m noticing a lot more buyers (real estate agents are saying, “duh!”). Even when I’m trying to get a listing to sell a home, I end up more often than not with a buyer. REO (foreclosure) properties are a lot easier to deal with than Short Sales, and if priced right, my buyer’s offer might be one of 11 offers for that home. If you’re in the market, be patient and persistent. I'm seeing prices still declining in Santa Clarita and San Fernando Valleys, but sales volumes are increasing. In the Antelope Valley, there are still a lot of foreclosures coming on the market. Call me if you have any questions!

In Summary -

Many mortgage brokers are finding that consumers do not fully understand the home loan process and as a result, make mortgage mistakes. Some common mistakes that borrowers make are: not cleaning up their credit; failing to search out first-time home buyer programs; paying junk fees; and not planning for closing costs.
Borrowers can increase their chances of being approved for a home loan by requesting their credit report and FICO score at least six months prior to applying for a loan. This allows the consumer to dispute errors and/or pay any outstanding debt.
Borrowers also should seek out a first-time home buyer program because they often offer better interest rates and terms, and some even are tailored to people with poor credit, or can assist those that do not have enough saved for a down payment.
To avoid paying junk fees, such as those charged for "document preparation," for example, a borrower can use a mortgage broker or call a variety of lenders to compare loans, interest rates, and fees.
Some borrowers are shocked when they realize that they must bring cash to the closing table, typically anywhere from 2 percent to 7 percent of the home's selling price. To avoid this "sticker shock," experts recommend that borrowers get a good-faith estimate from their lender early in the loan process. (CAR, 8/21)

Q2 ENTRY-LEVEL HOUSING AFFORDABILITY INCREASES 50 PERCENT - Nearly half of first-time home buyers in California were able to afford an entry-level home in California in the second quarter of 2008, according to a report released yesterday by C.A.R. Affordability rose to 48 percent in the second quarter compared with 24 percent a year ago. At 68 percent, the High Desert region was the most affordable area in the state. The San Francisco Bay Area region was the least affordable in the state at 32 percent, followed by the Santa Clara region at 33 percent. The Monterey, Northern Wine Country, Palm Springs/Lower Desert, Santa Barbara County, Southern California, Merced, Riverside, and Sonoma regions all reached record-high affordability levels in the second quarter of 2008. (CAR, 8/20)

HOME BUILDERS' CONFIDENCE IN MARKET INCREASES IN AUGUST - Sales expectations among single-family home builders for the next six months increased two points in August to 25, while current sales conditions increased by one point to 16, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The NAHB/Wells Fargo HMI monitors builder perceptions of current single-family home sales and sales expectations for the next six months, where a score greater than 50 indicates that more builders view sales conditions as good than poor. (CAR, 8/20)

CALIFORNIA FORECLOSURE ACTIVITY INCREASES; DEFAULT NOTICES DECLINE - California led the nation with 72,285 foreclosure filings in July, a 5 percent increase from June and an 85 percent increase from July 2007, according to a recent report by RealtyTrac®. Bank repossessions, auction notices, and default notices all increased in year-over-year comparisons. Default notices however, which are the first phase in foreclosure proceedings, declined 4 percent from June, according to the report. (CAR, 8/20)

NEW HOUSING STARTS DECREASE IN JULY - The U.S. Census Bureau reported that building permits, an indication of future residential construction, decreased 17.7 percent in July to 937,000 from 1,138,000 in June. New housing starts also decreased 11 percent in July from June, and were 29.6 percent below the revised July 2007 rate. (CAR, 8/20)

Real estate chaos hits appraisal industry - As a result of the current market and a return to proper underwriting guidelines, appraisers are finding it increasingly difficult to get lenders to accept appraisals. Some lenders even are declining low appraisals and scrutinizing loan applications more carefully than in previous real estate cycles. Whereas most lenders used to evaluate a home appraisal's credibility based on comparisons generated from their desk, now some banks are requesting that appraisals be verified by on-site visits to the property, as well as the nearby homes listed as comparables. (SF Chronicle, 8/17)

Since real estate markets are local and prices can greatly fluctuate from one area to the next, experts recommend that sellers and REALTORS® work with local appraisers that have knowledge of the region.
Similar to utilizing a REALTOR® versus a sales agent, it is recommended that sellers work with an appraiser that is a member of the Appraisal Institute or the American Society of Appraisers, the appraisal industry's two largest trade groups. Appraisers that are members of these organizations are required to complete more coursework than those just licensed by the state.
Because some lenders are declining appraisals, some mortgage brokers recommend that buyers leave their financing contingencies in place until the lender has signed off on the appraisal. (CAR, 8/21)

How the Housing Law Affects Reverse Mortgages - The recently signed federal housing bill has many provisions, including changes to reverse mortgages, which are loans against a house that the borrower is not required to pay back as long as they live in the home. Some of the amendments include raising the amount that seniors, age 62 and older, can borrow using a federally backed reverse mortgage; and lowering the cost of receiving the home's equity. Some ageing experts advise consumers to be cautious before refinancing into a reverse mortgage. (USNWR, 8/18)

Although seniors can access their home equity by refinancing into a reverse mortgage, many of these loans come with a variety of fees. Once the fees are paid, borrowers may choose to receive a lump sum payment, monthly payments, a credit line, or a combination based on the home's value. A provision in the housing bill reduce the maximum fee to 2 percent on the initial $200,000 of a home's value and 1 percent on the remaining balance, with a maximum set at $6,000. Some lenders charge less fees, so similar to finding a traditional mortgage, consumers should shop around and negotiate with their lender on these fees. In some cases, closing costs, service fees, mortgage insurance premiums, and interest rates also can be negotiated.
Most reverse mortgages are Home Equity Conversion Mortgages (HECM), which are backed by the Federal Hosing Administration. In order for a borrower to qualify for an HECM, they must discuss the loan with a loan counselor employed by a nonprofit or public agency approved by the U.S. Dept. of Housing and Urban Development. This ensures borrowers understand all of their options and make the right decision.
Some borrowers may not understand that although the loan does not have to be repaid, as long as they remain in the home, they still are responsible for property taxes, insurance, utilities, fuel, maintenance, and other homeowner expenses. If some of these items are not kept up to date, the borrower risks the lender calling the loan due. It is important to note that reverse loans must be paid back with the proceeds, along with any remaining equity, if the home is sold. (CAR, 8/21)

Good news for California housing - Home sales in Southern California increased in July compared with a year ago, while foreclosures decreased in month-over-month comparisons, according to a recent report. The California Legislature also is working with consumer and lending groups on a bill that would protect consumers from predatory lending and establish guidelines and restrictions on brokers and lenders. (LAT 8/20)

Although the foreclosure rate is approximately double what it was a year ago, in month-over-month comparisons, it is 8 percent lower, indicating that foreclosures could be reaching a plateau. In a report released by RealtyTrac, default notices, which are the first phase in foreclosure proceedings, declined 4 percent from June.
If signed, the bill will prohibit lenders from offering pick-a-payment loans to subprime borrowers; establish limits and timeframes on prepayment penalties to subprime borrowers; and prohibit brokers from leading subprime borrowers into loans with higher interest rates if they can qualify for one with a lower interest rate. The bill also would prohibit lenders from paying a financial incentive to brokers for steering borrowers into loans with prepayment penalties or higher interest rates. Additionally, mortgage brokers would be required to place the consumer's financial interests above their own. (CAR, 8/21)

Fast Facts –

Calif. median home price - June 08: $368,250 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region June 08: Santa Barbara So. Coast $1,035.000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region June 08: High Desert $180,570 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
Mortgage rates - week ending 08/14/08 30-yr. fixed: 6.52 Fees/points: 0.7% 15-yr. fixed: 6.07 Fees/points: 0.7% 1-yr. adjustable: 5.18 % Fees/points: 0.5% (Source: Freddie Mac)

Sources: California Association of REALTORS, Los Angeles Times, San Francisco Chronicle,U.S. News and World Report, Freddie Mac.

Greenspan expects Housing to Stabilize Soon – Sunday, August 17, 2008

2008-08-17T22:12:00.000-07:00

AV Market Right for Home Buyers – Today’s AV Press top article states lower prices now are creating unique opportunities for home buyers. Read it yourself at http://avpress.com/n/17/0817_s1.hts. (8/17)

Greenspan expects Housing to Stabilize Soon - Former Federal Reserve Chair Alan Greenspan in an interview with the Wall Street Journal this week says he expects U.S. home prices to stabilize in the first half of 2009. "Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities. We won't really know the market value of the asset side of the banking system's balance sheet – and hence banks' capital – until then," he said. (8/13)

Mortgage Rates Steady - Freddie Mac reports that the 30-year fixed mortgage rate held steady at 6.52 percent during the week ended Aug. 14. However, interest on 15-year fixed loans fell slightly to 6.07 percent from the prior week. Meanwhile, the five-year adjustable mortgage rate dipped to 6.05 percent, and the one-year ARM dropped to 5.18 percent. (Chicago Sun-Times, 8/15)

California 10^th Most Expensive States for Closing Costs - The 2007 average closing cost of $2,736 has gone up to an average of $3,118 in 2008, a 14 percent increase. New York City at $4,016 is the most expensive place to close. North Carolina is the least expensive area with an average fee of $2,650. Here are the top 10 most expensive states to pay closing costs.

New York: $4,016
Texas: $3,975
Florida: $3,683
Oklahoma: $3,558
New Mexico: $3,465
New Jersey: $3,432
Pennsylvania: $3,411
Alaska: $3,409
Colorado: $3,358
California: $3,321 (bankrate.com, 8/15)

Sources: National Association of REALTORS, Chicago Sun Times, Antelope Valley Press, Bankrate.com, Wall Street Journal.

301

SCV Home Sales Increase for 5th month – Sunday, August 10, 2008

2008-08-10T23:58:00.000-07:00

SCV Market continues to stabilize and show improvement during June – Sales of existing single-family homes increased 11.2 percent compared to 12 months ago with Realtors closing escrow on 299 transactions. The total also was 4.1 percent higher than this May. Likewise, condo sales of 75 units were 5.6 percent ahead of a year ago and equal to the May tally. While the single-family median price fell 25.6 percent from a year ago to $450,000 – a drop of $155,000 – and has been drifting downward since April 2006 when the record high of $643,000 was set, the pressure on home sellers to reduce prices is not nearly as strong as buyers presume. Condo prices also have been falling with the median off 23.0 percent from a year ago to $285,000. The condo record-high median price of $397,000 was set in January 2006. There were 1,940 active listings at the end of June, down 16.4 percent from a year ago and less than 1 percent below the May tally. At the current pace of sales, the inventory represents a 6.4-month supply, only slightly on the high side of the 5- to 6-month supply that is deemed to represent a balanced market. – Southland Regional Association of REALTORS, 7/29/08

SFV June Home Sales Slightly Behind A Year Ago - Realtors closed escrow on 671 single-family homes during June, off 19 sales or 2.8 percent below the 669 sales of June 2007. A total of 230 condominiums also changed owners last month, off 15 sales or 6.1 percent below last year’s 245 transactions. A total of 6,935 properties were listed for sale at the end of June, up 1.6 percent from a year ago, but down 2.0 percent from May. At the current pace of sales, the inventory represents a 7.7-month supply, only slightly higher than the 5- to 6-month supply deemed to represent a balanced market. For comparison, at the height of the recent sellers’ boom market the inventory frequently hovered at a less than 1-month supply. And, in the early 1990s, when a recession wracked the nation and California rebuilt its economy, the supply often soared above a 20-months, hitting a record 23-month inventory in January 1993 with total listings at nearly 15,000 in July of 1992 – double the number of properties on the market today. The median price of single-family homes sold last month was $431,000, down 34.2 percent from a year ago when the record high of $655,000 was set. The condo median price of $295,000 was off 26.2 percent. The condo record high of $415,000 was set in February 2006. Statistics support the notion that a growing number of people are entering the market. Pending sales – a measure of future resale statistics – increased 20.6 percent from a year ago and were up slightly from May. There were 1,128 open escrows at the end of June, the third consecutive month that pending sales have increased and topped the 1,000 benchmark. – Southland Regional Association of REALTORS, 7/29/08

Hooray Santa Clarita!

SANTA CLARITA LIFEGUARDS WIN CALIFORNIA SWIM COMPETITION - Third Consecutive Year of Wins for Santa Clarita Lifeguards
MAJOR CRIME DOWN OVER 16% IN SANTA CLARITA - First Six Months of 2008 Reveal Downward Trend for Part I Crimes --City of Santa Clarita, 8/8/08

Big Gain in Pending Home Sales Index - A hike of almost 10 percentage points in NAR's forward-looking sales indicator suggests strong prospects later this year. - National Association of REALTORS, 8/8/08

More Unmarried Couples Buying Homes - Unmarried couples made up 7 percent of home buyers last year, making up the second-fastest growing buyer segment. Experts recommend that each buyer have a will stating that their share of the property goes to the surviving owner upon his or her death, but they also should consider including joint tenancy with the right of survivorship in the deed. They also must understand that obtaining a mortgage requires full financial disclosure, meaning that their past credit histories will be out in the open. Moreover, buyers must understand that in the event of a breakup, the mortgage must be refinanced for it to be removed from one's credit report. -- National Association of REALTORS, Atlanta Journal-Constitution, 8/3/08

New Housing Bill 1st Time Buyer Tax Credit - Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500.

· The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.

· This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

· The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.

· High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

Alex Calder writes that you read this act at http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary1.pdf -- Washington Post, 8/3/08; Alex Calder, 8/6/08.

NEW STUDY SUGGESTS HOME LOAN LIMITS, NOT SUBPRIME BORROWERS, LED TO MORTGAGE CRISIS - A new study from the UC Irvine Paul Merage School of Business Center for Real Estate suggests that the private mortgage industry, not subprime borrowers who took out risky adjustable rate loans, led to the current lending crisis that resulted in the dramatic rise and fall of home prices across the country and mounting foreclosures. According to the study, had loan limits for Fannie Mae and Freddie Mac, the nation's two largest mortgage lenders, been lifted ahead of the current housing crisis, the two agencies would have been able to provide more loan products for borrowers, and the private mortgage sector would not have pushed as many subprime loan products-- loans that, for many homeowners, became unaffordable as their initial adjustable interest rates reset at higher amounts. –California Association of REALTORS 8/6/08.

McCain vs. Obama on Real Estate – third in a series summarizing the stance between the leading presidential candidates regarding topics associated with real estate:

Mortgage Giant Rescue – Both candidates say they want to go after predatory lenders. Obama introduced the STOP FRAUD Act in the Senate and now it's a part of his platform. McCain called for creating a task force to investigate criminal wrongdoing in the mortgage lending and securitization industry. For greater details, check http://money.cnn.com/galleries/2008/news/0806/gallery.election_issues/8.html. -- CNNMoney

Fast Facts:

Calif. median home price - June 08: $368,250 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region June 08: Santa Barbara So. Coast $1,035.000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region June 08: High Desert $180,570 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08:44 percent (Source: C.A.R.)
Mortgage rates - week ending 07/31/08 30-yr. fixed: 6.52 Fees/points: 0.7% 15-yr. fixed: 6.07 Fees/points: 0.6% 1-yr. adjustable: 5.27 % Fees/points: 0.6% (Source: Freddie Mac)

Sources: Southland Association of REALTORS®, California Association of REALTORS®, Freddie Mac, CNNMoney, Washington Post, Alex Calder, Atlanta Journal-Constitution, City of Santa Clarita, National Association of REALTORS®.

1235

Home Sales Up, Consumer Confidence Steady, & the Fed meets Tuesday–Sunday, August 3, 2008

2008-08-03T18:36:00.000-07:00

Interest Rates Likely To Hold Steady - The Fed meets August 5 and most market experts believe the weakness in the economy will keep the Fed from raising interest rates, an action that will probably be viewed as an admission that it is pretty powerless to do much about either problem right now. (CNN, 8/1)

In Brief:

Homeownership is strongly related to age and socioeconomic status. The average age of first-time home buyers is 32, according to the National Survey of Families and Households (NSFH). Thirty percent of homeowners are under 31 years of age. Ownership peaks at 76.7 percent among those age 61 to 70, and then declines slightly to 68.5 percent for age 71 and older.
Owners say they are happier and have higher self-esteem than renters, according to the NSFH.
86 percent of a national sample of Americans believe that people are better off owning than renting, according to the Fannie Mae National Housing Survey. (CAR)

C.A.R. REPORTS SALES INCREASED 17.5 PERCENT; MEDIAN HOME PRICE FELL 37.7 PERCENT IN JUNE - The median price of an existing, single-family detached home in California during June 2008 was $368,250, a 37.7 percent decrease from the revised $591,280 median for June 2007, C.A.R. reported. The June 2008 median price fell 4.3 percent compared with May's $384,840 median price. (CAR, 7/30)

CONSUMER CONFIDENCE HOLDS STEADY IN JULY - Consumer confidence held steady in July and now stands at 51.9, up from 51 in June, according to the latest Conference Board Consumer Confidence Index, which measures consumers' current outlook on the economy across a several business sectors and expectations for the near future. (CAR,7/30)

Mortgage Rates Drop – Freddie Mac says 30-year fixed rate fell to 6.52% with an average 0.7 point discount as the price of oil and gasoline fell this week. This is down from an average 6.63% last week, and down from an average of 6.68% recorded during the same week last year. The 15-year FRM averaged 6.07% this week with an average of 0.6 point, down from 6.18% last week, and down from 6.32% last year. Five-year adjustable-rate mortgages (ARMs) averaged 6.07% this week, with an average 0.6 point, down from last week when it averaged 6.16%. A year ago, the 5-year ARM averaged 6.29%. One-year ARMs averaged 5.27% this week with an average 0.6 point, down from last week when it was 5.49%. At this time last year, the 1-year ARM averaged 5.59%. (CNN, 7/31)

Prez signs Housing Bill - President Bush on Wednesday signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac. This bill was featured in last week’s blog at http://changhomesnews.blogspot.com/2008/07/housing-rescue-bill-on-presidents-desk.html. (CNN, 7/30)

McCain vs. Obama on Real Estate – second in a series summarizes the stance between the leading presidential candidates regarding topics associated with real estate:

Mortgage Giant Rescue – Both support efforts to stabilize Fannie Mae and Freddie Mac, but are otherwise vague. For greater details, check http://money.cnn.com/galleries/2008/news/0806/gallery.election_issues/7.html. Mortgage Fraud next week.

Fast Facts:

Calif. median home price - June 08: $368,250(Source: C.A.R.)
Calif. highest median home price by C.A.R. region June 08: Santa Barbara So. Coast $1,035.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region June 08: High Desert $180,570(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08:44 percent (Source: C.A.R.)

Sources: California Association of REALTORS®, CNNMoney.

Housing Rescue Bill On President’s Desk - Sunday, July 27, 2008

2008-07-27T15:24:00.000-07:00

Housing Rescue Bill has passed both chambers of Congress when it passed the Senate on Saturday. Points of the bill:

Goes into effect October 1 and President likely to sign it to law this week
Borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA)
Qualified borrowers must live in their homes
They must have loans that were issued between January 2005 and June 2007
They must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.
They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.
They must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.
Requires case-by-case approval from the FHA
Total debt cannot exceed 95% of the home's appraised value at the time
The program is voluntary, so the original lender(s) must agree to rework the loan before a homeowner starts the application process. Each loan must be underwritten by an FHA-approved lender and will be evaluated on a case-by-case basis. Homes will be re-appraised and banks will verify income statements, bank accounts, job histories and credit scores.
Although there are little up-front costs for borrowers, consumers receiving a refinanced loan must agree to certain terms, including paying an insurance premium of 1.5 percent of the principal annually to the FHA.

In addition, the measure also would permanently increase the cap on mortgage loans guaranteed by Fannie and Freddie to a maximum of $625,000 from $417,000. (CNNMoney, 7/26; CAR, 7/23)

In Short:

Two of the most commonly reported barriers to homebuying are high down payment requirements and high home prices. The majority of Americans feel that it has become more difficult to obtain mortgages and that the application process is more difficult than a year ago. Consumers also believe that the terms they are offered are too demanding given the weak economic conditions. Many of today’s loans require home buyers to put down at least 5 percent, but most market experts recommend a minimum of 10 percent. Areas with high foreclosure rates may require 20 percent down and markets that have been severely impacted by foreclosures such as Reno, Nev. may require a 25 percent down payment. However, home buyers have reason to be optimistic. If signed by President Bush as expected, the American Housing Rescue and Foreclosure Prevention Act would allow states to issue an additional $11 billion to first-time buyers and homeowners with subprime mortgages.
Although interest rates remain low by historic standards, concerns over the sustainability of Fannie Mae and Freddie Mac have contributed to an increase in interest rates. Investors who purchase these loans are wary and are demanding higher interest rates to offset the added perceived risk. The average 30-year, fixed-rate loan was up nearly a point two weeks ago, to 6.37 percent, compared with the year’s low of 5.48 percent, which was set in January.
Credit ratings are playing an ever-increasing role among consumers seeking to purchase a new home or refinance an existing one. By improving their credit scores, Americans can save billions of dollars annually on interest payments. As of June 1, buyers with credit scores of less than 620 that put down less than 30 percent must pay a fee of 2.75 percent of their mortgage principal. Consumers with higher credit ratings were previously rewarded by not having these up-front fees imposed. Now, those with a credit score between 680 and 720 may be required to pay a 0.5 percent fee. Consumers can boost their credit scores and receive more favorable rates by keeping credit card utilization rates below 50 percent and avoiding exceeding the maximum limit on credit cards. (CAR, 7/25)

MORTGAGE INTEREST RATES DECLINE - Interest rates on the 30-year fixed-rate mortgage (FRM) averaged 6.26 percent with an average 0.6 point for the week ending July 17, down from an average of 6.37 percent the previous week and 6.73 percent a year ago. There is speculation that the Federal Reserve may not raise the overnight bank-lending rate this year after all. (CAR, 7/23)

HOUSING STARTS IN CALIFORNIA INCREASE 9.2 PERCENT IN JUNE - Building permits issued for single-family homes in California rose 9.2 percent to 3,954 in June compared with May but remain 54.9 percent below where they were for the same period a year ago, according to new data from the California Building Industry Association. (CAR, 7/23)

According to the Leading Real Estate Companies of the World®, a national network of about 700 brokers across the country, 59 percent of brokers report seeing stronger market conditions between May and July. Some 20 percent of the respondents also reported declines in inventory during this period and more buyers moving forward with serious home searches than in prior months. (CAR, 7/23)

Treasury Secretary Paulson calls bank system secure - Following the collapse of IndyMac, consumers are questioning the security of the U.S. banking system, although only a small percentage of banks are expected to fail. A bill aimed at stabilizing the housing market will assist borrowers and will allow the Treasury Department to increase its line of credit to Fannie Mae and Freddie Mac and purchase stock in the companies, if necessary. Reports show that both companies stand a better than 50 percent chance of weathering the current market without government aid. (LA Times, 7/21)

Paulson assured IndyMac consumers that all funds fully insured by the Federal Deposit Insurance Corp. (FDIC) guarantee of $100,000 and below will remain safe. Several thousand depositors had accounts exceeding the FDIC guarantee and may not have been fully insured depending on how the accounts were structured. Deposits above $100,000 will be paid out at 50 percent of the value.
Fearful of future loan defaults, investors have rapidly sold off shares in Fannie Mae and Freddie Mac. Combined, the two banks own or back approximately half of the nation’s $12 trillion in mortgage debt. Paulson is supporting a plan to ease the ability of Fannie and Freddie to borrow from the government, which in turn allows the Treasury Department to acquire stakes in both.
Experts remain divided on when mortgage defaults will subside. Median housing prices have declined for 22 consecutive months, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). Some economists predict that the market will bottom out mid-2009, while others think the market is at or near the bottom now. (CAR, 7/25)

McCain vs. Obama on Real Estate – first in a series summarizes the stance between the leading presidential candidates regarding topics associated with real estate:

Foreclosures - Obama wants the government to step in to help homeowners facing foreclosure. McCain has gradually broadened his position to support government intervention, but wants stricter requirements for borrowers seeking aid. For greater details, check http://money.cnn.com/galleries/2008/news/0806/gallery.election_issues/6.html

Fast Facts:

Calif. median home price - May 08: $384.840
Calif. highest median home price by C.A.R. region May 08: Santa Barbara So. Coast $1,199.000
Calif. lowest median home price by C.A.R. region May 08: High Desert $200,740
Mortgage rates - week ending 07/17/08 30-yr. fixed: 6.26 Fees/points: 0.6% 15-yr. fixed: 5.78 Fees/points: 0.6% 1-yr. adjustable: 5.10 % Fees/points: 0.5% (CAR, 7/23)

Sources: California Association of REALTORS, CNNMoney, LA Times, RISMedia.

1277

Mixed News at the Trough, Sunday, July 20, 2008

2008-07-20T15:36:00.000-07:00

Economic news this week show inflation pressures in the Consumer Price Index and retail prices. Despite the doldrum news from the Fed and Bernake’s testimony in Congress, many figure, stats, and actions show that we are bound for a turn-around. We often find such mixed news at the top and the bottom of an economic cycle. Look at the last couple weeks’ blogs and a summary of a Barron’s Magazine article below.

In Short:

The nation’s banks are in less danger of failing today than they were during the savings & loan crisis of the late 1980s and early 1990s, when more than 1,000 financial institutions failed and taxpayers funded a bailout totaling more than $125 billion. How does the current crisis compare? To date this year, only six lenders have failed and the Federal Deposit Insurance Corporation (FDIC) has only 90 banks on its "watch" list, compared with 575 banks in 1994. However, former FDIC Chair William Isaac recently called bank failures a "lagging indicator" rather than a "leading indicator" and predicted there will be more bank failures this year as lenders cope with subprime lending losses.
Banks and loan servicers may be beginning to catch up with troubled loan workouts, but the numbers of borrowers who require assistance continues to rise. During the first six months of this year, Countrywide says it modified the terms of 86,000 loans, and Bank of America, which recently acquired Countrywide, reports that counselors are completing more than two workouts for every completed foreclosure. Hope Now, an alliance of lenders, says it conducted 70,000 loan modifications in May, although an estimated 85,000 families lost their homes that month. Even if loans are modified borrowers still may not be able to make their mortgage payment if they have lost a job, for example. According to a working group of the Conference of State Bank Supervisors, 32,000 loans that were modified in recent months already are delinquent again. That may be because few loan modifications actually result in lower monthly payments due to a cut in the principal loan balance. In California, only 1.3 percent of loan modifications involved such a reduction.
IndyMac Bancorp’s new management, the Federal Deposit Insurance Corporation (FDIC), has halted foreclosures and said it is focusing on modifying existing loans to make them more affordable for IndyMac borrowers. The bank has about $15 billion in mortgage loans in its own portfolio and manages servicing for another $185 billion in mortgages owned by other institutions. FDIC officials said they were examining troubled loans contained in the broader servicing portfolio loan by loan to determine whether they can be modified. However, borrowers serviced by IndyMac who need help may want to move quickly: The FDIC hopes to sell the troubled thrift and its assets within 90 days. IndyMac reopened under federal oversight on Monday after regulators closed its doors on Friday. Last year, it ranked as the tenth-largest mortgage lender and eight-largest mortgage servicer in the county. (CAR, 7/17)

Upcoming weeks: more on where McCain and Obama stand on the economy, foreclosures, gas prices, health care and more.

Mortgage Rates Fall Again - Rates on 30-year fixed mortgages fell for the second week in a row on increased speculation that the Federal Reserve will not raise interest rates before the end of the year, according to mortgage backer Freddie Mac. 30-year fixed-rate mortgages averaged 6.26% with an average 0.6 of a point in the week ending Thursday, down from 6.37% last week. Last year at this time, the 30-year loan averaged 6.73%. The 15-year fixed rate mortgage this week averaged 5.78% with an average 0.6 of a point, down from last week when it averaged 5.91%. A year ago at this time, the 15-year fixed rate mortgage averaged 6.38%. Five-year adjustable-rate mortgages (ARMs) averaged 5.80% this week, with an average 0.6 of a point, down from last week when it averaged 5.82%. A year ago, the 5-year ARM averaged 6.35%. One-year Treasury-indexed ARMs averaged 5.10% this week with an average 0.6 of a point, down from last week when it averaged 5.17%. At this time last year, the 1-year ARM averaged 5.72%. (CNNMoney, 7/17)

Bottom’s up: This real-estate rout may be short-lived - Home sales and prices may be down, foreclosures may be mushrooming and the blowback from the subprime mortgage crisis may be threatening banks and secondary mortgage lenders, but there are some early signs the real estate market is trending in a more positive direction -- although you may not know it if you rely on the mainstream media for your real estate news. (Barrons, 7/14)

Recent data suggest real estate market pessimism may be overblown. Even economist Karl Case, father of the S&P/Case Shiller Home Price Index, admits many industry pundits and members of the media are ignoring key facts – as demonstrated by their focus on negative year-over-year price figures rather than more recent monthly data. An example: Home prices actually increased slightly in eight of 20 Case Shiller markets between March and April. Instead, the focus of most media reports was on year-over-year figures, which continue to support the notion that the market may not have hit bottom, let alone begun to improve.
Transaction-related indices may be skewed at present by a far larger than normal share of subprime-derived default and distress sales. In the San Francisco Bay Area, for example, more expensive homes (those priced over $721,548) have dropped in price by only about 10.7 percent from their peak, compared with homes priced under $473,711, which have tumbled by 40.9 percent.
Even new housing construction numbers suggest an improvement, according to Case. He notes that housing starts, which fell to 975,000 in April from 2.27 million in January 2006, have fallen by similar percentages three times during the last 35 years. Case observes that each previous time this has occurred the market has staged a surprising upturn within a quarter. Only a slide into a recession would temper his optimism about the potential for a similar recurrence of this trend. (CAR, 7/17)

Fed stiffens restrictions on mortgage lenders - The Federal Reserve is clamping down on what it called "deceptive acts and practices" by some mortgage lenders that it says helped lead to the subprime mortgage crisis. The new rules, which apply to all banks and other lenders and specifically target subprime loans and borrowers, will take effect Oct. 1. (LA Times, 7/15)

The new rules "are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership," said Federal Reserve Chairman Ben Bernanke.
The new rules will prohibit loans to borrowers who can’t repay the loan from income and assets other than the home’s value and will require lenders to verify the borrower’s income and assets. Prepayment penalties are banned for the first four years of any adjustable rate subprime loan and for the first two years on other subprime loans. Lenders also must establish escrow accounts for property taxes and insurance for all first-lien loans
Also banned are seven misleading advertising practices, including use of the word "fixed" to describe a rate or payment that changes at any time during the loan term. Other prohibited practices include loan comparison advertising (unless all payments and rates are disclosed), foreign-language ads where disclosures are presented in English, and encouraging appraisers to misrepresent a home’s value. The rules also will require lenders to credit payments on the date of receipt, prohibit pyramiding of loans, and require a good faith estimate of costs and payments on any loan application for a home secured by its value (including home equity loans and refinancings) within three days. Further, borrowers cannot be charged any fees other than to obtain a credit report before receiving that estimate. (CAR, 7/17)

Bush offers plan to save Fannie, Freddie - Eroding confidence in the nation’s two largest mortgage finance companies led President Bush to ask Congress to approve a rescue plan that would provide billions of dollars in investments and loans to the two companies. Separately, the Federal Reserve said it would make funds available to Fannie Mae and Freddie Mac on a short-term basis, if necessary. The dual rescue efforts came over the weekend after stock prices for the two quasi-governmental companies plunged late last week, potentially jeopardizing a planned debt offering by Fannie Mae and sending shock waves through the nation’s equity markets. (NY Times, 7/14)

The White House plan calls on Congress to raise the national debt limit and to allow the Federal Reserve to determine how large a cash reserve the two companies must have on hand. The proposals are expected to be attached to a housing bill that will be voted on by Congress as early as this week.
Both Fannie Mae and Freddie Mac have existing credit lines of $2.25 billion that were set 40 years ago by Congress when Fannie Mae held about $15 billion in outstanding debt. It now has about $800 billion in debt; Freddie Mac debt totals about $740 billion.
Despite concerns that the program will protect shareholders and investors while asking taxpayers to foot the bill, Treasury Secretary Henry M. Paulson, Jr. reiterated that the failure of either Fannie Mae or Freddie Mac would have a devastating impact on the world economy because their debt is held by investors around the globe. (CAR, 7/17)

Census lists 5 CA cities in fastest-growing - While there are signs of a slowdown in migration to the West and sunbelt region, California continues to see steady population growth, placing five cities on the list of the 25 fastest-growing large municipalities in the country between 2006 and 2007, according to new population estimates from the U.S. Census Bureau. According to the report, Victorville, Calif. saw a population increase of 9.5 percent to 107,232 in 2007, putting the San Bernardino County city second on the list of the nation's fastest-growing large cities with populations of 100,000 or more. New Orleans ranked number one on the list, with a population increase of 13.8 percent to 239,124 after a seeing its population in 2005 dwindle to half in the wake of Hurricane Katrina. The other four California cities that made the list are Bakersfield; Irvine; Moreno Valley; and Visalia. (CAR, 7/16)

Although local sales have been increasing in May and June, California May sales have decreased 51% since a year ago. (CAR, 7/16)

Fed Approves New Rules For Mortgage Lenders to Protect Consumers - The Federal Reserve Board on Monday approved a set of new rules, effective Oct. 1, 2009, pertaining to home mortgage loans aimed at better-protecting consumers and ensuring responsible lending practices. The new rules prohibit unfair, abusive, or deceptive home mortgage lending practices and restrict certain other mortgage practices. In addition, the rules establish a new set of advertising standards for the mortgage lending sector and require certain mortgage disclosures to be given to consumers earlier in the home-buying transaction. (CAR, 7/16)

State Enacts Law to Protect Homeowners Facing Foreclosure - the California Legislature enacted a set of foreclosure reforms to address the adverse effects of high foreclosure rates. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. The law also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties, and extends from 30 to 60 days the time for residential tenants to vacate properties that have been foreclosed upon, unless other laws apply. (CAR, 7/16)

Sources: California Association of REALTORS, New York Times, Los Angeles Times, Barrons, CNNMoney.

1850

Housing Inventories Fall, Sunday, July 13

2008-07-13T22:10:00.000-07:00

Big news of the week was the Fed’s takeover of Pasadena-based IndyMac Bank. This upcoming week, stats for 2 inflation measures will be released – Consumer’s Price Index and Producer’s Price Index. People are also watching Monday for Freddie Mac’s sale of securities. Lack of private investors to Freddie Mac’s sale may prompt the federal government to intervene and “save” Freddie Mac and Fannie Mae.

In Short

Looking at trends in the average number of days a home stays on the market before an offer is received is one way to view the health of a real estate market. June figures from Altos Research and RealIQ show that, with the exception of San Diego, metro California markets are in better shape than those in many other struggling cities around the country. San Francisco homes over the past three months averaged 73.7 days on the market, less than half of the 153 days a home was on the market in Miami and well below the 131-day average in Detroit. San Jose averaged 79.3 days and Los Angeles remained steady at 94 days on average between April and the end of June. The lone leap in time on the market among the four California markets studied was San Diego, which jumped from 89 days in May to 114 in June and boosted its three-month average to 93.6 days.
Continued stress in the housing market and a slowing economy were behind a sharp increase in the percentage of delinquent home equity lines of credit (HELOCs) during the first quarter of 2008, according to the American Bankers Association. HELOC payments more than 30 days past due increased 14 basis points to 1.10 percent between the end of 2007 and March 31 – the highest level since 1997 and the largest increase since the ABA began tracking delinquencies about 20 years ago. The news wasn’t all bad, however. Home equity loan delinquencies improved slightly from 2.39 percent at the end of 2007 to 2.34 percent in the first quarter of 2008, while late payments on property improvement loans fell from 1.81 percent to 1.78 percent. Bank credit card delinquencies, meanwhile, increased 13 basis points to 4.51 percent, just above the five-year average delinquency rate of 4.41 percent. The ABA expects delinquencies of all types to remain elevated in future quarters as higher gas and food prices eat away at consumer paychecks. (CAR, 7/10)

Pending Home Sales Fall Nationally - Pending home sales fall 4.7 percent, after posting a sharp gain in April, NAR’s Pending Home Sales Index for May slipped by 4.7 percent and was 14 percent below 2007 levels. While the decline reflects continued softness in the market, there was some good news in the West, which includes California. There, pending sales slipped only 1.3 percent in May and were 2 percent higher than a year ago. (AP, 7/8)

The national index registered 84.7 on a scale where 100 equals the rate of pending sales during 2001, when the index was initiated. It stood at 98.5 in May 2007. The national decline was driven by the South, where the index fell 7.1 percent to 84.5, 22 percent below last year’s figure, and the Midwest, which experienced a 6 percent decline to 78.6, 13.8 percent lower than a year ago.
Despite the higher-than-expected national decline, the West region index fell to 97.5 in May led by Sacramento, which experienced double-digit gains in pending sales as homebuyers continued to take advantage of favorable home prices and interest rates.
NAR President and Long Beach REALTOR® Richard (Dick) Gaylord noted that the current market offers short-term benefits and long-term value for homebuyers. He warned that buyers should consider the potential that interest rates may increase slightly should inflationary fears arise. (CAR, 7/10)

Fed to clamp down on exotic and subprime loans - Signaling that it sees no end to the housing downturn in the foreseeable future, the Federal Reserve Tuesday said it will issue new lending rules next week that are expected to limit exotic mortgages and loans to high-risk individuals, and that it may extend its program of low-cost overnight loans to investment banks beyond September in a further attempt to normalize the nation’s credit markets. (NY Times, 7/9)

On July 14, the Federal Reserve is expected to present a revised set of rules governing mortgage lending. Proposed rules issued in December drew significant criticism from lenders, who fear that tougher standards at a time when credit already is tight could make many mortgages more costly by increasing paperwork and creating additional legal issues. At the same time, consumer groups argue that the proposed rules already are too weak and that efforts to alter the proposal could make it ineffective.
Starting in March 2008 during the near-collapse of Bear Stearns, the Fed initiated what was expected to be a six-month program to avert further bank defaults among the 20 top investment banks that regularly trade Treasury securities. Under federal law, the program may continue beyond September 2008 only if "unusual and exigent circumstances" exist in the financial markets. Under the program, the government may hold a wide variety of investments, including hard-to-sell mortgage-backed securities, as collateral for the overnight loans.
Speaking Tuesday, Fed Chairman Ben Bernanke reiterated his support for the proposed overhaul of Fannie Mae and Freddie Mac. "If these firms are strong, well-regulated, well-capitalized and focused on their mission, they will be better able to serve their function of increasing access to mortgage credit, without posing undue risks to the financial system or the taxpayer," Bernanke said. (CAR, 7/10)

Mortgage Rates Rise - Freddie Mac reports a slight jump in the 30-year fixed mortgage rate to 6.37 percent during the week ended July 10, from 6.35 percent the prior week. The five-year adjustable mortgage rate also moved up, climbing to 5.82 percent from 5.78 percent. However, the 15-year fixed rate fell to 5.91 percent from 5.92 percent; and the one-year ARM was unchanged at 5.17 percent. (Chicago Sun-Times, 7/11)

Housing Rescue Bill Has Hurdles - Once it passes the Senate, the Senate version faces substantial opposition from the House of Representatives. The White House also is still threatening veto. Roadblocks include Rep. Barney Frank (D-Mass.), the Financial Services Committee chairman who won House approval of his version in May. He has made it clear he doesn’t plan to accept the Senate proposal without changes. Speaker Nancy Pelosi (D-Calif.) is working to quell a revolt in the House by representatives who insist that housing tax breaks and any spending in the package must be paid for with tax increases or spending cuts to prevent an increase in the deficit. There is also a push by some lawmakers for far more money for fixing up foreclosed properties. The Congressional Black Caucus also opposes language in the Senate bill that bars the FHA from insuring mortgages obtained by borrowers whose down payments were paid by the seller. (AP, 7/9)

Housing Inventories Fall in Major Cities - Los Angeles among major U.S. cities seeing inventories decline:

Boston: -10%
Dallas: -10.6%
Houston: -2.4%
Las Vegas: -18.5%
Los Angeles: -7.4%
Minneapolis: -4.8%
Orange County, Calif.: -15%
Orlando: -3.1%
Phoenix: -2.6%
Sacramento: -22.4%
San Diego: -6.7%
Tampa, Fla.: -7% (Wall St. Journal, 7/10)

Sources: California Association of REALTORS, Associated Press, Wall Street Journal, Chicago Sun Times, New York Times.

1230

Local Numbers Improve over Last Month, Sunday, July 6

2008-07-06T23:04:00.000-07:00

Short blog tonight, as it's getting late...Hope everyone had a wonderful holiday!!

Southland Association of REALTORS(R) released May stats for both the Santa Clarita and San Fernando Valleys. Both show that prices and number of sales have improved over the prior month. So, it look like we're at a turning point!

Mortgage rates fall, applications rebound - Rates on 30-year fixed mortgages fell for the first time in three weeks after the Federal Reserve said last week that it expects inflation to level off, according to mortgage backer Freddie Mac. Mortgage application volume rose 3.6% during the week ended June 27, according to the trade group Mortgage Bankers Association's weekly application survey. (CNNMoney, 7/2 and 7/3)

Single-Family Homes Sales in the Santa Clarita Valley Increase 23%, Posting 5th Consecutive Month of Gains

Sales of existing single-family homes picked up during May in the Santa Clarita Valley, posting the fifth consecutive month of increases, the Southland Regional Association of Realtors reported on Thursday, June 26.

Realtors closed escrow on 220 homes, an increase of 22.9 percent over a year ago May and 23.6 percent higher than the tally reported this April. May also marked the first time since June 2007 that more than 200 homes sold in a single month. Every month since January has seen more homes sold than the prior year.

With more activity coming in the lower price ranges, the median price of the single-family homes sold during May slipped by 14.1 percent from a year ago to $450,000.

The condominium median price of $305,000 was down 14.1 percent from a year ago, but up 9.3 percent from the April median.

Pending sales – a measure of future resale activity – increased 19.0 percent from a year ago to a total of 339 open escrows. However, pending sales fell 11.0 percent compared to this April.

Surprisingly, the inventory of homes for sale is dropping, hitting levels that are close to levels where industry experts believe the market is balanced between buyers and sellers. At the current pace of sales, the inventory represents a 6.6-month supply. A balanced market appears when the inventory offers a 5- to 6-month supply.

San Fernando Valley Home Sales Rise for the Fifth Consecutive Month

The residential real estate market in the San Fernando Valley faired better than other regions of the state during May as buyers negotiated enough bargains to post the fifth consecutive month of sales increases, the Southland Regional Association of Realtors reported on Thursday, June 26.

Increased sales activity in the lower price ranges continued to bring the median price of homes sold down while also reducing the inventory of properties listed for sale.

A total of 669 single-family homes closed escrow throughout the San Fernando Valley during May. That was an increase of 6.4 percent from a year ago and 22.3 percent higher than the April sales total. While overall activity remains low by historical standards, every month since January has seen more sales consummated with the help of Realtors.

Following traditional buyer preferences, condominium sales were down 32.8 percent from a year ago to a total of 168 closed escrows. However, condo sales did rise on a month-to-month basis, posting a 15.1 hike over April.

The median price of single-family homes fell 30.8 percent to $450,000 as buyers focused on properties priced under $500,000.

Likewise, the median price of the 168 condos sold last month fell by 22.7 percent to $299,000.

Pending sales – a reliable measure of future sales activity – suggest that sales will remain strong through the coming months as buyers show ongoing faith in the local economy and the residential real estate market.

The pending sales total of 1,122 open escrows was up 19.9 percent from a year ago and 3.7 percent higher on a month-to-month basis.

Indeed, the 7,078 properties listed for sale throughout the San Fernando Valley was a surprisingly low number. It was up 5.7 percent from a year ago, but down 2.2 percent from the April tally.

At the current pace of sales, the inventory represents a mere 8.5-month supply. That is still a buyers’ market, but the inventory is down from the double-digit supply of recent months and close to the 5- to 6-month supply deemed to represent a balanced market.

For comparison, the number of properties listed for sale during the 1990s hit a record high of a 23-month supply. Even at the worst point in the current cycle, the highest the inventory rose was to a 15.1-month supply.

Sources: Southland Regional Association of REALTORS(R), CNNMoney

Fed Meets This Week: Sunday, June 22, 2008

2008-06-22T19:59:00.000-07:00

What’s a short sale? Why does Stevenson Ranch have Mello-Roos? Readers who submitted these questions earned themselves a $20 gift card. What’s your real estate delimma? There are no stupid questions. If I publish your question in my blog, you might save on gas, coffee, groceries, or electronics! In this economic crunch, I know every little bit helps. Submit your question(s) to changhomes@gmail.com.

The Federal Reserve’s Open Market Committee will meet this Tuesday and Wednesday, June 24-25. It is widely expected that it will hold rates steady in an announcement expected Wednesday around 11:15am. (CNNMoney, 6/20)

Mixed messages in economic data often highlight a market at the peak or trough. As you listen to the news this week, consider the messages you are hearing. You might conclude the market is stabilizing at/near the bottom of this downtrend, as I have. It might be the time to jump on that first home or investment property you've been thinking about.

In Short:

Twenty- and thirty-something renters with a downpayment are increasingly attractive to real estate agents especially in markets where home prices have fallen and having a client with a home to sell is less and less attractive, according to a recent story in USA Today. Many of these potential clients prefer to work with a technology-savvy agent from their own generation, and a growing number of brokerages are responding by creating an age-appropriate sales force adept at using social media and other technologically enabled marketing approaches to attract and serve Gen-X and Gen-Y clients. Desirable as they are, these young potential buyers can have trouble qualifying, thanks to student loans and credit card debt. With tighter lending standards, young buyers with 5 percent saved for a downpayment increasingly are turning to Mom and Dad for help meeting today's additional qualification criteria. That means agents must win over these non-traditional buyers and their baby boomer parents.
The sub-prime mortgage crisis in the United States and resulting credit crunch has had negative implications for established countries like Great Britain. However, it hasn't stopped the real estate boom occurring in developing countries like Mexico, Brazil, the former Soviet Union, India and China, which are among the world's fastest-growing economies. Low interest rates in countries with currencies pegged to the dollar and a shortage of homes that appeal to the growing middle class are bolstering real estate and land values, according to a report issued by Fitch Ratings. Home ownership, which was rare in these countries in the past, is being buoyed by growing housing affordability and economic growth fueled by dramatic increases in disposable income.
An allied group of mortgage lenders and servicers that calls itself "Hope Now" Tuesday unveiled a set of guidelines it says will give struggling U.S. mortgage holders a broader range of options to help them avoid foreclosure, including relief measures aimed at those with second mortgages and homeowners seeking a short sale. Alliance members pledged to offer a wider range of options to help homeowners, including loan modifications, repayment plans, and temporary suspension of mortgage payments. The agreement could include similar offers of assistance for homeowners with second mortgages or those seeking a short sale, where the amount of an offer to purchase is less than the amount owed on the loan. The new guidelines require that alliance members meet certain deadlines for acting on a borrower's request for assistance. Hope Now previously announced procedures and guidelines for determining if borrowers qualify for lower rates of interest on their adjustable rate mortgages (ARMs). Founded last year and guided by the U.S. Treasure Dept., the private sector group has helped some 1.2 million homeowners avoid foreclosure by offering lower interest rates or adjusting the loan repayment schedule. (CAR, 6/19)

Operation Malicious Mortgage snatches 400 individuals nationwide from March 1 to June 18 as part of the mortgage/banking/credit fiasco, including 4 in Southern California and 2 senior managers of the failed investment company Bear Sterns. (KNX-AM, 6/19; LA Times, n.d.)

Next Weekend: Santa Clarita Valley Fair at Saugus Speedway, June 26-29.

U.S. housing starts drop to lowest level in 17 years: May building permits fell and housing starts dropped to their lowest level since 1991 in a sign of continued weakness in the housing sector, the U.S. Dept. of Commerce reported on Tuesday. (Bloomberg, 6/17)

Housing starts fell 3.3 percent to 975,000 in May, down from a revised 1.08 million in April. The May figure was down 32 percent from the same month a year ago and was slightly lower than the 980,000 starts expected by economists. In the West, which includes California, starts were down by 10 percent.
Building permits, a signal of future new construction trends, fell to 969,000 ? a 1.3 percent decline but slightly better than the 960,000 level economists expected.
The growing inventory of foreclosures, higher mortgage rates, tighter qualification criteria and continued declines in home values are behind declining builder confidence, which fell to a record low in May, according to a survey by the National Association of Home Builders and Wells Fargo. (CAR, 6/19)

73,000 homes lost to foreclosure in May: California, Nevada and Florida continue to outpace other states in the number of foreclosures as 73,000 more Americans lost their homes in May a 158 percent increase from May 2007. Foreclosure filings jumped 7 percent from April and were 48 percent higher than a year ago. May was the twenty-ninth consecutive month of increases, according to RealtyTrac. (CNNMoney, 6/13)

20,000 California homeowners lost their homes in May and 72,000 mortgages were at some stage in the foreclosure process. That means one of every 183 California households was affected in May, putting California right behind Nevada, with one out of every 118 households affected.
Nine of the 10 most affected cities were in Florida or California. Topping the list was Stockton, with one in 75 households affected by a foreclosure filing. Merced ranked third, Modesto was fourth and Riverside was fifth.
RealtyTrac expects foreclosure rates to continue to rise as Alt-A adjustable rate mortgage (ARM) loans originated during the waning months of the real estate boom begin to adjust upward. (CAR, 6/19)

Housing woes hit community banks: Heavy investment in residential real estate development throughout inland California communities during the real estate boom is taking its toll on community-based banks, as noted in a Federal Reserve regional report issued last week. (LA Times, 6/19)

Many community banks gave up mass-market products like credit cards and mortgages in recent years in favor of the high fees they earned making loans to residential developers and home builders. As new home developments sat empty in the wake of the sub-prime mortgage crisis and both land values and home prices plummeted, community banks were left holding a portfolio of loans worth dimes on the dollar.
Regulators are acting to require that banks write down the value of troubled loans and generate more capital to cover the write-offs. These losses are increasingly apparent in regulatory filings and shareholder earnings reports. (CAR, 6/19)

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

1039

McCain & Obama on Housing, Week of June 15, 2008

2008-06-15T13:46:00.000-07:00

Happy Father’s Day to all the fathers out there!

As a reminder for those getting this blog by email, if you want to see the blog in an easier-to-read format, visit http://changhomesnews.blogspot.com/.

As promised last week, here’s where McCain and Obama stand on housing: As the race for the presidency shapes up as a contest between Sen. John McCain, the presumptive Republican nominee, and Sen. Barack Obama, who will claim the Democratic nomination, here are their initial positions on housing and related economic issues.
McCain:

Proposes to spend up to $10 billion to allow some home owners to trade high-interest, adjustable-rate mortgages for fixed-rate loans.
Proposes a suspension of the 18.4-cent federal gas tax and 24.4-cent diesel tax during the summer.
Supports a middle-class tax cut by doubling the personal tax exemption for dependents to $7,000.
Calls for a simpler tax system with two tax rates and a generous standard deduction.
Supports making permanent the 2001 and 2003 income tax cuts and proposes cutting the corporate tax rate to 25 percent from 35 percent and allowing businesses to immediately write off capital expenses.
Maintains that government assistance to the banking system should focus on preventing systemic risk that would endanger the financial system and the economy.

Obama:

Calls for greater government regulation of the U.S. financial system and proposes a new $30 billion economic stimulus plan to help home owners, including a $10 billion foreclosure prevention fund to help people keep their homes and $10 billion in relief for state and local governments hit hardest by the housing crisis.
Outlines six "core principles for reform" that would give the Federal Reserve supervisory authority over any financial institution to which it might make credit available and calls for reform and streamlining of financial regulatory agencies.
Wants to repeal a provision in the bankruptcy law so ordinary families can modify terms of home mortgages.
Proposes a 10 percent mortgage tax credit for middle-class Americans.(Reuters, 6/4)

In Short:

A Reuters/University of Michigan survey reveals that twice as many homeowners expect their home value to fall in the coming year than believed their home value would drop a year ago. Twenty-eight percent of those surveyed in late April and early May said they expect their home to depreciate in value, up from 14 percent at this same time last year. Just 17 percent predicted their home will increase in value, down significantly from 35 percent in May 2007. Their outlook doesn’t improve much over the longer term: Only 58 percent reported they expect their home value to appreciate over the next five years, down from 65 percent a year ago. Concerns about month after month of home price declines and long-term prospects for inflation, energy costs and the job market were behind the more pessimistic response, survey participants said.
Some 183,000 at-risk homeowners were rescued from the potential loss of their homes due to foreclosure in April, according to Hope Now, a coalition of mortgage lenders, servicers, investors and community groups that has offered help to troubled borrowers since July 2007. Hope Now said it completed more than 183,000 loan workouts in April, a 7.6 percent increase over March, bringing the total number of homeowners helped to more than 1.6 million. Most of the workouts involved the negotiation of repayment plans in which borrowers receive extra time to bring their loans current. However, the number of mortgage term modifications rose to 42 percent, or roughly 77,000 total workouts for the month. Even with the program, 80,926 families lost their home to foreclosure in April, the group said.
Consumers who arrange a mortgage through a mortgage broker or who are African American, Latino or live in neighborhoods with lower numbers of college graduates generally pay more in closing costs, according to a recent study of 7,560 loans closed in May and June of 2001 through commercial lenders and insured by the Federal Housing Administration (FHA). Homebuyers who worked through a mortgage broker paid $300 to $425 more in closing costs than those who worked through direct lenders. African Americans paid an additional $415, while Latinos paid an additional $365, on average. Consumers in neighborhoods where there were larger numbers of college-educated adults paid on average $1,100 less that homebuyers paid in neighborhoods where there were fewer college graduates. The study concluded that buyers who obtain so-called “no cost loans” (where there is no cost for points, appraisals or title insurance) generally are better off than those who “buy down” their interest rate but pay more in fees or points. (CAR, 6/12)

PENDING HOME SALES UP 6.3 PERCENT IN APRIL - The number of pending sales contracts for existing homes rose 6.3 percent in April, according to the latest Pending Homes Sales Index from NAR. The Index rose to 88.2 in April, up from 83 in March. (CAR, 6/11)

Bernanke says rate “well positioned,” watching dollar (Bloomberg, 6/3): Federal Reserve Chairman Ben Bernanke Tuesday signaled he is finished cutting interest rates for now and has turned his attention to concerns about inflation in the world’s foreign exchange markets in the wake of the U.S. dollar’s 16 percent decline against the Euro over the past year. Speaking to the International Monetary Conference, Bernanke stated that, “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate.”

Observers called Bernanke’s statement a “strong defense of the dollar” and a sign that the Fed believes a weaker U.S. dollar would be detrimental. Declines over the past year against the Euro and more recent oil price surges have increased fears of inflation. These fears are one reason the Fed is not expected to pare interest rates further at least through October.
Bernanke called financial market conditions “strained” and reiterated that U.S. consumers face challenges from declining home prices and stricter mortgage and other lending standards, a weaker job market and higher energy costs. He added that economic growth will remain limited until home prices and the housing market show clearer signs of stabilization. (CAR, 6/12)

Banks miss an easy housing fix (CNNMoney.com, 5/28): Mortgage lenders say they are there to help homeowners who are having trouble making their monthly payments but who can’t sell their home for what it is worth in today’s market. But real estate agents and others say both homeowners and the banks themselves lose out when banks are unable to close so-called “short sale” transactions.

In a short sale, homesellers ask their lender to accept a buyer’s offer that is less than the amount needed to pay off the balance of the mortgage. Lenders who agree to a short sale also typically agree to forgive the remaining debt.
Many call short sales a win-win for lenders and homeowners. The homeowner avoids foreclosure and banks avoid the cost of carrying the property through the lengthy foreclosure process, not to mention the hassles of selling an empty property in a market saturated with other foreclosures.
On average, lenders lose approximately 19 percent of a mortgage’s value with a short sale but lose an average of 40 percent on mortgages that proceed to foreclosure, according to one source.
The problem with short sales? Like other foreclosure mitigation efforts, the challenge is in determining which financial entity “owns” the loan and, thus, has the final say on a short sale offer. Banks also have been slow to ramp up internal processes needed to review and approve short sale packages. Delays and last-minute dickering often prolong or even derail transaction closings and creates frustration for potential homebuyers and their real estate agents. (CAR, 6/12)

Lose homes, pay more tax (NY Times, 5/30): Investors in second or multiple homes stand to be among the biggest losers from the housing downturn. That’s because proposed mortgage bailout programs don’t address second homes and investment properties. Many owners of multiple properties don’t realize that investments they thought would help them build long-term wealth may in fact leave them in bankruptcy and facing a sizeable tax debt.

Homeowners who borrowed against the value of their second home, or who financed the purchase of their second home and subsequent homes by pledging their primary home or other properties as security, may be liable for taxes on the difference in value should they sell any of their properties for a price less than the value owed on the mortgage.
Under the Mortgage Forgiveness Debt Relief Act, a homeowner doesn’t have to pay taxes on forgiven debt if the collateral behind the mortgage is owner-occupied. That provision doesn’t apply to a growing number of homeowners renting out their second home or investment property. Of some 7.5 million vacation homes, only about 10 percent are considered owner-occupied, according to the NATIONAL ASSOCIATION of REALTORS® (NAR). Many of these homeowners borrowed against the ever-increasing (or so it seemed) value of these properties to finance improvements or to buy other properties.
There may be a way out for some, one bankruptcy lawyer counsels: Get a lender to agree that foreclosure “fully satisfies all obligations under the loan.” That might protect the seller from having to pay taxes on the forgiven debt – although one attorney said, “I sure don’t want to be the one litigating it” in court.

Modest Gain in Home Sales Forecasted from Pending Home Sales Index: A modest gain in the level of home sales is possible over the next couple of months, and an improvement is forecast for the second half of this year as more buyers are able to access affordable mortgages, according to the latest forecast. The Pending Home Sales Index rose 6.3 percent to 88.2 from a reading of 83.0 in March. It's the highest index figure since last October. (NAR, 6/13)

Mortgage Rates Climb to 8-Month High: Speculation that the central bank could reverse its rate-cutting campaign later this year sparked increases across the board. (NAR, 6/13)

Next Week’s Happenings:

June 19-20 – Los Angeles Film Festival, Westwood Village, LAFilmFest.com
June 20 – Celebrate Downtown Lancaster/AV
June 21 – AV – AV Mall – Public Safety Expo

Fast Facts:

Calif. median home price - April 08: $403,870(Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 06/05/08 30-yr. fixed: 6.09% Fees/points: 0.6% 15-yr. fixed: 5.65% Fees/points: 0.6% 1-yr. adjustable: 5.06 % Fees/points: 0.7% (Source: Freddie Mac)

“The best exercise for the human heart was to bend down and pick someone else up.” -- Tim Russert, 1950-2008, via his Executive Producer, Betsy Fischer, Meet the Press, June 15, 2008.

Sources: New York Times, CNNMoney, California Association of REALTORS, Freddie Mac, National Association of REALTORS, Bloomberg, Reuters

1760

Oil Prices Surge, Inflation Worries, Mortgage Rates Climbing - June 8, 2008

2008-06-08T12:44:00.000-07:00

European central bank raises rates. Word on The Street is that the Fed might do that too when it meets June 24-25 to stem inflation. As mentioned in prior posts, what the Fed does doesn't affect mortgage rates directly, but it does influence the bond market, which will push mortgage rates around. Mortgage rates have been climbing (see last article on this blog). It's a great time to buy and lock in those rates before rates get higher.

Volatile week in oil. Early this week they were predicting retail gas prices should decline by the weekend. Then an Israeli cabinet minister stated that an attack on Iran is inevitable. That shot crude oil prices higher by record margins to a new record high on Friday, and expectations of $5 per gallon unleaded prices before the end of the year, especially if hurricanes hit the Gulf.

Next week, I'll reveal where Obama and McCain stand on housing. Don't miss it!

Bullet Points (CAR, 6/5):
· A Reuters/University of Michigan survey reveals that twice as many homeowners expect their home value to fall in the coming year than believed their home value would drop a year ago. Twenty-eight percent of those surveyed in late April and early May said they expect their home to depreciate in value, up from 14 percent at this same time last year. Just 17 percent predicted their home will increase in value, down significantly from 35 percent in May 2007. Their outlook doesn’t improve much over the longer term: Only 58 percent reported they expect their home value to appreciate over the next five years, down from 65 percent a year ago. Concerns about month after month of home price declines and long-term prospects for inflation, energy costs and the job market were behind the more pessimistic response, survey participants said.
· Some 183,000 at-risk homeowners were rescued from the potential loss of their homes due to foreclosure in April, according to Hope Now, a coalition of mortgage lenders, servicers, investors and community groups that has offered help to troubled borrowers since July 2007. Hope Now said it completed more than 183,000 loan workouts in April, a 7.6 percent increase over March, bringing the total number of homeowners helped to more than 1.6 million. Most of the workouts involved the negotiation of repayment plans in which borrowers receive extra time to bring their loans current. However, the number of mortgage term modifications rose to 42 percent, or roughly 77,000 total workouts for the month. Even with the program, 80,926 families lost their home to foreclosure in April, the group said.
· Consumers who arrange a mortgage through a mortgage broker or who are African American, Latino or live in neighborhoods with lower numbers of college graduates generally pay more in closing costs, according to a recent study of 7,560 loans closed in May and June of 2001 through commercial lenders and insured by the Federal Housing Administration (FHA). Homebuyers who worked through a mortgage broker paid $300 to $425 more in closing costs than those who worked through direct lenders. African Americans paid an additional $415, while Latinos paid an additional $365, on average. Consumers in neighborhoods where there were larger numbers of college-educated adults paid on average $1,100 less that homebuyers paid in neighborhoods where there were fewer college graduates. The study concluded that buyers who obtain so-called “no cost loans” (where there is no cost for points, appraisals or title insurance) generally are better off than those who “buy down” their interest rate but pay more in fees or points.

· Next weekend: Thunder On The Lot – Antique and Customized Cars and Motorcycles. Sat and Sunday ($5 Sat, Free Sun, $5 parking), Antelope Valley Fairgrounds. http://www.thunderonthelot.com, or 661-265-6000.
· Though outside our area, the Pasadena Chalk Festival will be happening next weekend at Paseo Colorado. 626-795-9100
· Landlord Training Class for certification under Palmdale’s Partners Against Crime Program – June 17 and 19, 6-10pm, must attend both classes, $20. Must register with Palmdale Community Safety Supervisor, Kelly Long, 661-267-5172 or Crime Prevention Officer Vicky Razo, 661-267-5181.

HOMEOWNER LOAN WORKOUTS HIT RECORD LEVELS IN APRIL - Roughly 183,000 at-risk homeowners were provided loan workouts in April, 23,000 more than in March, according to a new report from HOPE NOW, a private sector alliance of mortgage servicers, counselors, and investors working to prevent home foreclosures across the country. The April numbers represent the highest number of workouts provided through HOPE NOW since the program was launched in July 2007, according to the alliance. (CAR, 6/4)

CALIFORNIA CONSUMER CONFIDENCE SLIPS TO RECORD LEVELS ACCORDING TO NEW REPORT - California consumers' outlook on current and future economic conditions and their plans for future spending fell sharply during the second quarter on concerns over mounting gasoline prices, job security, and the broader economy, according to the A. Gary Anderson Center's California Composite Index of Consumer Sentiment. (CAR, 6/4)
Foundation Set for Healthy Housing Market - Toll Brothers CEO Robert Toll told analysts that the foundation for a healthy housing market is in place: low interest rates, a low unemployment rate, a rising population, and increasing wealth. With home prices at 2002 and 2003 levels, the stage is set. (AP, 6/4)

Clearing up traffic jams. An LA Times graphic on Sunday, June 08, shows how slowing down but not stopping as you approach a traffic jam prevents a larger backup from forming.

Hands Free In Car - On July 1, a new law goes into effect requiring adults driving vehicles to use hands-free devices while talking on the cellphone. You can still text and use the phone, but you can’t put your phone by your ear. Those under 18 are not allowed to use cellphones at all while behind the wheel. There is NO grace period where you get only a warning. You can get more information at the CHP website, http://www.chp.ca.gov, near the bottom of the main page.

"Mortgage fraud ground zero" – FBI agent in an article in USA Today states Las Vegas is “mortgage fraud ground zero.” Nationwide, MortgageDaily.com says fraudulent mortgages topped $4 billion last year from $1.6 billion the prior year. (6/3)

Most common mortgage scams –
· Bait and switch. The home owner is presented with what appears to be an application for refinancing, but in reality it's title transfer papers. Once the home owner signs, he loses his home.
· Upfront fees. Scammers ask for money to be used for locating rescue funding. Once the home owner pays, the scam artist disappears.
· Bankruptcy ploys. An attorney – or someone who pretends to be – persuades the home owner that filing for bankruptcy will save the house. The only one who wins is the person who pockets the fees he charges to file.
· Rent-to-buy. Fraudsters offer to buy the property with a provision that the home owner will pay rent while building equity. Once the title is transferred, the former home owner is locked out.
· Fraudulent refinance deals. A scammer offers to use his higher credit score to secure a refinance deal, but first the home owner has to hand over title to the house.
It pays to be knowledgeable! (Forbes, 5/23)

REOs Surging - Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic, a research firm. That’s one in seven previously owned homes currently for sale nationwide. (WSJ, 6/2)

Bernanke says rate “well positioned,” watching dollar (Bloomberg, 6/3) - Federal Reserve Chairman Ben Bernanke Tuesday signaled he is finished cutting interest rates for now and has turned his attention to concerns about inflation in the world’s foreign exchange markets in the wake of the U.S. dollar’s 16 percent decline against the Euro over the past year. Speaking to the International Monetary Conference, Bernanke stated that, “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate.”
* Observers called Bernanke’s statement a “strong defense of the dollar” and a sign that the Fed believes a weaker U.S. dollar would be detrimental. Declines over the past year against the Euro and more recent oil price surges have increased fears of inflation. These fears are one reason the Fed is not expected to pare interest rates further at least through October.
* Bernanke called financial market conditions “strained” and reiterated that U.S. consumers face challenges from declining home prices and stricter mortgage and other lending standards, a weaker job market and higher energy costs. He added that economic growth will remain limited until home prices and the housing market show clearer signs of stabilization.

Banks miss an easy housing fix (CNNMoney.com, 5/28) - Mortgage lenders say they are there to help homeowners who are having trouble making their monthly payments but who can’t sell their home for what it is worth in today’s market. But real estate agents and others say both homeowners and the banks themselves lose out when banks are unable to close so-called “short sale” transactions.
* In a short sale, homesellers ask their lender to accept a buyer’s offer that is less than the amount needed to pay off the balance of the mortgage. Lenders who agree to a short sale also typically agree to forgive the remaining debt.
* Many call short sales a win-win for lenders and homeowners. The homeowner avoids foreclosure and banks avoid the cost of carrying the property through the lengthy foreclosure process, not to mention the hassles of selling an empty property in a market saturated with other foreclosures.
* On average, lenders lose approximately 19 percent of a mortgage’s value with a short sale but lose an average of 40 percent on mortgages that proceed to foreclosure, according to one source.
The problem with short sales? Like other foreclosure mitigation efforts, the challenge is in determining which financial entity “owns” the loan and, thus, has the final say on a short sale offer. Banks also have been slow to ramp up internal processes needed to review and approve short sale packages. Delays and last-minute dickering often prolong or even derail transaction closings and creates frustration for potential homebuyers and their real estate agents.

Lose homes, pay more tax (NY Times, 5/30) - Investors in second or multiple homes stand to be among the biggest losers from the housing downturn. That’s because proposed mortgage bailout programs don’t address second homes and investment properties. Many owners of multiple properties don’t realize that investments they thought would help them build long-term wealth may in fact leave them in bankruptcy and facing a sizeable tax debt.
* Homeowners who borrowed against the value of their second home, or who financed the purchase of their second home and subsequent homes by pledging their primary home or other properties as security, may be liable for taxes on the difference in value should they sell any of their properties for a price less than the value owed on the mortgage.
* Under the Mortgage Forgiveness Debt Relief Act, a homeowner doesn’t have to pay taxes on forgiven debt if the collateral behind the mortgage is owner-occupied. That provision doesn’t apply to a growing number of homeowners renting out their second home or investment property. Of some 7.5 million vacation homes, only about 10 percent are considered owner-occupied, according to the NATIONAL ASSOCIATION of REALTORS® (NAR). Many of these homeowners borrowed against the ever-increasing (or so it seemed) value of these properties to finance improvements or to buy other properties.
* There may be a way out for some, one bankruptcy lawyer counsels: Get a lender to agree that foreclosure “fully satisfies all obligations under the loan.” That might protect the seller from having to pay taxes on the forgiven debt – although one attorney said, “I sure don’t want to be the one litigating it” in court.

Mortgage Rates Climbing - Freddie Mac reports a slight gain in the 30-year fixed mortgage rate to 6.09 percent during the week ended June 5 from 6.08 percent the prior week, marking a nearly three-month high. The increase can be attributed to concerns about inflation, with investors and analysts interpreting recent comments by Federal Reserve Chairman Ben Bernanke to mean an end to interest-rate cuts as the central bank moves to prevent out-of-control inflation. (via Baltimore Sun, 6/6)

Fast Facts
· Calif. median home price - April 08: $403,870(Source: C.A.R.)
· Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000(Source: C.A.R.)
· Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860(Source: C.A.R.)
· Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
· Mortgage rates - week ending 05/30/08 30-yr. fixed: 6.08% Fees/points: 0.6% 15-yr. fixed: 5.66% Fees/points: 0.6% 1-yr. adjustable: 5.22 % Fees/points: 0.6% (Source: Freddie Mac)

Sources: The Baltimore Sun, USA Today, Freddie Mac, California Association of REALTORS®, KNX-AM, Los Angeles Times, Antelope Valley Press, Forbes, Wall Street Journal, Bloomberg.com, Associated Press, CNNMoney.com, New York Times.

2000

Monthly Report: Tri-Valley Housing Stats: 4 Consecutive Months of Increased Sales

2008-06-01T18:04:00.000-07:00

This report was normally published in the monthly ClientDirect newsletter. As stated in prior blogs, I have discontinued e-publishing of the newsletter in favor of publishing such articles in this blog. Thank you to all who participated in my survey that fostered this change!

In both Santa Clarita and San Fernando Valleys, the sales numbers have been up steadily. Santa Clarita median prices are fluctuating, but up versus March. This is a typical sign of being at the bottom of a cycle, where the curve is "flat."

Current Stats in Santa Clarita:

Santa Clarita Valley Home Sales Post Strong Increases as Buyers Snap Up Foreclosed Properties

Buyers eager to capture bargains on foreclosed properties pushed sales of existing single-family homes in the Santa Clarita to their highest level in months, posting the fourth consecutive month of gains and the first year-to-year increase in 13 months, the Southland Regional Association of Realtors reported on Thursday, May 22.

A total of 178 homes changed owners last month, up 2.3 percent from a year ago and 17.9 percent higher than the March tally. Sales had been trending downward since hitting a record high of 405 transactions in June 2005, but the April total was the first time since March 2007 that the total was higher than 12 months ago.

Even condominium resales posted the fourth consecutive month of increased sales with the 67 transactions during April up 24.1 percent from March. Condo sales were 11.8 percent below a year ago.

Pending escrows – a measure of future resale activity – support the optimism that the market has turned upwards.

There were 381 open escrows at the end of April, up 34.2 percent from a year ago and 24.1 percent higher on a month-to-month basis. Activity has been steadily rising since hitting bottom in December when there were a mere 160 open escrows. The record high of 662 open escrows was set in March of 2005.

The single-family median price has been fluctuating in the mid- to high-$400,000 range with the $480,000 median in April down 19.3 percent from a year ago, but up 2.1 percent from March.

The first four months of the year saw the median slip under $500,000 for the first time in 16 months. The record high median of $643,000 was set in April 2006.

Similarly, the condominium median price of $279,000 was down 27.5 percent from a year ago, off $106,000 from the $385,000 median of April 2007. It has been slowly falling since the record high of $387,000 was set in January 2006 with the March median of $275,000 being the low point in this cycle to date.

Many factors mitigate against steep price declines, including: pent-up demand for housing in an area of the nation that will see population gains in coming years, lenders again writing loans which carry favorable interest rates, the lower cost of jumbo loans in high-cost regions now that the conforming loan rate has been increased, assistance for beleaguered home owners, which will limit the number of foreclosures, and an inventory that offers a solid selection but is not excessive.

The number of homes listed for sale declined during April compared to a year ago, down 6.8 percent to 2,014 active listings.

The inventory at the current pace of sales represents a mere 8.2-month supply, still a buyers’ market yet not all that far ahead of the 5- to 6-month supply thought to represent a balanced market. It also was the first time in months that the number of active listings dropped into single-digit range, supporting conclusions that the market is changing as the Spring home-buying season gets into full swing.

Current Stats in San Fernando Valley:

San Fernando Valley Home Sales Rise for the Fourth Consecutive Month

In a sign that the local housing marketing is beginning to rebound, sales in the San Fernando Valley of existing single-family homes increased during April for the fourth consecutive month and posted the first year-to-year gain in 30 months, the Southland Regional Association of Realtors reported on Thursday, May 22.

Not since September 2005 has the monthly total been higher than the prior year. The 547 sales closed by Realtors during April was up dramatically compared to April 2007 – 100 transactions or 22.4 percent higher.

The April total also was 31.5 percent above March and has climbed each month since January, gaining momentum as the traditional Spring home buying season gets underway and as lenders start writing loans again.

With the emphasis on single-family homes now that they are within reach of more people than at any time in many years, condominium resale activity has yet to pick up.

Condo sales are coming slower not for lack of a wide selection, but because first-time buyers generally have a more difficult time coming up with a downpayment and qualifying under today’s tougher loan restrictions.

Condominium sales during April were down 16.6 percent from the prior year and off 3.3 percent from the March tally. Condo sales have yet to exceed prior year figures even though resale prices have been falling.

The condominium median price of $300,000 was down 24.1 percent from a year ago and off 4.8 percent from March. The condo median price peaked at the record high of $415,000 in February 2006, but have been trending downward since July of 2007 and started a more precipitous decline in November.

Single-family home prices hit the record high of $655,000 in June of last year but have been inching lower at a much slower pace than condos. Last month the median came in at $465,000, down 25.6 percent from the prior year and off 1.1 percent from March. That was only the second time in this cycle that the price decline was above 20 percent.

The Association reported a total of 7,234 active listings at the end of April, up 34.0 percent from a year ago.

However, at the current pace of sales, the inventory represents a 10.4-month supply, clearly a buyers’ market, but significantly lower than the 15- and 16-month supply of recent months or the record high 23-month supply set in February 1993. During the height of the recent sellers’ market, inventory frequently dipped below a 1-month supply. A balanced market appears around the 5- to 6-month range.

Pending escrows – a measure of future resale activity – suggest that April’s strong sales numbers likely will continue into summer. Open escrows, totaling 1,082 transactions, were down a modest 4.7 percent from a year ago, but increased on a month-to-month basis by 21.2 percent. April marked the first time in a year that the pending escrow total rose above the 1,000 benchmark.

Current Stats in Antelope Valley:

Inventory Counts Report is the only current report as of 6/1/2008. Other reports, when published, will be included in the weekly blog

Residential Property

Status - Count - Average Price

Active - 4511 - 268,176

Pending - 1394 - 232,672

Total: - 5905 - 259,794

Sources: Southland Association of REALTORS® and Greater Antelope Valley Association of REALTORS®

More Evidence of a Turning Point: Week Ending May 31

2008-06-01T17:55:00.000-07:00

It appears we are at a turning point in the market, but the recovery, as it shows right now appears shallow. If you’re on the fence to buy, now is the time to get off and be an early bird. You never know when people will jump off the fence in full force, increasing home prices greatly. I’ve already had many homes with multiple offers, causing a bidding war, with the home going to the highest bidder.

Fast Fact: Average Age of the current first-time homebuyer is 26. (RIS Media, 5/29)

Weekend of June 6-7-8: Italian Feast of Santa Clarita. Come for Italian culture, food, music and games. Experience Italian traditions, culture, food and music. Located at the Westfield Valencia Town Center. Contact Rosemary Competelli for more information. 661-904-0699 (Santa Clarita Magazine, 6/1)

Thoughts of the Week:

· Lower-cost home improvements, such as exterior paint and updated or new windows, may provide a higher return on investment in a cool market than an expensive new kitchen or bathroom, according to a recent “Remodeling” magazine survey of real estate professionals. Nationally, major home projects today return 70 cents on the dollar, down from as high as 90 cents during the housing boom and from 80 cents in 1994. That year, a kitchen remodel fetched a 93 percent return; today, the same remodel would cost about $6,000 more and return only about 83 percent of that cost. New windows, updated energy systems and landscaping are seen as more practical upgrades in the current real estate market and also help a home show better.
· What are some of the hottest ZIP codes for home sales right now? The answer: Those that were among the coldest markets last year at this time. Neighborhoods with large numbers of unsold homes on the market last Spring this year are sporting “sold” signs in record numbers, according to the “Sacramento Bee” and DataQuick Information Systems. A list of the capital city’s hottest ZIP codes includes 95832, which gain notoriety as one of the most default-prone areas in the state. Located in the Meadowview section of Sacramento, sales year over year have increased by 266 percent behind a 44 percent decline in the median price to $185,000. In fact, 79 percent of April sales involved foreclosed homes. Other hot ZIPs to look for if you’re looking to pick up a bargain: 95660 (North Highlands, sales up 211 percent); 95834 (North Sacramento, up 180 percent); 95823 (Meadowview, up 157 percent); 95828 (Florin neighborhood, up 143.9 percent).
· Speaking of bargains, South Florida’s largest real estate brokerage over the Memorial Day holiday took a page from a big box retailer’s marketing manual and cut prices on all its listings by 10 percent while supplies last (in this case, 10 days). The broker behind the unique approach said the extra 10 percent off already bargain prices in foreclosure-laden Miami might encourage buyers waiting for the market to be at or near “the bottom.” Others countered that the properties included in the sale might be perceived as being over-priced, or that the discount might bring down the price of neighboring properties as a result.

California home-price cuts end sales losing streak (Bloomberg.com): Bargain hunters who bought foreclosed properties in April helped reverse a 30-month decline in homes sales and sent the median home price tumbling by 32 percent compared with a year ago, according to a report issued Tuesday by the CALIFORNIA ASSOCIATION OF REALTORS®. April 2008 home sales were 2.5 percent above the April 2007 level, but buyers looking for bargains were behind a $190,240 drop in the median price from $594,110 in April 2007 to $403,870 this April. The figures were heralded as good news for long-suffering first-time homebuyers.

· Seasonally adjusted existing home sales rose to an annualized rate of 366,720 this April from 357,640 in April 2007. The Association’s Unsold Inventory Index, which measures how many months it would take to deplete the supply of homes at the current pace of sales, fell from 11.3 months in April 2007 to 9.2 months this April. Median days on the market stood at 53.1 days a year ago, compared with 52.1 days this April.
· The vast majority of sales were at the more affordable end of the spectrum. Homes priced under $500,000 accounted for 64 percent of all sales in April, compared with only 40 percent a year ago. Homes from $500,000 to $1 million, meanwhile, accounted for only 26 percent of sales this April, down sharply from 45 percent a year ago. Once-fallow markets like Sacramento and Riverside saw increases in sales of more than 20 percent as bargain-hunters took advantage of favorable interest rates, lower prices and a glut of foreclosures on the market.
· An estimated 30,000 foreclosed homes have been auctioned in California over the past year. Observers say lenders holding repossessed properties have been anxious to sell them at discounts of as much as 40 percent, and that fact is enticing buyers back into the market in greater numbers.

Single-family home prices tumble in March (Reuters): Single-family home prices fell 14.4 percent in the first quarter from a year ago, according to the Standard & Poor’s/Case Shiller index. Separately, the Commerce Department reported that new home sales rose for the first time in six months while the unsold inventory of new homes declined for the twelfth consecutive month. In other news, The Conference Board said its Consumer Confidence measure declined from 62.8 in April to 57.2 in May on consumer worries about housing, higher fuel and food costs, and the future of the economy.

S&P’s survey of 20 markets showed a 2.2 percent price decline in March. A 10-market survey showed a 2.4 percent monthly decline and a 15.3 percent overall drop. In California, Los Angeles prices fell 21.7 percent in March compared with a year ago, while San Diego fell 20.5 percent.
New home sales edged up 3.3 percent in April after an 11 percent drop in March to an annualized rate that remains 42 percent below last year’s levels. The good news: Inventory feel 2.4 percent to a 10.6-month supply, down from 11.1 months in March.
Consumer Confidence fell to the lowest level since October 1992. Other measures also dropped considerably: The group’s measure of present conditions dropped from 81.9 in April to 74.4 in May, and its gauge of expectations through the end of 2008 declined from 50.0 in April to 45.7 in May. The Conference Board also reported that the percentage of consumers planning to buy a home sometime during the next six months fell from 2.5 percent in April to 2.1 percent in May.

Foreclosures in military towns surge at four times U.S. rate (Bloomberg.com): Foreclosure filings in 10 communities within 10 miles of a military facility jumped by an average of 217 percent between January and the end of April compared with the same period a year ago – a rate more than four times that of non-military towns and cities, according to RealtyTrac. Foreclosure filings near Fort Jackson, S.C., jumped 492 percent from the same period in 2007 while filings in three California communities with nearby bases also climbed significantly.

In California, Carlsbad (near Camp Pendleton) experienced a 131 percent increase in foreclosure filings from the January-April period a year ago. Also on the list were Barstow, home of a Marine Corps logistics base (120 percent) and Twentynine Palms (73 percent), home of the Marine Corps Air Ground Combat Center. The figures compare to an overall U.S. increase in foreclosure filings of 59 percent for the period.
Experts say military personnel who bought homes over the last few years are more likely to have received subprime loans because of relaxed lending criteria that overlooked their frequent moves, lower pay and credit scores. While Veterans Administration loans historically have met the needs of soldiers and their families, they carried more stringent qualification criteria – one reason the percentage of VA loans granted actually fell during the real estate boom.
Military personnel are protected from losing their homes due to nonpayment of mortgages while on active duty and for 90 days after they return home. Several members of Congress, including California’s Bob Filner, are advocating the timeframe be extended to a year.

As a reminder, you will not be receiving my newsletter through ClientDirect on Monday. I’ll be integrating a couple of articles in this blog over the next couple of weeks.

A special report will follow this blog with current market stats for the Tri-Valley Region.

Hope you have a wonderful week!

Sources: Santa Clarita Magazine, California Association of REALTORS®, RIS Media, Bloomberg.com, Reuters.

1378

Proposition 98 versus 99 Feature and Housing More Affordable in California (May 25)

2008-05-25T18:29:00.000-07:00

Ahead of the curve… CBS Radio News (KNX-AM) Monday morning featured economists who emphasized the same thing we stated in last week’s blog: we’re at a turning point in our market downturn was carried heavily on. Rest assured, this blog keeps you on top of the market!

Existing-Home Sales Dip 1% in April: Existing-home sales slowed in April, partly because tight lending guidelines hampered home buyers. But there are some things to be happy about: A greater number of market areas are showing sales gains from a year ago, and a recent reversal in mortgage policy means the market is better positioned for a turnaround, according to the NATIONAL ASSOCIATION OF REALTORS®. (5/23)

C.A.R. REPORTS ENTRY-LEVEL HOUSING AFFORDABILITY RISES 18 PERCENTAGE POINTS IN FIRST QUARTER: The percentage of households that could afford to buy an entry-level home in California stood at 44 percent in the first quarter of 2008, compared with 26 percent for the same period a year ago, according to a report released Tuesday by C.A.R. (5/21)

U.S. LEADING INDEX UP 0.1 PERCENT IN APRIL: The U.S. leading index in April grew 0.1 percent, fueled largely by positive contributions from stock prices, favorable interest rates, and housing permits, according to new data from The Conference Board. The six-month rate of decline in the leading index for April slowed to 1.2 percent, down from 2.4 percent for the six-month period between July 2007 and January 2008. (CAR, 5/21)

NEW HOME SALES DOWN 49 PERCENT IN MARCH, BUT PACE OF DECLINE SPARKS OPTIMISM: Total sales for new homes in March were 49 percent below March 2007 levels, however, monthly year-over-year declines are beginning to narrow, according to the latest report from the California Building Industry Association (CBIA). (CAR, 5/21)

Summer Events: LAFD Air Operations Grand Opening (Van Nuys)

Now that summer has unofficially started, you know there are things to do in our Tri-Valley area every week! I expect to feature one or two events in my blog every week. Most of you know I’m an avid supporter of our Emergency Services, volunteering with L.A. City Fire Department, City of Santa Clarita, and L.A. County Sheriff. Come join me this weekend with the grand opening of the new LAFD Air Operations Building at Van Nuys Airport. Shuttles will be provided from 8050 Balboa at the NW corner of VNY airport; it’s just south of the Home Depot.

June 3 Election: Proposition 98 versus 99

With the June 3 election just over a week away, I promised last week to compare the Eminent Domain Propositions 98 and 99.

Generally, Proposition 98 bars state and local governments from condemning or damaging private property for private uses and prohibits rent controls. The fiscal effect on most governments probably would not be significant. Proposition 98 is supported or endorsed by Ventura Daily Press (April 22), California Farm Bureau Federation, California Republican Party, California Libertarian Party, and the California Taxpayer Protection Committee, among others.

Proposition 99 also bars state and local governments from using eminent domain to acquire an owner-occupied residence. The measure also would likely not have a significant fiscal impact on state or local governments. The following organizations support/endorse Proposition 99 (or oppose 98): Gov. Arnold Schwarzenegger, AARP, League of California Cities, San Francisco Chronicle (May 4), and Los Angeles Times (May 12), among others.

The differences are in the details. Prop 98 supporters say Proposition 99 is limited only to owner-occupied residences, while Proposition 98 protects all private property, including small businesses and rental property. The Prop 99 supporters, on the other hand, say that rent control will disappear if Proposition 98 passes once current tenants leave.

An interesting note: If both measures get over 50% of the vote, Proposition 99 invalidates 98. So Proposition 99 goes into law.

Los Angeles Daily News: First-time buyers find silver lining in foreclosure cloud

More than a third of Los Angeles County families had the income needed to purchase a starter home in the first quarter, a 66 percent increase over a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® reported Tuesday. The affordability figure is the highest since 2003 and was heralded as a hopeful sign for the troubled Southern California real estate market.

Dramatically lower home prices and a .56 percent drop in interest rates are behind the improvement in the Association’s First-time Housing Affordability Index. A year ago, LA County households needed an income of $100,000 to qualify to buy a home costing $496,120, which is 85 percent of the area’s median home price, assuming a 10 percent downpayment at an interest rate of 5.65 percent. In the first quarter of 2008, entry-level buyers in the county could qualify to buy a home costing $390,450 with an income of $74,320.
First-time buyers and those seeking homes under $500,000 are behind a 22 percent increase in home sales in the six-county Southern California region between March and April, according to a report issued Monday by DataQuick Information Systems. The report said two-thirds of homes sold were priced at less than $500,000.
C.A.R. VP and Chief Economist Leslie Appleton-Young said she expects to see the affordability index continue to improve as additional foreclosures coming on the market keep prices at a level where more families can afford to buy.

The Associated Press: SoCal home sales jump in April but still lag year-ago period

Southern California homebuyers stepped off the sidelines in April, snatching up foreclosures and homes priced under $500,000 at a rate that was 22 percent higher than in March but down 19 percent from April 2007 and the lowest level since 1995, according to DataQuick Information Services.

· The median home price for the six-county region was $385,000, unchanged from March but down 24 percent from an April 2007 peak of $505,000. April marked the first time in eight months that the median price did not decline.

· Sales were strongest in areas hit hardest by foreclosures: Riverside County (where sales increased month to month for the first time in two years), Lancaster, Chula Vista, Anaheim, Lake Forest and Victorville experienced the strongest rebounds. Two-thirds of homes sold during the month in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties were priced under $500,000. About 38 percent of the homes sold were in foreclosure at some point during the previous year, up only 2 percent from March but sharply higher than the 5 percent reported a year ago. In Riverside County, 53 percent of sales involved troubled properties.

The credit crunch, potential for a recession, and uncertainty over when foreclosures will peak caused DataQuick analysts to remain cautious. Lack of financing for high-value homes continues to be an issue and could forestall a recovery if the trend persists. In April, only 15 percent of Southern California home loans were above $417,000, down sharply from the same period a year ago.

The Associated Press: Forecasters see weak economy even if housing, credit improve

The worst of the housing downturn and credit crunch may end this year but unemployment will rise and the economy will continue to weaken and fall into a short-lived and shallow recession, according to a survey released by the National Association for Business Economics (NABE).

56 percent of economists surveyed believe the U.S. already is in a recession or will enter one this year, up from 45 percent in February. Economic growth also will slow from a projected 1.8 percent in February to 1.4 percent in the current survey – well below last year’s 2.2 percent growth figure and next years projection of 2.3 percent growth. If correct, the new prediction for 2007 will mark the slowest growth since the 2001 recession. Weakness in the housing sector was cited as the most significant factor in the slowing economy.
The group remains hopeful that the housing downturn will hit bottom in 2008 but predict that prices will continue to fall into 2009. Economists were equally divided in their opinion of which quarter of 2008 would see a bottom for home sales.
The group said it expects the credit crunch to soften later this year, opening the door to some improvement in the housing sector. They expect the Fed to maintain interest rates through the rest of 2008 but believe it could increase key rates from 2 percent to 3 percent by the end of 2009.

Fast Facts

· * Calif. median home price - March 08: $413,980(Source: C.A.R.)

· * Calif. highest median home price by C.A.R. region February 08: Santa Barbara So. Coast $1,140,000 (Source: C.A.R.)

· * Calif. lowest median home price by C.A.R. region February 08: High Desert $210,66-(Source: C.A.R.)

· * Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)

· * Mortgage rates - week ending 05/15/08 30-yr. fixed: 6.01% Fees/points: 0.6% 15-yr. fixed: 5.60% Fees/points: 0.5% 1-yr. adjustable: 5.18 % Fees/points: 0.7% (Source: Freddie Mac)

Sources: California Secretary of State, California Republican Party, California Democratic Party, Ballotpedia.org, California Association of REALTORS, National Association of REALTORS, LA Daily News, Associated Press, KNX-AM.

May 12-18, 2008 – Housing Stats Show Turning Point

2008-05-18T17:58:00.000-07:00

After a 1½-month leave, Weekly Digest is back. A BIG Thank You for all your support and referrals!

This blog has been invited to join VerveEarth by its Founder and CEO, who writes, “Your blog Wayne's Real Estate World caught our attention. We are searching the internet for the world's blogs by geography, and we found yours for California. I would like to invite you to our site which plots the content of the internet on an interactive map of the world. VerveEarth is an entirely new way to surf the net. It shows spatial and geographic connections that a blog search engine could never reveal.” Check out the blog at http://www.verveearth.com/dest/user/11094.

Positive News First:
· 32 percent of homeowners nationwide owning a debt-free home (NAR, 5/14)

· As noted in this month’s newsletter, Santa Clarita and San Fernando Valleys are seeing an upswing in prices and/or sales numbers.

Home Sales, Prices Seen Rising in Late '08 - NAR Chief Economist Lawrence Yun predicts more notable improvements in 2009, when sales should climb to 5.71 million units. (NAR, 5/16)

Fannie Mae Scraps Declining Markets Policy - In a change spurred by NAR's concerns, borrowers will no longer need to put up an extra 5 percent down payment in markets where prices have fallen. (NAR, 5/16)

Today real estate is less about “location” and more about “duration,” according to a recent San Francisco Chronicle analysis based on the Standard & Poor’s Case-Shiller home price index. Californians who bought their house two years ago face the reality that it may be worth less than they paid, but those who bought four years ago probably are not “under water.” Those who bought eight years ago, in 2000, on paper have made a tidy profit assuming they haven’t spent all the equity in the meantime. For those who have forgotten that real estate is an asset that matures in value over time, consider this: The recent nationwide decline in home prices was preceded by a decade of year-over-year increases. Nationwide, home prices in February 2008 were 75 percent higher than they were in February 2000 and 15 percent above where they were in February 2004. In the San Francisco Bay Area, prices are down except in San Francisco year over year but up in all metro counties and down slightly in outlaying counties compared with 2004. However, the eight-year change skyrockets to a home price that is 94 percent higher today in San Francisco than it was in 2000. Of the nine Bay Area counties, the lowest eight-year gain was 48.8 percent in Santa Clara County.

Sacramento-based ForeclosureS.com reports a 5 percent drop in foreclosures and a 7.52 percent drop in preforeclosures nationwide between March and April. California recorded the highest number of filings year-to-date with 6.2 per 1,000 households but ranked fourth behind Nevada, Arizona and Florida in the number of preforeclosures (13.9 per 1,000 households) and was down 17.58 percent from March to April. Seventeen states recorded a drop in foreclosure filings between the last quarter of 2007 and the end of the first quarter of 2008. Nationally, 3.8 per 1,000 households have lost their homes to foreclosure so far this year.

NAR: Prices Up in 1 of 3 Metro Areas - During the first quarter, the median single-family home price increased in 48 of 149 U.S. metropolitan statistical areas. (NAR, 5/16)

· The slowdown is most pronounced in high-cost markets. In the West, which includes California, the median price was down 12.3 percent to $296,300 compared with a year ago. That’s due, in part, to the limited availability of mortgage financing in response to the subprime mortgage crisis. NAR believes recent increases in Fannie Mae/Freddie Mac loan limits to encompass jumbo loans will improve the situation somewhat in the months to come, although qualifying criteria will remain stringent.
· Home price and sales declines vary dramatically by neighborhood and are largely based on the extent of a neighborhood’s exposure to subprime mortgages. Neighborhoods with a high percentage of subprime loans are experiencing a higher rate of foreclosures, which typically drives prices down.
· NAR emphasized that the average buyer today intends to stay in the home they purchase for 10 years, which should position them to receive long-term benefits from home ownership. Homes purchased six years ago, for example, would have increased in value by 23.8 percent over that period, based on the difference in national median price between the first quarter of 2002 and first quarter 2008. (CAR, 5/15)

In mortgage market, “walkaway” homeowners may be urban myth - True or false: More and more homeowners who owe more than their house is worth are giving their house keys back to the bank? While anecdotal evidence suggests that mailing the keys back to the bank is occurring, there doesn’t appear to be any evidence that the practice has become widespread. (LA Times, 5/11)
· Data on the number of “walkaway” homeowners is lacking. The Mortgage Bankers Association and major banks believe the practice is increasing but don’t have any numbers to back up this supposition.
· Lenders suggest the practice is more prevalent among investors and “flippers” than among homeowners who live in their home. Bankers confirm that most borrowers are interested in working out a solution when they fall behind in their payments or when their home value is “under water” or their interest rate is about to reset.
· There is no sign that walking away from a mortgage obligation is becoming more “socially acceptable,” observers say. Homeowners historically have been known to do whatever it takes to avoid losing their home to foreclosure. (CAR, 5/15)

Jumbo mortgage rates becoming affordable - In the past week, jumbo conforming loans have become almost as affordable as standard conforming loans thanks to higher loan limits and a drop in bank interest rates. That’s good news for high-cost markets and homeowners with equity in their homes who may be able to refinance to a lower-cost standard conforming rate. However, borrowers still face tightened lending requirements. (San Francisco Chronicle, 5/13)

· Last week, a 30-year fixed-rate jumbo conforming loan with no points averaged 6.125 percent, compared with 5.875 percent for a standard conforming and 6.75 percent for a regular jumbo loan. Jumbo conforming loans are used for home purchases between $417,000 and $729,750, while standard conforming loans apply to homes with a purchase price below $417,000. Conforming loans are those that meet certain underwriting criteria and can be guaranteed by Fannie Mae and Freddie Mac. A lower rate could save borrowers several hundred dollars a month in mortgage costs.
· Both Fannie Mae and Freddie Mac require jumbo loan borrowers to make a higher downpayment (in the 10 percent to 15 percent range); require higher credit scores; provide income documentation; and typically have lower debt-to-income ratios than standard conforming loans.
· Congress recently increased the maximum loan amount to 125 percent of an area’s median home price up to $729,750. The new higher rates were intended to more accurately reflect home prices in high-cost markets and to stimulate housing market activity by allowing lenders to package more loans for sale to Fannie Mae and Freddie Mac.

Conusmer Price Index up 0.2% in April - The Consumer Price Index for All Urban Consumers(CPI-U) increased by an unexpectedly lower margin of 0.2 percent in April according to today's report from Bureau of Labor Statistics of the U.S. Dept. of Labor. The index for petroleum-based energy fell 1.6 percent, offsetting the 2.5 percent increase in the index for energy services. But food prices remain a chief concern: the food index rose 0.9 percent in April; and the food at home index increased 1.5 percent. (CAR, 5/15)

Fast Facts (CAR, 5/14)
· Calif. median home price - March 08: $413,980(Source: C.A.R.)
· Calif. highest median home price by C.A.R. region February 08: Santa Barbara So. Coast $1,140,000 (Source: C.A.R.)
· Calif. lowest median home price by C.A.R. region February 08: High Desert $210,66-(Source: C.A.R.)
· Calif. First-time Buyer Affordability Index - Third Quarter 07: 33 percent (Source: C.A.R.)

Next Week: A run-down of Proposition 98 vs Proposition 99: The Imminent Domain Propositions on the June 3 California Ballot.

Sources: Los Angeles Times, San Francisco Chronicle, California Association of Realtors, National Association of Realtors, ForeclosureS.com, VerveEarth.com

1342

Employment Report Shows Drop: Week in Review, March 31-April 6

2008-04-06T21:07:00.000-07:00

I thank everyone for their understanding and emails regarding my security and safety issues from the last week. More legal maneuvering this week, but not intrusive enough that I can’t write my blog...

Employment Report
Payroll employment (based on company survey data) fell 80,000 in March. The data was revised lower for prior months, so there have now been 3 straight months of job cuts totaling 232,000. Over a 12-month span, only 536,000 jobs have been added - compared to 2 to 3 million one-year job additions that would normally occur under normal conditions.

Household employment (based on a survey of asking people if they have jobs) fell by 24,000.

The unemployment rate increased to 5.1 percent from 4.8 percent the month prior. The labor force - the number of people searching for jobs -increased by 410,000 during the month.
The construction sector took a big hit with 51,000 fewer payroll jobs and the manufacturing sector continue to bleed with 48,000 fewer jobs. The manufacturing sector has shed nearly 4 million jobs in the past 10 years.

Jobs in the service sector rose modestly by 13,000. But the higher paying jobs in the Professional Business Service fell by 35,000 - these are the jobs that most impact office net absorption.

Big job gains occurred in Education and Health Services, where 42,000 jobs were added. Government jobs rose by 18,000.With the weakening job market, the wage growth also slowed to $17.86, a 3.6% increase from one year ago.

Yesterday's data on first-time and continuing jobless claims had increased notably and took place after the surveying period of today's overall report on employment. That means, that job cuts will most likely continue in the next month's employment report.
Any good news in the data? (1) Household employment figures had been falling steeply in the past few months, but the latest decline is much more modest and household employment has shown a bit of leading information in the past about payroll employment trends; (2) slower wage growth means lower inflationary pressure, which in turn, permits more easing room for the Fed to cut interest rates

What does today's data mean for consumers?
This employment report is the most closely watched economic data. On jobs, we are in a recession. Production wise, we are very close to recessionary conditions - because companies are squeezing additional output with fewer workers.

Recession is certainly not good news. However, the housing market performed well in the last recession due to exceptionally low interest rates. Though we currently also have low rates, the confidence issue is likely to be a bigger factor this round and recession does not help.
There is a better chance for legislation on tax credits for homebuyers.
(National Association of REALTORS, 4/4)

Bankruptcies Increase 30% in March, Led by California, Housing-Bust States - The jump in March bankruptcy filings is another indication the U.S. economy is in recession, led by states where the housing boom turned to bust. (Bloomberg, 4/5)

Lenders Overwhelmed by Foreclosures Let Delinquent Borrowers Stay in Homes - Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages. (Bloomberg, 4/4)

U.S. Homebuilders Rise to Highest Since September on Outlook for Recovery - U.S. homebuilders rose to the highest in more than six months this week on the prospect that lower prices and interest rates will help the industry recover. (Bloomberg, 4/4)

Senate takes up $15 billion housing fix - The Senate began debate Thursday on a $15 billion bipartisan housing relief package that could get a final vote by next week. The proposed measures include funding to help borrowers refinance unaffordable loans and help boost activity in neighborhoods with properties in foreclosure. Also in the bill is a tax break for homebuilders, as well as a new tax credit and deduction for homeowners and home buyers. The package also contains measures to make loans that are insured by the Federal Housing Administration - which helps borrowers with weak credit or little or no cash for a downpayment - more accessible. (CNNMoney, 4/3)

Rates on 30-, 15-year mortgages rise - Rates on 30-year and 15-year mortgages rose this week, delivering another dose of unwelcome news to the troubled housing industry. 30-year fixed-rate mortgages averaged 5.88% for the week ending April 3. That was up from last week's 5.85% and was the highest since the middle of March, when 30-year rates stood at 6.13%. The increase in mortgage rates also isn't welcome news to prospective home buyers in an environment where obtaining financing to buy a home or other big-ticket items has become more difficult. Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose this week to 5.42%, up from 5.34% last week. However, rates on shorter term mortgages dipped this week For five-year adjustable-rate mortgages, rates dropped to 5.59% this week, from 5.67% last week. And, rates on one-year, adjustable-rate mortgages averaged 5.19% this week, down from 5.24% in the prior week. The mortgage rates do not include add-on fees known as points. For 30-year and 15-year mortgages as well as one-year adjustable-rate mortgages the nationwide average fee was 0.5 point. Five-year mortgages carried a 0.6 point average fee. (CNNMoney, 3/3)

America’s riskiest real estate markets (Forbes)
Using data from a variety of sources, Forbes has compiled a list of the nation’s “riskiest” real estate markets – which includes San Diego and Sacramento. But, the magazine concludes, there are signs that improvement may be on the horizon for these two major California markets.

MAKING SENSE OF THE STORY FOR CONSUMERS:
The riskiest markets are those with high foreclosure rates, slow or no job growth, and a glut of homes on the market. Markets like Detroit, Cleveland, and Miami display all three characteristics.

By contrast, transactions are rising in San Diego, and that’s a good sign assuming the increase is sustained. Rising transaction numbers may mean credit is becoming easier to come by and buyers are looking somewhat more favorably on the market. In fact, Forbes suggests prices also may begin to rise over the next six months. That’s because there usually is a lag between increases in transaction numbers and price increases.

The Forbes report also projects better times ahead for San Diego and Sacramento thanks to a 125 percent increase in Fannie Mae/Freddie Mac conforming loan limits. In San Diego, the report notes, 18 percent of the market will see improved lending conditions.

Report: Housing slump hitting second homes (Dallas Morning News)
Vacation home sales declined by more than 30 percent in 2007 and home sales to investors fell more than 18 percent from the previous year, according to a report issued Friday by the NATIONAL ASSOCIATION OF REALTORS®.

MAKING SENSE OF THE STORY FOR CONSUMERS:
Sales of primary residences dropped 10 percent nationally over the same period, so it is no surprise that second-home and investment purchases, which tend to be discretionary, would fall as well.

Second home and investment property buyers also have faced the same disruption in the mortgage market that buyers of primary residences have faced. Mortgage credit tightened across the board during the last six months of 2007, creating a significant barrier to the completion of second- and investment-home sales.

Despite the decline in sales, the median price of investment properties remained unchanged at $150,000 and vacation home prices fell by only 2.5 percent from 2006 figures to a median price of $195,000.

Even with a softening in second/investment home sales, buyers remain optimistic: 80 percent of those surveyed by NAR in 2007 said they considered it a good time to invest in real estate.

Banks fail to lower mortgage rates as Bernanke cuts (Bloomberg)
Though they’ve received seven interest rate cuts and a program designed to kick-start borrowing, banks are rebuilding their balance sheets rather than passing on the cuts to consumers in the form of lower interest rates.

MAKING SENSE OF THE STORY FOR CONSUMERS
With home sales continuing to fall, policy-makers have shaved 3 percentage points off of bank borrowing costs, but the average fixed rate has dropped only half a point. Last week, the rate for a 30-year-fixed loan was 5.85.

In 2000, the last time home sales fell year over year, interest rate cuts helped revive the market. During 2001, the Federal Reserve acted 11 times to reduce rates by a whopping 4.75 percentage points. Fixed rates fell to a record low of 5.21 percent in June 2003.

Because they have been holding steady at just below 6 percent in recent years, interest rates would have to fall to 5.7 percent or less to stimulate a wave of home purchase or refinance activity, according to one mortgage broker.
(Source: California Association of REALTORS)

Sources: CNNMoney, California Association of REALTORS, National Association of REALTORS, Bloomberg.com

A Week Off...

2008-03-30T19:51:00.000-07:00

This blog will return next week due to personal issues that require my attention. Rest assured that I am currently safe, but I need to work through the legal process to secure my safety. Please keep me in your thoughts and prayers. This blog will return next week. Thank you.

SPECIAL REPORT-When You're Getting Your Stimulus Check!

2008-03-23T21:29:00.000-07:00

If you filed your 2007 taxes and got a refund by direct deposit...and the last 2 digits of your SSN are...

00-20, you will get the money by direct deposit around May 2
21-75, ... May 9
76-99, ... May 16

If you filed your 2007 taxes and you didn't get a refund or got a refund by a mailed check...and the last 2 digits of your SSN are...

00-09, you will get a mailed check sent out by the IRS around May 16
10-18, ... May 23
19-25, ... May 30
... goes on and on until...
88-99, ... July 11

For details on requirements to get a Stimulus Check, please see this prior blog:
http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html

Source: Bob McCormick, KCAL 9 News, 3/23, 8pm newscast.

Buyers Fair Galore: Week in Review, March 17-23

2008-03-23T19:14:00.000-07:00

Thoughts on the Current Market:
Prospective borrowers worried about the foreclosure crisis should obtain pre-purchase homeownership counseling. A Harvard University analysis found that borrowers who received classroom and individual counseling were, respectively, 23 percent and 41 percent less likely to become 60 days delinquent than equivalent borrowers who did not undergo counseling.
Calling the market low is a difficult task, and it's most often spotted in the rear-view mirror, according to MSN. While prices in many markets may have not yet hit their lowest point, the bottom may be near. And in other areas, only the pace of sales has been affected; prices have held firm or increased. Waiting for the absolute bottom puts consumers at risk of missing the best prices and getting caught up in a market on the upswing. (CAR, 3/20)

AV Home Show – the REALTOR® Association that covers the AV will have a booth for homebuyers and sellers March 28-30 in the Eliopulos Pavillon/Booth #46. Bring unwanted electrical items to be recycled and receive free parking. AVFair.com. (GAVAR, 3/17)

Home Buyer Fair – Southern California Home Buyer’s Fair will occur April 12-13 at the Los Angeles Convention Center in downtown Los Angeles. The REALTOR® Association that covers the SCV and SFV will help buyers access one of 20 $4000 grants and understand issues around purchasing homes in the valley. Educational seminars too. Entrance is free. HomeBuyersFair.com. (SRAR, CAR, 3/23)

Homeowners have filed suit against KB Home and Countrywide Financial Corp. alleging the companies inflated home prices through fraudulent appraisals. (SF Chronicle, 3/21)

Vast numbers of the country’s small and midsize home builders are feeling the pain form the credit crunch and housing downturn. (Wall Street Journal, 3/21)

Los Lomas Development Rejected – this 5,553-home development at the Newhall Pass was rejected by the Los Angeles City Council. (LA Times, 3/20)

California Leads US in Defaults, Price Drop, Slowing Growth - California leads the nation in foreclosures, home-price drops, and slowing economic growth. (Bloomberg, 3/20)

State Breaks Up Alleged Sub-prime Fraud Ring - Five people have been arrested and more are being sought in connection with an alleged mortgage fraud ring suspected of victimizing thousands of Californian homeowners. (LA Times, 3/19)

Capital Requirements Eased for Freddie & Fannie - Federal regulators on Wednesday eased capital requirements for Fannie Mae and Freddie Mac allowing them to pump an expected $200 billion into the troubled U.S. mortgage market. (Reuters, 3/19)

Central Valley Builders rely on the Internet to auction homes in hopes of drawing more buyers. (Fresno Bee, 3/18)

Auction firms are busy, especially in the Inland Empire region, where the number of homes repossessed by lenders in February increased nearly 21-fold in Riverside County and 15-fold in San Bernardino County compared with a year ago. (Riverside Press-Enterprise, 3/17)

Mortgage Rates Harder to Figure Out – Mortgage rates did, in fact, fall this week after the Fed cut rates again and took other steps to ease credit. But if recent history is any guide, the decline in mortgage rates may not last long. On mortgages, banking industry leaders say rate sheets often change several times during the course of a day, making the current situation all the more urgent for borrowers. Mortgages are moved by a variety of factors, with the most important in recent months being the spread, or difference, between 10-year Treasury bond rates and securities issued by secondary mortgage agencies. The difference is a direct reflection of the market's appetite for risk, and the closer the spread gets the more likely mortgage rates are likely to fall. Since the central bank lowered its Fed funds rate by three-quarters of a point Tuesday, rates for 30-year mortgages dropped from 5.96 percent to 5.66 percent, according to Bankrate.com. That's down from 6.37 percent four weeks ago. (CNBC, 3/21)

Mortgage Applications Drop - number of people applying for a home loan fell nearly 3% last week. Refinance volume fell 4.6%, while purchase volume declined 1% during the week. Refinance applications accounted for 49.7% of total applications, the first time all year that purchase application volume was larger than refinance volume. (CNBC, AP, 3/19)

Interest Rates Below 6% - Rates continued their wild swings. Fixed-rate mortgage rates plummeted, while adjustable-rates continued to skyrocket. The average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.98% from 6.37% the previous week. The average rate for 15-year fixed-rate mortgages, which are often used in refinance applications, plummeted to 5.24% from 5.72%. The average rate for one-year adjustable-rate mortgages rose to 6.95% from 6.72%, more than one percent higher than they were just two weeks ago. (CNBC, AP, 3/19)

Perspectives: S&P sees end to subprime mortgage writedowns (CNBC, per CAR, 3/20)
Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.
S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.

Perspectives: Commercial real estate market is running strong (Bakersfield Californian, per CAR, 3/20)
Bakersfield's housing market is facing tough times, but commercial real estate in the area remains relatively strong, due partly to demand from the agriculture and oil industries.
Demand for multifamily housing has surged as potential home buyers face tougher mortgage requirements, higher debt payments, and declining home values.
The office market is solid, but warehouse and distribution sectors may slow if the economy weakens further.
Banks have had trouble selling debt so financing is tight, but the federal government is stepping in aggressively with moves designed to protect large investment banks.

Perspectives: Bear Stearns Rescue Is `Finger in Dike,' Scholars Say (Bloomberg, per CAR, 3/20)
With Bear Stearns Cos.' rescue, the $200 billion subprime crisis joins a long history of government bailouts to preserve jobs, homes, and savings.
Bear Stearns failing would have reverberated well beyond the investment banking sector. Large investment bankers such as Bear Stearns provide much of the capital that eventually finds its way into the pool of money used to fund mortgage loans.
Most investment bankers are heavily leveraged. That means they fund investments by borrowing. If they invest well, they can pay off debt and still make a profit. But if no one will lend to them, investment bankers can neither pay debt nor make investments. That combination can cause an institution to fail. Bear Stearns was not the only heavily leveraged investment bank. Many other large Wall Street firms also are dependent on the ability to borrow to survive, so a loss of confidence resulting from the failure of a major player could easily have brought down several others.
The credit crunch, or consumers' difficulty obtaining mortgage loans, is one of the greatest hindrances to a real estate market rebound. In recent months, even prospective buyers with good credit have had trouble securing a loan. If financial markets stabilize, that could help boost demand for housing.

Fed Cuts Key Interest Rate in Effort to Further Boost Economy - The Federal Reserve on Tuesday lowered the federal funds rate 75 basis points to 2.25 percent citing continued concerns about the country's softening labor market, stalled consumer spending, and turmoil on the financial markets over the mortgage credit crisis. (CAR, 3/19)

New Home Sales Declines 62% - The overall pace of new home sales across California was down just over 62 percent in January compared to the same period a year ago, according to the CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report. Sales of single-family homes dropped by 61 percent in January compared to 2007, while sales of town homes and duplexes were down 71 percent, and condominium sales fell 58 percent. (CAR, 3/19)

HUD Unveils Mortgage Reform Plan – As mentioned last week, the U. S. Dept. of Housing and Urban Development (HUD) last week proposed a plan for mortgage reform designed to help consumers better understand mortgage loan documents and make more informed decisions when it comes to the home purchase, in an attempt to help streamline the home-buying process and mitigate risk connected to the subprime mortgage crisis. HUD's proposal calls for revamping the 30-year old rules of the Real Estate Settlement Procedures Act (RESPA), and calls for changes in disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. HUD also is proposing that mortgage lenders and brokers provide consumers with a standard Good Faith Estimate. (CAR, 3/19)

Sources: CNBC, Associated Press, California Association of REALTORS, Riverside Press-Enterprise, Fresno Bee, Reuters, Bloomberg, Los Angeles Times, Wall Street Journal, San Francisco Chronicle, Southland Regional Association of REALTORS, Greater Antelope Valley Association of REALTORS.

9206

Fed Drops Rates Sunday Night! - Week in Review: March 10-16

2008-03-16T22:52:00.000-07:00

This blog is a little late...that’s because I had word of late-breaking news!

JP Morgan Chase to buy Bear Stearns for $2/share. (CNNMoney, 3/16)

The US Federal Reserve cut to its lending rate Sunday night to financial institutions to 3.25% from 3.50% and created another lending facility for big investment banks to secure short-term loans. (CNBC, 3/16)

Feds propose home-loan disclosure reform - President Bush on Friday is expected to announce a plan aimed at making the mortgage application process easier for prospective buyers and lowing closing costs. Require new disclosures by summer in the buying and selling of homes. (AP, 3/14)

Foreclosures up 60% in February - The number of filings jumps year over year but decreases modestly over last month. (CNNMoney, 3/12)

Mortgage Application Fees Rise on appraisal reform - A new agreement between the NY Attorney General and Fannie and Freddie should promote independence and accuracy of appraisals. But it's going to cost buyers. (CNNMoney, 3/12)

US to simplify mortgage process - Buyers would get easier-to-understand mortgage terms and save about $700 in closing costs under a new proposal. (CNNMoney, 3/14)

Mortgage Applications Fall - Volume dropped 1.9% in the week ending March 7. Refinance volume dropped 4.7% while purchase volume increased 1.6%. Refinance applications accounted for 50.6% of total applications. Refinance volume has steadily declined since January, when it accounted for 73% of total applications. (CNNMoney, 3/13)

Mortgage Rates Rise – Mortgage rates rose across the board this week as lower home prices and mortgage rates contributed to a more affordable market for homebuyers. The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.13% for the week ending Thursday, up from 6.03% last week. Freddie Mac also said 15-year fixed-rate loans averaged 5.60%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.58%, up from 5.34% last week. One-year Treasury-indexed ARMs averaged 5.14%, up from 4.94% last week. (CNNMoney, 3/13)

January Pending Home Sales Index Unchanged in December – contrary to consensus expectation of 1% slide. (CNNMoney, 3/13)

Calirfornia February Sales up 7.1% - A total of 20,513 new and resale houses and condos were sold statewide last month. That makes it the slowest February in DataQuick's records, which go back to 1988. Sales were up 7.1 percent from 19,145 in January and down 34.3 percent from 31,228 for February last year. (DQNews, 3/14)

Commercial real estate market fundamentals are fairly stable, although investment is waning following a record year in 2007. (NAR, 3/12)

Fed is poised to cut interest rates further, by possibly as much as 75-basis points when they meet later this month, says Economist Danielle Hale. (NAR 3/14)

Sources: National Association of REALTORS, DQNews, CNNMoney, CNBC, AP.

2679

New Loan Limits Official & Best Time To Buy - Week In Review: March 2-9, 2008

2008-03-10T00:17:00.000-07:00

Number One Office Again! - RE/MAX of Valencia has once again earned the award for the NUMBER ONE OFFICE, 2007 - HIGHEST TOTAL TRANSACTIONS (LARGE MARKET) FOR RE/MAX, IN THE STATE OF CALIFORNIA. #1 OFFICE IN THE WHOLE STATE, WAY TO GO !!! We will be sure everyone gets a color copy of the congratulatory letter we received from RE/MAX of California Regional Vice President Adam Contos. (Broker/Owners of RE/MAX of Valencia, 3/6)

The federal government officially raised limits on conforming loans temporarily from $417,000 to as high as $729,750 in fourteen counties in California for loans originated between July 1, 2007 and Dec. 31, 2008. These are loans that may be sold to Fannie Mae or Freddie Mac. (CAR, 3/7)

Also, the government raised FHA conforming loan limits to a maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008. (CAR, 3/7)

Best time to buy in four years - Home values have declined across the country, giving homebuyers the best buys they've had since 2004. (CNNMoney 3/4)

Mortgage Rates Drop This Week - Freddie Mac says the 30-year fixed mortgage rate fell to 6.03 percent during the week ended March 6, from 6.24 percent the prior week. Interest on 15-year, fixed-rate mortgages also declined, falling to 5.47 percent from 5.72 percent over the same period. The five-year adjustable mortgage rate dipped to 5.34 percent from 5.43 percent, while the one-year ARM dropped to 4.94 percent from 5.11 percent. (San Diego Union-Tribune, 3/7; CNNMoney, 3/6)

Fed: Rates May Remain Low for Awhile - The Federal Reserve may need to keep a lid on interest rates for a significant length of time if the financial markets continue to be under duress, New York Fed President Timothy Geithner told the Council on Foreign Relations. (Reuters, 3/6)

Mortgage applications up slightly – Refinance and purchase volume increased in latest week as fixed-rate mortgage rates tumbled. Mortgage application volume increased 3% for the week ending Feb. 29, according to a weekly application survey by the Mortgage Bankers Association. Refinance volume increased 4.5% during the week, while purchase volume grew 1.4%. Refinance applications accounted for 52.4% of all mortgage applications during the week ending Feb. 29. (MBA via CNNMoney, 3/6)

FBI begins investigation of Countrywide – Calabasas-based mortgage lender being investigated for possible securities fraud. (KNX-AM, CBS Radio, 3/9)

Home Equity Falls to Record Low – The percentage of equity Americans with mortgages have in their homes fell below 50 percent in the second quarter of 2007 and declined further through the fourth quarter to 47.9 percent, the Federal Reserve reported yesterday. This is the first time that home owners’ debt exceeds their equity since the Federal Reserve first began keeping records in 1945. Economists expect this figure to drop even further as home prices continue to decline. (AP, NY Times, 3/7)

Moody's Economy.com estimates that 8.8 million U.S. home owners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak. (3/8)

The Mortgage Bankers Association also reported Thursday that loans past due or in foreclosure hit 7.9 percent of the total in the fourth quarter of 2007, up from 6.1 percent in December 2006. While defaults were scattered across the country, 21 percent came from California and Florida. Nevada, Arizona, Michigan, and Ohio also had high default rates. (3/8)

Jobs plunge by 63,000, worst since 2003; Fed steps in - Employers slashed jobs for the second month in February prompting the Fed to raise auctions of short-term loans to aid lenders. (USA Today, 3/7)

Foreclosures hit all-time high - Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments. (CNNMoney, 3/6)

Home sales stay weak in Realtors' report - Homes under contract flat in January but remain near record low, showing continued weakness in market. (CNNMoney, 3/6)
Flat Existing-Home Sales Likely Before Gradual Recovery - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery in the second half of the year. (NAR, 3/6)

This Week:
* Monday – Wholesale Inventories: expected to rise
* Tuesday – International Trade Deficit: expected to widen slightly to $59.5 billion after shrinking to $58.8 billion in December
* Thursday – February Retail Sales Report: expect slight rise in sales (0.2%)
* Thursday – January Business Inventories
* Friday – February Consumer Price Index: expect rise of 0.2% in the core index. (translating to slight inflation)
* Friday – preliminary March consumer sentiment
(AP, 3/9)

Last week - Wall Street balked at the February jobs loss, banks' requests to hedge funds and other borrowers for loan paybacks, and a plan for the troubled bond insurer Ambac Financial Group Inc. that many considered insufficient. (AP, 3/9)

Ending in Foreign News:
Australian Foreclosures Set to Rise as Interest Rates Reach 12-Year High Foreclosures in New South Wales, Australia's biggest state, are set to rise to a record this year after the central bank increased rates twice in the past two months to a 12-year high. (Bloomberg, 3/10)

New Zealand House Prices Rose at Slowest Pace in Three Years in February New Zealand's house prices rose at the slowest pace in three years in February as higher interest rates curbed demand for property. (Bloomberg, 3/10)

Sources: Bloomberg, San Diego Union-Tribune, California Association of REALTORS, National Association of REALTORS, CNNMoney, Reuters, Associated Press, Moody’s Economy.com, New York Times, Mortgage Bankers Association.

5610

Tri-Valley Housing Markets at a Glance

2008-03-10T00:14:00.000-07:00

As promised in my monthly newsletter, here are the latest trends in the 3 Valleys.

San Fernando Valley Sales Down 35%, While Prices Post a Modest Increase
Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported.

A total of 6,271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions. Annual home sales in the San Fernando Valley have been slowing since 2004.

Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.

Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower - below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.

The annual single-family median price came in at $61 1,933 -the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year's annual median price beat the prior record of $605,917 set in 2006.

The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.

There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago. At the current pace of sales, the inventory represents a 10.9-month supply - a buyers' market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.

December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.

Santa Clarita Valley Home Sales At An Impasse
Home sales in the Santa Clarita Valley during January posted a record low of 99 transactions, down 42.4 percent from a year ago when 172 single-family homes changed owners, the Southland Regional Association of Realtors reported.

The prior record low of 105 home sales was recorded in September of 2007 while, for comparison, the record high of 405 sales was set in June 2005.

Likewise, a total of 31 condominiums closed escrow last month, down 57.7 percent from January 2007 and the lowest tally on record. The prior record low of 38 sales came in November 2007 while the record high of 204 sales was set in April 2003.

The median price of single-family homes sold during January fell below the $500,000 for the first time in three and a half years. The median price of $460,000 was down 21.8 percent from a year ago and well below the record high of $643,000 set in April of 2006.

Similarly, the condominium median price fell below $300,000 for the first time in three and a half years with the $284,900 January median down 20.9 percent from the prior year. The record high of $397,000 came two years ago in January 2006.

Statistics produced by the Association indicated that the pending escrow total increased 21.9 percent on a month-to-month basis. That supports the contention that next month's sales numbers may be slightly higher.

However, pendings were down 48.7 percent compared to a year ago.

A total of 2,163 active listings were reported at the end of January, up 22.9 percent from a year ago.

At the current pace of sales, that represents a 16.6-month inventory - a buyers' market by any definition, especially since experts believe a balanced market appears with an inventory of 5- to 6-months.

While statistics are unavailable to support the conclusion, Association executives believe the inventory was much higher during the recession of the early 1990s, a fact reflected by today's relatively modest price declines and one which weighs in against steep price discounts.

Antelope Valley
Greater Antelope Valley Association of REALTORS notes that as of 3/2/2008, there were 4575 active residential listings with an average price of $294,350.

Buyers Have More Choices: Week In Review, February 25 – March 2, 2008

2008-03-02T16:52:00.000-08:00

Reading this in email? It’s convenient and handy! Encourage your friends to sign up at http://changhomes.net or http://changhomesnews.blogspot.com/.

Bullet points about today’s market:
• With more homes on the market for longer periods of time, buyers have more choices when it comes to selecting a home today.
• The foreclosure crisis has motivated the government to create more consumer protections against predatory lenders than previously existed.
• A temporary increase in the conforming loan limit means consumers should soon be able to borrow at lower interest rates for higher-priced homes. Prior to the increase, the conforming loan limit was $417,000. The spread between jumbo, or non-conforming mortgage loans and conforming mortgages is about 1.2 percentage points. (CAR, 2/28)

Facts and statistics to help keep you up to date on the market:
• Homeownership is strongly related to age and socioeconomic status. The average age of first-time home buyers is 32, according to the National Survey of Families and Households (NSFH). Thirty percent of homeowners are under 31 years of age. Ownership peaks at 76.7 percent among those age 61 to 70, and then declines slightly to 68.5 percent for that age 71 and older.
• Owners say they are happier and have higher self-esteem than renters, according to the NSFH.
• 86 percent of a national sample of Americans believe that people are better off owning than renting, according to the Fannie Mae National Housing Survey. (CAR, 2/28)

Santa Clarita Eyes Castaic for Annexation – Santa Clarita Planning Commission will consider the first steps in annexing the 1,500-home area of Castaic that includes Hasley Hills, Live Oak and North Bluff communities, as well as the Valencia Commerce Center. Last year a pro-annexation team submitted signatures showing 72% of residents and business owners support being annexed into the city. Before annexation becomes final, an application must be submitted to the county Local Agency Formation Commission, which would take 6-12 months to process the development. (Santa Clarita Signal, 3/2)

Economic Reports This Upcoming Week:
• Monday – U.S. Manufacturing February – expect it to be down after a modest uptick in January and a contraction in December
• Wednesday – Service Sector February – expect a decline after a steep plunge in January
• Friday – Jobs Report February – expect a decline. (CNNMoney, 3/2)

Economic Predictions - A recession is usually defined by two straight quarters of declines in gross domestic output, the broadest gauge of economic health. A survey released last week by the National Association for Business Economics showed that 45% of economists are predicting a recession in 2008. (CNNMoney, 3/2)

California Sales Down 29.8% in January - ...compared to January last year. Median home price fell 21.9% during the same time period. Who says they are still waiting for a “good time” to buy a home? (CAR, 2/25)

The median number of days it took to sell a single-family home was 71.6 days in January 2008, compared with 68.7 for the same period a year ago. Buyers have more choices! (CAR, 2/25)

Statewide, the 10 cities and communities with the highest median home prices in California during January 2008 were: Newport Beach, $1,250,000; Danville, $1,037,000; San Clemente, $923,500; Santa Barbara, $895,000; Yorba Linda, $807,500; Redondo Beach, $800,100; Redwood City, $757,500; San Ramon, $753,500; San Francisco, $744,500; and Sunnyvale, $708,500. Where’s Beverly Hills? (CAR, 2/25)

Statewide, the 10 cities and communities with the greatest median home price increases in January 2008 compared with the same period a year ago were: Redondo Beach, 11.1 percent; Danville, 6.9 percent; San Diego, 5.2 percent; Arcadia, 4.2 percent; San Clemente, 2 percent; Los Angeles, 1.5 percent; Sunnyvale, 1.2 percent; Walnut Creek, 0.8 percent; Thousand Oaks, 0.4 percent; and Redwood City, 0.3 percent. Home appreciation is still there in some markets! (CAR, 2/25)

CA Luxury Home Prices Decline - First Republic Bank’s Prestige Home Index show Los Angeles area values declined 1.2% from the third quarter of 2007 and rose 2.0% from the fourth quarter of 2006. The average luxury home in Los Angeles is now $2.4 million. Values in the Los Angeles area are down from a high of $2.46 million in the second quarter of 2007. The 1.2% decline in the fourth quarter of 2007 was the region's second consecutive quarterly drop. In December 2006, the average value of a luxury home in the Los Angeles area was $2.35 million. (First Republic Bank, 2/25)

“Say Goodbye to Granite Countertops” – CNN reports with a dramatic headline that most upscale renovations that used to return 80% of cost are not returning less than 70%, according to the National Association of REALTORS and Remodeling magazine. (3/1)

Talking Bailout – Democrats are pushing a bill in the Senate they argue will soften problems caused by the growing number of foreclosures. The most controversial part of the bill would let bankruptcy judges reduce the amount of principal and interest due on some residential mortgages. Under current law, only mortgages for investment properties, vacation homes and farms may be written down for those in bankruptcy. (CNNMoney, 2/29; MSNBC, 3/2)

Mortgage rates rise more - Following a January surge in refinancing activities, mortgage rates rose this week in the lackluster housing market, but are likely to decline. The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.24% for the week ending Thursday, up from 6.04% last week. Last year at this time, the 30-year rate averaged 6.18%, Freddie Mac said. Freddie Mac also said 15-year fixed-rate loans averaged 5.72%, up from 5.64% last week. A year ago, the 15-year rate averaged 5.92%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.43%, up from 5.37% last week. A year ago, the 5-year rate averaged 5.93%. One-year Treasury-indexed ARMs averaged 5.11%, up from 4.98% last week. At this time a year ago, the 1-year ARM averaged 5.49%. (Freddie Mac via CNNMoney, 2/28)

Fast Facts
• Calif. median home price - January 08: $430,370 (Source: C.A.R.)
• Calif. highest median home price by C.A.R. region January 08: Santa Barbara So. Coast $1,135,000 (Source: C.A.R.)
• Calif. lowest median home price by C.A.R. region January 08: High Desert $234,310 (Source: C.A.R.)
• Calif. First-time Buyer Affordability Index - Third Quarter 07: 33 percent (Source: C.A.R.)

Sources: California Association of REALTORS (CAR), Freddie Mac, CNNMoney, Santa Clarita Signal, First Republic Bank, MSNBC.

6270

“Painfully Slow Growth”: Week in Review, February 18-24

2008-02-24T17:34:00.000-08:00

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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.

6535

Economic Stimulus Bill Signed: Week in Review, February 11-17

2008-02-17T13:49:00.000-08:00

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.

Economic Stimulus Bill Passed: Week in Review, February 4-10

2008-02-10T15:57:00.000-08:00

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.

SPECIAL: Economic Stimulus Bill Awaits President’s Signature

2008-02-08T22:57:00.000-08:00

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

Heavy News Week Wraps Up January: Week in Review, Jan 2

2008-02-03T23:04:00.000-08:00

... 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.