This Week’s Real Estate News
Not as much news as last week, but it all seemed to occur on Wednesday 11/21:
House Passes Anti-Predatory Lending Measure: The House of Representatives has approved a controversial bill intended to help combat predatory lending practices, widely considered a central cause of the nation's credit crunch and rising foreclosure rates. HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, calls for the establishment of a national licensing program for all mortgage loan originators, and would force lenders to ensure a borrower's reasonable ability to repay the loan, among other requirements. (CAR, 11/21)
Mortgage Rates Continue to Fall: Mortgage rates continued to fall as the weak housing market remained a drag on the economy, Freddie Mac reported Wednesday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan fell to 6.20 percent for the week ended Nov. 21 from 6.24 percent the prior week. At this time last year, the 30-year FRM averaged 6.18 percent. The 30-year rate has not been lower since the week ending May 10, 2007, when it averaged 6.15 percent, Freddie Mac said. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.83 percent, down from 5.88 percent last week. A year ago, the 15-year rate averaged 5.91 percent. The 15-year rate has not been lower since the week ending February 2, 2006, when it averaged 5.81 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.88 percent this week, down from 5.96 percent last week. A year ago, the five-year ARM averaged 5.99 percent. One-year Treasury indexed ARMs averaged 5.42 percent this week, from 5.50 percent last week. At this time last year, the one-year ARM averaged 5.49 percent. (Freddie Mac, CNNMoney.com, 11/21)
Refi’s Prefer Fixed-Rate Mortgages in the 3rd Quarter: More borrowers who refinanced during the third quarter replaced their 15-year fixed-rate mortgages with traditional 30-year, fixed-rate loans, and 85 percent of borrowers with a one-year adjustable rate mortgage loan who refinanced selected fixed-rate loans, according to a recent report from Freddie Mac. (CAR, 11/21)
Mortgage Apps Decline: Mortgage application volume declined 3.6 percent during the week ending Nov. 16, according to the trade group Mortgage Bankers Association's weekly application survey. Refinance volume declined 5 percent during the week, while purchase volume fell 2 percent. Refinance applications accounted for 50.3 percent of total mortgage applications during the week. Application volume declined while interest rates barely moved. (AP, 11/21)
Housing Price Drops in 3rd Quarter: Housing price drops, driven by soaring foreclosure rates, accelerated during the three months ended September 30, according to the latest data from the National Association of Realtors (NAR). The median single-family house price in the United States fell to $220,800, which was down 2 percent from a year ago. Condo prices showed some resiliency: At $226,900, they rose 2 percent compared with 12 months ago. In Los Angeles-Long Beach-Santa Ana area, median home prices increased 1.1% to $588.400. (NAR, CNNMoney.com, 11/21)
Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger. Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate. The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation. (SF Gate, 11/21)
Sources: California Association of REALTORS (CAR), CNNMoney, AP, National Association of REALTORS (NAR), and SF Gate. Real
Sunday, November 25, 2007
Sunday, November 18, 2007
Lots of Real Estate News, 11/12 to 11/18
With Thanksgiving this week, the holiday shopping season is here too. Economists are cautiously optimistic, not knowing how the housing slump and its effects on the home equity accounts of buyers, where most wealth lies, will affect holiday shopping sales. Most are saying that it will stay stable or rise very slightly versus last year. Here are some real estate and economic headlines from the past week:
Big news of the week came from RealtyTrac, which is known for tracking foreclosures nationwide: No slowdown yet in foreclosure filings. Hardest hit cities are on coasts and in Rust Belt. Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter. During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months. The report shows seven cities in California (Stokton, Riverside, Sacramento, Bakersfield, and Oakland among others) and five each in Florida and Ohio were among the top 25 metro areas with the highest foreclosure rates. Nevada has the worst rate with one filing in every 61 households, while the nationwide rate is one filing for every 196 households. Riverside-San Bernardino also accounted for the most foreclosure filings in the U.S. during the quarter. According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes. Stockton may top the list of states with the highest foreclosure rates, but mortgage defaults in the city are generating business for REALTORS® in an otherwise stalled market. Cleveland is a city that is noted for being hit especially hard. (RealtyTrac.com, AP, Reuters, 11/14; Stockton Record, 11/15)
Home loan demands at 1-year high as rates stay low – it increased 5.5% for the week ending Nov. 9. Mixed signals keep mortgage rates flat: Fixed 30-year rate holds steady at 6.24 percent as consumer confidence declines and third-quarter productivity grows. Mortgage rates were flat following mixed economic signals. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan remained at 6.24 percent for the week ended Nov. 15. The 30-year rate has not been lower since the week ending May 17, 2007, when it averaged 6.21 percent, Freddie Mac said. At this time last year, 30-year mortgage rates also averaged 6.24 percent. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.88 percent, down from 5.90 percent last week. A year ago, the 15-year rate averaged 5.94 percent. The 15-year rate has not been lower since the week ending May 10, when it averaged 5.87 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.96 percent this week, up from 5.89 percent last week. A year ago, the 5-year ARM averaged 6.04 percent. One-year ARMs averaged 5.50 percent this week, unchanged from last week. At this time last year, the 1-year ARM averaged 5.53 percent. (CNNmoney.com, Mortgage Bankers Association, 11/15)
Mortgage bonds remain in a long-term uptrend in its rates with multiple support floors beneath present levels – translation: mortgage rates will more likely rise from here on and not fall in the short term forecast. And in this week's planned economic releases, any scent of inflation in the reports will be very bad news for Bonds - which deliver a fixed return that is eroded by the effects of inflation - so that would spell bad news for home loan rates as well. (Mortgage Market Guide, LLC, 11/13)
Fact Facts from the California Association of Realtors (11/15):
* Calif. median home price - September 07: $530,830(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region September 07: Santa Barbara So. Coast $1,667,500(Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region September 07: High Desert $271,940(Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 11/08: 30-yr. fixed: 6.24%; Fees/points: 0.4% 15-yr. fixed: 5.90%; Fees/points: 0.5% 1-yr. adjustable: 5.50%; Fees/points: 0.6% (Source: Freddie Mac)
Despite declining home prices as recently reflected in an S&P/Case-Shiller home price statistics survey, on average, the nation's top markets have experienced price appreciation by as much as 50 percent over the past five years, according to comparable data from the National Association of Home Builders (NAHB). "It's important to keep things in perspective," said NAHB President Brian Catalde. "The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest." According to the NAHB's comparable data tables, home prices in Los Angeles dipped 5.7 percent in the last year, but have appreciated by 88.9 percent since 2002. San Francisco home prices have declined 4.2 percent in the last year, but have seen appreciation of 46.7 percent since 2002. Home prices in San Diego have fallen by 8.3 percent in the last year, but have appreciated 54 percent since 2002, according to the report. (CAR, 11/14)
Fannie Mae changed the way the company calculates losses on home loans in its earnings releases, fueling speculation it is hiding the number of bad loans it holds to downplay its potential losses. (AP, Moody’s Economist.com, 11/16)
A ruling by a federal judge in Ohio could lead to a shift of longstanding policies regarding mortgage pools, possibly offering homeowners facing foreclosure some bargaining power. (NY Times, 11/15)
Online lender E-Loan announced it intends to cut more than 400 jobs from its Pleasanton, CA (San Francisco-area) headquarters as part of a large-scale restructuring plan. (Oakland Tribune, 11/13)
Countrywide Financial Corp. reported that October loan volume fell 48 percent from a year earlier, but said its reduction of high-risk home loans is producing credit stabilization. (Reuters, 11/13)
US business confidence remains moribund. Sentiment has not changed appreciably since plunging in August during the height of the subprime financial shock, and it remains consistent with an economy that is expanding very slowly. (Moody’s Economy.com, undated but estimated to be around 11/9)
Office of Management and Budget Director Jim Nussle offered a note of caution on how an economic slowdown could affect government finances - Nussle did not offer a specific projection for the deficit, though. (Christian Science Monitor, 11/15)
There has been a fair amount of sobering news on the economy lately. Last week, Federal Reserve Chairman Ben Bernanke said the US economy will slow "noticeably" in the final three months of the year. And this week, Augustine Faucher, an economist with Moody's Economy.com, told the Associated Press that he expected the federal budget deficit for the current budget year to rise to about $200 billion. (Moody's Economy.com, 11/15)
The West isn’t the only area reacting poorly in the housing market. Boston Globe noted Northeast economy is not projected to grow slowly through 2011 (11/14)
A perfect storm is brewing that threatens the entire mortgage lending industry. We believe that state and federal law enforcement and regulatory agencies will feel pressure to prosecute even inadvertent instances of regulatory noncompliance. Similarly, either through desperation or in an attempt to profit from public fear over what the media calls the "mortgage crisis," we believe that defaulting and troubled borrowers will increasingly take aggressive postures by challenging foreclosures through affirmative consumer claims (Bracewell & Giuliani LLP through Moody’s Economy.com, 11/13)
Goldman Sachs sees risk of recession as subprime reduces lending by $2 trillion - The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a "substantial recession'' in the U.S., according to Goldman Sachs Group Inc. (Moody’s Economy.com, 11/15)
Existing home sales seen hitting 5-year low: Sales numbers are expected to decline 12.7 percent this year, worse than expected - A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability. Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.” The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said. (National Association of Realtors and AP, 11/13)
National Association of Realtors’ 2007 National Housing Pulse Survey shows Americans are more concerned about obtaining a mortgage but remain convinced that buying a home is a good long-term investment. (NAR, 11/14)
National Association of Realtors survey shows consumers very satisfied with agent performance. Both buyers and sellers value the personal touch and services real estate professionals offer. (NAR, 11/13)
S&P reports mortgage turmoil to worsen in 2008 -- The chaos in the mortgage markets is only going to get worse in 2008 and will put a dent in U.S. mortgage bank earnings, according to a report released Tuesday by Standard & Poor's. Next year will be the worst for mortgage bank earnings since the 1990s, the ratings agency said. Loose lending standards, especially to people with shaky credit, are at the heart of the problem. (AP, Bloomberg, 11/14)
The formerly obscure ABX index has become a closely watched gauge of just how bad the market for subprime securities is getting. (CNNMoney, 11/14)
Sources: AP, Bloomberg, National Association of Realtors, Moody’s Economy.com, Boston Herald, Boston Globe, Christian Science Monitor, Reuters, Oakland Tribune, NY Times, Freddie Mac, California Association of Realtors, Mortgage Market Guide, LLC, CNNmoney.com, Mortgage Bankers Association, RealtyTrac.com, Stockton Record
Big news of the week came from RealtyTrac, which is known for tracking foreclosures nationwide: No slowdown yet in foreclosure filings. Hardest hit cities are on coasts and in Rust Belt. Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter. During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months. The report shows seven cities in California (Stokton, Riverside, Sacramento, Bakersfield, and Oakland among others) and five each in Florida and Ohio were among the top 25 metro areas with the highest foreclosure rates. Nevada has the worst rate with one filing in every 61 households, while the nationwide rate is one filing for every 196 households. Riverside-San Bernardino also accounted for the most foreclosure filings in the U.S. during the quarter. According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes. Stockton may top the list of states with the highest foreclosure rates, but mortgage defaults in the city are generating business for REALTORS® in an otherwise stalled market. Cleveland is a city that is noted for being hit especially hard. (RealtyTrac.com, AP, Reuters, 11/14; Stockton Record, 11/15)
Home loan demands at 1-year high as rates stay low – it increased 5.5% for the week ending Nov. 9. Mixed signals keep mortgage rates flat: Fixed 30-year rate holds steady at 6.24 percent as consumer confidence declines and third-quarter productivity grows. Mortgage rates were flat following mixed economic signals. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan remained at 6.24 percent for the week ended Nov. 15. The 30-year rate has not been lower since the week ending May 17, 2007, when it averaged 6.21 percent, Freddie Mac said. At this time last year, 30-year mortgage rates also averaged 6.24 percent. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.88 percent, down from 5.90 percent last week. A year ago, the 15-year rate averaged 5.94 percent. The 15-year rate has not been lower since the week ending May 10, when it averaged 5.87 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.96 percent this week, up from 5.89 percent last week. A year ago, the 5-year ARM averaged 6.04 percent. One-year ARMs averaged 5.50 percent this week, unchanged from last week. At this time last year, the 1-year ARM averaged 5.53 percent. (CNNmoney.com, Mortgage Bankers Association, 11/15)
Mortgage bonds remain in a long-term uptrend in its rates with multiple support floors beneath present levels – translation: mortgage rates will more likely rise from here on and not fall in the short term forecast. And in this week's planned economic releases, any scent of inflation in the reports will be very bad news for Bonds - which deliver a fixed return that is eroded by the effects of inflation - so that would spell bad news for home loan rates as well. (Mortgage Market Guide, LLC, 11/13)
Fact Facts from the California Association of Realtors (11/15):
* Calif. median home price - September 07: $530,830(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region September 07: Santa Barbara So. Coast $1,667,500(Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region September 07: High Desert $271,940(Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 11/08: 30-yr. fixed: 6.24%; Fees/points: 0.4% 15-yr. fixed: 5.90%; Fees/points: 0.5% 1-yr. adjustable: 5.50%; Fees/points: 0.6% (Source: Freddie Mac)
Despite declining home prices as recently reflected in an S&P/Case-Shiller home price statistics survey, on average, the nation's top markets have experienced price appreciation by as much as 50 percent over the past five years, according to comparable data from the National Association of Home Builders (NAHB). "It's important to keep things in perspective," said NAHB President Brian Catalde. "The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest." According to the NAHB's comparable data tables, home prices in Los Angeles dipped 5.7 percent in the last year, but have appreciated by 88.9 percent since 2002. San Francisco home prices have declined 4.2 percent in the last year, but have seen appreciation of 46.7 percent since 2002. Home prices in San Diego have fallen by 8.3 percent in the last year, but have appreciated 54 percent since 2002, according to the report. (CAR, 11/14)
Fannie Mae changed the way the company calculates losses on home loans in its earnings releases, fueling speculation it is hiding the number of bad loans it holds to downplay its potential losses. (AP, Moody’s Economist.com, 11/16)
A ruling by a federal judge in Ohio could lead to a shift of longstanding policies regarding mortgage pools, possibly offering homeowners facing foreclosure some bargaining power. (NY Times, 11/15)
Online lender E-Loan announced it intends to cut more than 400 jobs from its Pleasanton, CA (San Francisco-area) headquarters as part of a large-scale restructuring plan. (Oakland Tribune, 11/13)
Countrywide Financial Corp. reported that October loan volume fell 48 percent from a year earlier, but said its reduction of high-risk home loans is producing credit stabilization. (Reuters, 11/13)
US business confidence remains moribund. Sentiment has not changed appreciably since plunging in August during the height of the subprime financial shock, and it remains consistent with an economy that is expanding very slowly. (Moody’s Economy.com, undated but estimated to be around 11/9)
Office of Management and Budget Director Jim Nussle offered a note of caution on how an economic slowdown could affect government finances - Nussle did not offer a specific projection for the deficit, though. (Christian Science Monitor, 11/15)
There has been a fair amount of sobering news on the economy lately. Last week, Federal Reserve Chairman Ben Bernanke said the US economy will slow "noticeably" in the final three months of the year. And this week, Augustine Faucher, an economist with Moody's Economy.com, told the Associated Press that he expected the federal budget deficit for the current budget year to rise to about $200 billion. (Moody's Economy.com, 11/15)
The West isn’t the only area reacting poorly in the housing market. Boston Globe noted Northeast economy is not projected to grow slowly through 2011 (11/14)
A perfect storm is brewing that threatens the entire mortgage lending industry. We believe that state and federal law enforcement and regulatory agencies will feel pressure to prosecute even inadvertent instances of regulatory noncompliance. Similarly, either through desperation or in an attempt to profit from public fear over what the media calls the "mortgage crisis," we believe that defaulting and troubled borrowers will increasingly take aggressive postures by challenging foreclosures through affirmative consumer claims (Bracewell & Giuliani LLP through Moody’s Economy.com, 11/13)
Goldman Sachs sees risk of recession as subprime reduces lending by $2 trillion - The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a "substantial recession'' in the U.S., according to Goldman Sachs Group Inc. (Moody’s Economy.com, 11/15)
Existing home sales seen hitting 5-year low: Sales numbers are expected to decline 12.7 percent this year, worse than expected - A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability. Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.” The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said. (National Association of Realtors and AP, 11/13)
National Association of Realtors’ 2007 National Housing Pulse Survey shows Americans are more concerned about obtaining a mortgage but remain convinced that buying a home is a good long-term investment. (NAR, 11/14)
National Association of Realtors survey shows consumers very satisfied with agent performance. Both buyers and sellers value the personal touch and services real estate professionals offer. (NAR, 11/13)
S&P reports mortgage turmoil to worsen in 2008 -- The chaos in the mortgage markets is only going to get worse in 2008 and will put a dent in U.S. mortgage bank earnings, according to a report released Tuesday by Standard & Poor's. Next year will be the worst for mortgage bank earnings since the 1990s, the ratings agency said. Loose lending standards, especially to people with shaky credit, are at the heart of the problem. (AP, Bloomberg, 11/14)
The formerly obscure ABX index has become a closely watched gauge of just how bad the market for subprime securities is getting. (CNNMoney, 11/14)
Sources: AP, Bloomberg, National Association of Realtors, Moody’s Economy.com, Boston Herald, Boston Globe, Christian Science Monitor, Reuters, Oakland Tribune, NY Times, Freddie Mac, California Association of Realtors, Mortgage Market Guide, LLC, CNNmoney.com, Mortgage Bankers Association, RealtyTrac.com, Stockton Record
Sunday, November 11, 2007
This Week’s Real Estate News, November 5-11
Overall news this week is still portrays that the current buyer's market will continue...
Dollar hit new lows. Partially due to the current reduction in Federal Funds rate last week. This is promoting higher oil prices worldwide, as the trade in oil is in U.S. Dollars. Gold, silver, platinum and other precious metals are hitting record highs or are at near record highs. An economic minister with China has stated that China should move investments from the United States Bond market to those that are based on other currencies. Supermodel Giselle is demanding to be paid in Euros instead of dollars. The dollar is now at near record lows against the Euro, British Pound and Canadian Dollar, among many other world currencies. (KNX-AM, 11/5/2007, 11/6/2007, 11/7/2007)
Top lenders such as Chase, Washington Mutual, Countrywide and Wells Fargo are having difficulty competing in the stated income loan arena. It is likely the other banks will follow Chase’s policy effective Monday 11/12 to eliminate all stated income programs. Those lenders that are surviving, at least for now, are saying that clients wanting stated income must contribute at least 10% to the purchase price and “the income has to make sense with what they do (W2 or self-employed).” (Wachovia email, 11/7/2007)
Mortgage Rates Continue to Slip: Mortgage rates eased in response to the Federal Reserve's decision to cut interest rates, Freddie Mac reported Thursday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.24 percent for the week ended Nov. 8, down from 6.26 percent last week. The 30-year rate has not been this low since the week ending May 17, 2007. Last year at this time, 30-year mortgage rates averaged 6.33 percent. In its latest report, Freddie Mac said rates on 15-year fixed-rate loans averaged 5.90 percent in the latest week, down from 5.91 percent last week. A year ago, the 15-year rate averaged 6.04 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, down from 5.98 percent last week. A year ago, the 5-year ARM averaged 6.08 percent. One-year ARMs averaged 5.50 percent this week, down from 5.57 percent last week. They were at 5.55 percent this time last year. (CNNMoney, 11/8/2007)
Mortgage Reform Bill Progress: House Financial Services Committee Chairman Barney Frank, D-Mass., has secured two key Republican endorsements on his legislative plan to reform the mortgage industry, avoiding a potentially bruising political fight this week. Rep. Spencer Bachus, R-Ala., the panel's top Republican, and Rep. Judy Biggert, R-Ill., another high-ranking member, have both signed on as co-sponsors to an amended bill that Frank plans to introduce before a committee vote on Tuesday. Among the changes, the bipartisan amendment includes the Federal Reserve among the regulators that would be responsible for implementing the new law. Also, the bill clarifies new secondary market liability. Some Republicans have raised concerns that Frank's approach could cut off access to credit, but growing problems in the subprime mortgage market raised the proposal's profile. Once the bill clears Frank's committee, it is expected to go to a vote on the House floor within weeks. (Dow Jones/AP, 11/5/2007)
Most business-economic talk this week surrounded the ousting of Citibank’s CEO.
NY Attorney General Andrew Cuomo Probes Fannie Mae and Freddie Mac concerning mortgages they bought from banks. Cuomo said he wants to know about loans Fannie Mae and Freddie Mac purchased from banks, including Washington Mutual. The subpoenas also seek to find out how the government-sponsored companies handle appraisals. (AP, 11/8/2007)
A survey conducted by the Federal Reserve shows many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as "interest only" loans and for subprime mortgages, those offered to borrowers with weak credit histories. The Fed survey, which was conducted in early October, found that 41 percent of banks responding said that they had tightened loan standards either "considerably" or "somewhat" for prime residential mortgages, those offered to borrowers with strong credit histories. The 41 percent figure was up from about 15 percent of banks who said they were tightening standards on prime mortgages in the last survey in July. The Fed's survey covered 49 banks, including many of the nation's largest. These banks account for about 75 percent of all residential real estate loans on the books of commercial banks. (AP, 11/5/2007)
Sources: California Association of REALTORS(R), Wachovia, Dow Jones, Associated Press, LA Times, Sacramento Bee, USA Today, Reuters, CNNmoney.com, KNX-AM Los Angeles
Dollar hit new lows. Partially due to the current reduction in Federal Funds rate last week. This is promoting higher oil prices worldwide, as the trade in oil is in U.S. Dollars. Gold, silver, platinum and other precious metals are hitting record highs or are at near record highs. An economic minister with China has stated that China should move investments from the United States Bond market to those that are based on other currencies. Supermodel Giselle is demanding to be paid in Euros instead of dollars. The dollar is now at near record lows against the Euro, British Pound and Canadian Dollar, among many other world currencies. (KNX-AM, 11/5/2007, 11/6/2007, 11/7/2007)
Top lenders such as Chase, Washington Mutual, Countrywide and Wells Fargo are having difficulty competing in the stated income loan arena. It is likely the other banks will follow Chase’s policy effective Monday 11/12 to eliminate all stated income programs. Those lenders that are surviving, at least for now, are saying that clients wanting stated income must contribute at least 10% to the purchase price and “the income has to make sense with what they do (W2 or self-employed).” (Wachovia email, 11/7/2007)
Mortgage Rates Continue to Slip: Mortgage rates eased in response to the Federal Reserve's decision to cut interest rates, Freddie Mac reported Thursday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.24 percent for the week ended Nov. 8, down from 6.26 percent last week. The 30-year rate has not been this low since the week ending May 17, 2007. Last year at this time, 30-year mortgage rates averaged 6.33 percent. In its latest report, Freddie Mac said rates on 15-year fixed-rate loans averaged 5.90 percent in the latest week, down from 5.91 percent last week. A year ago, the 15-year rate averaged 6.04 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, down from 5.98 percent last week. A year ago, the 5-year ARM averaged 6.08 percent. One-year ARMs averaged 5.50 percent this week, down from 5.57 percent last week. They were at 5.55 percent this time last year. (CNNMoney, 11/8/2007)
Mortgage Reform Bill Progress: House Financial Services Committee Chairman Barney Frank, D-Mass., has secured two key Republican endorsements on his legislative plan to reform the mortgage industry, avoiding a potentially bruising political fight this week. Rep. Spencer Bachus, R-Ala., the panel's top Republican, and Rep. Judy Biggert, R-Ill., another high-ranking member, have both signed on as co-sponsors to an amended bill that Frank plans to introduce before a committee vote on Tuesday. Among the changes, the bipartisan amendment includes the Federal Reserve among the regulators that would be responsible for implementing the new law. Also, the bill clarifies new secondary market liability. Some Republicans have raised concerns that Frank's approach could cut off access to credit, but growing problems in the subprime mortgage market raised the proposal's profile. Once the bill clears Frank's committee, it is expected to go to a vote on the House floor within weeks. (Dow Jones/AP, 11/5/2007)
Most business-economic talk this week surrounded the ousting of Citibank’s CEO.
NY Attorney General Andrew Cuomo Probes Fannie Mae and Freddie Mac concerning mortgages they bought from banks. Cuomo said he wants to know about loans Fannie Mae and Freddie Mac purchased from banks, including Washington Mutual. The subpoenas also seek to find out how the government-sponsored companies handle appraisals. (AP, 11/8/2007)
A survey conducted by the Federal Reserve shows many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as "interest only" loans and for subprime mortgages, those offered to borrowers with weak credit histories. The Fed survey, which was conducted in early October, found that 41 percent of banks responding said that they had tightened loan standards either "considerably" or "somewhat" for prime residential mortgages, those offered to borrowers with strong credit histories. The 41 percent figure was up from about 15 percent of banks who said they were tightening standards on prime mortgages in the last survey in July. The Fed's survey covered 49 banks, including many of the nation's largest. These banks account for about 75 percent of all residential real estate loans on the books of commercial banks. (AP, 11/5/2007)
Sources: California Association of REALTORS(R), Wachovia, Dow Jones, Associated Press, LA Times, Sacramento Bee, USA Today, Reuters, CNNmoney.com, KNX-AM Los Angeles
Sunday, November 4, 2007
Federal Funds Rate Reduced: Weekly News Summary 10/29 to 11/4
This article was published in my monthly newsletter. If you want to receive this newsletter, which is emailed to subscribers, please email me at changhomes@gmail.com.
Federal Reserve lowered Federal Funds Rate to 4.5%, citing concerns about weakness in the housing market. Statement also stated that it is also worried about inflation. 10/31/2007 (CNNmoney.com)
U.S. home prices down for 8th consecutive month; index of 10 large U.S. cties shows a price drop of 5% in August, the largest since 1991. 10/31/2007 (AP)
Foreclosure filings rise with more coming as interest rates jump on a record number of adjustable mortgages. 11/1/2007 (CNNmoney.com)
Mortgage rates fall to near a 6-month low –Fixed 30-year rate slips to 6.26% on weak consumer confidence and other economic worries, per Freddie Mac. 11/1/2007 (CNNmoney.com)
Mortgage applications surge as refinance volume drives 3.8% overall growth, according to the Mortgage Banker’s Association’s weekly application survey. 10/31/2007 (AP)
October federal jobs report is more than double of what was expected with a 166,000-job gain; unemployment remains steady at 4.7%. Some economists questioned the validity of gains in this report, which is subject to further revision. 11/2/2007 (CNNmoney.com)
Experts predict the wildfires in Southern California will further add to the region’s slowdown in housing sales, as buyers shy away from listings in and around burn areas. 11/2/2007 (Reuters)
Members of Congress applied more pressure on the Bush administration today to ramp up efforts to slow down foreclosure rates. 11/2/2007 (AP)
Home prices in Los Angeles and Orange counties saw steeper declines in August than most other major metropolitan areas. 10/31/2007 (LA Times)
Regulators and consumer advocates worry too many wildfire victims don’t have adequate insurance to rebuild. 11/1/2007 (USA Today)
U.S. Treasury Secretary Henry Paulson said Tuesday the U.S. economy is strong enough to overcome the housing downturn but added the recovery process could take longer than expected. 10/30/2007 (AP)
Mortgage lenders struggling to remain profitable in the wake of the mortgage meltdown are applying a heavy dose of marketing aimed at those with good credit and solid home equity. 10/29/2007 (LA Times)
Residential Construction declines 1.4% 11/1/2007 (CAR)
Consumer Confidence declined for the third straight month in October, indicating continued consumer skepticism about the economy, fueled largely by the housing and mortgage lending crisis. The Consumer Confidence Index now stands at 95.6, compared with 99.5 in September. 11/1/2007 (CAR)
Sources: California Association of REALTORS(R), Associated Press, LA Times, Reuters, CNNmoney.com, KNX-AM Los Angeles
Federal Reserve lowered Federal Funds Rate to 4.5%, citing concerns about weakness in the housing market. Statement also stated that it is also worried about inflation. 10/31/2007 (CNNmoney.com)
U.S. home prices down for 8th consecutive month; index of 10 large U.S. cties shows a price drop of 5% in August, the largest since 1991. 10/31/2007 (AP)
Foreclosure filings rise with more coming as interest rates jump on a record number of adjustable mortgages. 11/1/2007 (CNNmoney.com)
Mortgage rates fall to near a 6-month low –Fixed 30-year rate slips to 6.26% on weak consumer confidence and other economic worries, per Freddie Mac. 11/1/2007 (CNNmoney.com)
Mortgage applications surge as refinance volume drives 3.8% overall growth, according to the Mortgage Banker’s Association’s weekly application survey. 10/31/2007 (AP)
October federal jobs report is more than double of what was expected with a 166,000-job gain; unemployment remains steady at 4.7%. Some economists questioned the validity of gains in this report, which is subject to further revision. 11/2/2007 (CNNmoney.com)
Experts predict the wildfires in Southern California will further add to the region’s slowdown in housing sales, as buyers shy away from listings in and around burn areas. 11/2/2007 (Reuters)
Members of Congress applied more pressure on the Bush administration today to ramp up efforts to slow down foreclosure rates. 11/2/2007 (AP)
Home prices in Los Angeles and Orange counties saw steeper declines in August than most other major metropolitan areas. 10/31/2007 (LA Times)
Regulators and consumer advocates worry too many wildfire victims don’t have adequate insurance to rebuild. 11/1/2007 (USA Today)
U.S. Treasury Secretary Henry Paulson said Tuesday the U.S. economy is strong enough to overcome the housing downturn but added the recovery process could take longer than expected. 10/30/2007 (AP)
Mortgage lenders struggling to remain profitable in the wake of the mortgage meltdown are applying a heavy dose of marketing aimed at those with good credit and solid home equity. 10/29/2007 (LA Times)
Residential Construction declines 1.4% 11/1/2007 (CAR)
Consumer Confidence declined for the third straight month in October, indicating continued consumer skepticism about the economy, fueled largely by the housing and mortgage lending crisis. The Consumer Confidence Index now stands at 95.6, compared with 99.5 in September. 11/1/2007 (CAR)
Sources: California Association of REALTORS(R), Associated Press, LA Times, Reuters, CNNmoney.com, KNX-AM Los Angeles
Sunday, October 28, 2007
After the Fires: Summary October 22-28
I apologize for not blogging the latest news last week. As I was getting started, I was notified of brush fires in Santa Clarita, where I have majority of my clients. I spent Sunday through Tuesday calling current and past clients and assisting them as needed. Many were evacuated, but thankfully no one had major fire damage through the Buckweed, Ridge, Magic, Soledad Fires (there’s one fire name I forgot that started in Newhall), and my homes and I are fine as well.
I hope those of you in Southern California are safe, with minimal effects from the wildfires.
This week’s news:
The Federal Reserve meets this coming week. Expected to drop the Discount Rate by 1/4 point on October 31. May drop the Federal Funds Rate by the same or keep it steady.
Home sales decreased 38.9 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 4.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported October 24.
California stands to lose $23.6 billion in housing wealth if real estate prices continue to decline, and foreclosures rise, according to a study released by the Senate Joint Economic Committee. San Francisco Chronicle, 10/26.
Bank of America Corp. plans to discontinue offering home mortgages by Jan. 1, and slash an additional 700 jobs on top of the 3,000 job cuts announced earlier this week. Reuters, 10/26
The Commerce Dept. reported Thursday sales of new homes rose 4.8 percent in September, yet remain 23.3 percent below sales for the same period a year ago. CAR 10/24
Countrywide Financial Corp. plans to begin offering borrowers refinancing or modifications on $16 billion in loans with interest rates scheduled to reset next year. AP, 10/23
The country’s second-largest independent mortgage lender, Residential Capital LLC, a GMAC Financial Services subsidiary, plans to cut 3,000 jobs to address the housing freeze. Reuters, 10/17.
2 million empty homes: Number of vacant homes on the market nationwide equivalent to all homes in Detroit; another sign of weak housing market. CNNMoney, 10/28
Countrywide joins with Neighborhood Assistance Corporation of America (NACA), a gadfly/community advocacy group that has been its arch-enemy for years, to help borrowers with a new bailout program to prevent foreclosures.
Oct 25: Census Bureau says the pace of new home sales was weaker in September and revises August's numbers to an 11-year low. CNNMoney, 10/25
Mortgage Rates Fall: Fixed 30-year rate slips to 6.33% on market worries of a slowing economy, a weekly report shows, CNNMoney, 10/27.
Existing-home sales declined 8 percent in September, stemming from problems in credit availability, according to NAR's latest research. NAR, 10/26.
I hope those of you in Southern California are safe, with minimal effects from the wildfires.
This week’s news:
The Federal Reserve meets this coming week. Expected to drop the Discount Rate by 1/4 point on October 31. May drop the Federal Funds Rate by the same or keep it steady.
Home sales decreased 38.9 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 4.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported October 24.
California stands to lose $23.6 billion in housing wealth if real estate prices continue to decline, and foreclosures rise, according to a study released by the Senate Joint Economic Committee. San Francisco Chronicle, 10/26.
Bank of America Corp. plans to discontinue offering home mortgages by Jan. 1, and slash an additional 700 jobs on top of the 3,000 job cuts announced earlier this week. Reuters, 10/26
The Commerce Dept. reported Thursday sales of new homes rose 4.8 percent in September, yet remain 23.3 percent below sales for the same period a year ago. CAR 10/24
Countrywide Financial Corp. plans to begin offering borrowers refinancing or modifications on $16 billion in loans with interest rates scheduled to reset next year. AP, 10/23
The country’s second-largest independent mortgage lender, Residential Capital LLC, a GMAC Financial Services subsidiary, plans to cut 3,000 jobs to address the housing freeze. Reuters, 10/17.
2 million empty homes: Number of vacant homes on the market nationwide equivalent to all homes in Detroit; another sign of weak housing market. CNNMoney, 10/28
Countrywide joins with Neighborhood Assistance Corporation of America (NACA), a gadfly/community advocacy group that has been its arch-enemy for years, to help borrowers with a new bailout program to prevent foreclosures.
Oct 25: Census Bureau says the pace of new home sales was weaker in September and revises August's numbers to an 11-year low. CNNMoney, 10/25
Mortgage Rates Fall: Fixed 30-year rate slips to 6.33% on market worries of a slowing economy, a weekly report shows, CNNMoney, 10/27.
Existing-home sales declined 8 percent in September, stemming from problems in credit availability, according to NAR's latest research. NAR, 10/26.
Sunday, October 21, 2007
Due to So-Cal Fires, this week's news summary postponed
Due to the fires in Castaic and Agua Dulce/Canyon Country, I am unable to research and post the weekly Real Estate News Summary today.
I've received many emails and phone calls from all over the country regarding the SoCal Fires and making sure I'm okay/safe…I am, but the fires are affecting my clients and keeping me busy…
For those of you around the country, as of 10pm PT Sunday nite, there are 11 major fires in the area currently occurring (or occurred today and in monitoring stages): 1 in Ventura, 2 in Orange County, 2 in San Bernardino County, 2 in San Diego County, and 4 in Los Angeles County. Malibu is getting the attention on national TV, by what I hear, but that has died down; it's at 1200 acres and 2 structures destroyed? They expect to stay on-scene until Tuesday.
There are also major fires in LA County in Castaic (over 2000 acres) and Agua Dulce/Canyon Country (over 10,000 acres, unofficial numbers at up to 20,000, over 16 structures destroyed), which are ones affecting many of my clients and neighbors. I have been in touch with all of them and so far they are safe and their homes are safe. Many are without power due to downed power lines. Castaic is next to Valencia on the North and West-central sides of Santa Clarita, and Canyon Country is on the East. So we're taking it from both sides.
You hear about Santa Ana winds on the news…I remember hearing it when I was living in the Midwest. It's incredible to be out there in 60+ mph winds. Nearly hurricane strength…can't breathe outside and it's hard to stand. We've had much stronger gusts too: a weather station near Castaic recorded a gust around noon at 108mph.
Many of you know I volunteer with the City of Santa Clarita and LA City Fire Emergency Response Teams – today I mainly worked radio communications amongst all the agencies. We've got fire departments coming from all over California, and I still hear we're stretched thin (LA City also had a major building fire requiring 200 firefighters this afternoon). Tomorrow I am on reserve, but I will likely be activated too. Today, I've been making sure my clients are safe today and helping them out with evacuations.
I just want to thank all of you for your thoughts. If you're wanting to follow along, you can view live coverage online at cbs2.com (or kcal9.com, same website) and hear good coverage on knx1070.com.
--Wayne
I've received many emails and phone calls from all over the country regarding the SoCal Fires and making sure I'm okay/safe…I am, but the fires are affecting my clients and keeping me busy…
For those of you around the country, as of 10pm PT Sunday nite, there are 11 major fires in the area currently occurring (or occurred today and in monitoring stages): 1 in Ventura, 2 in Orange County, 2 in San Bernardino County, 2 in San Diego County, and 4 in Los Angeles County. Malibu is getting the attention on national TV, by what I hear, but that has died down; it's at 1200 acres and 2 structures destroyed? They expect to stay on-scene until Tuesday.
There are also major fires in LA County in Castaic (over 2000 acres) and Agua Dulce/Canyon Country (over 10,000 acres, unofficial numbers at up to 20,000, over 16 structures destroyed), which are ones affecting many of my clients and neighbors. I have been in touch with all of them and so far they are safe and their homes are safe. Many are without power due to downed power lines. Castaic is next to Valencia on the North and West-central sides of Santa Clarita, and Canyon Country is on the East. So we're taking it from both sides.
You hear about Santa Ana winds on the news…I remember hearing it when I was living in the Midwest. It's incredible to be out there in 60+ mph winds. Nearly hurricane strength…can't breathe outside and it's hard to stand. We've had much stronger gusts too: a weather station near Castaic recorded a gust around noon at 108mph.
Many of you know I volunteer with the City of Santa Clarita and LA City Fire Emergency Response Teams – today I mainly worked radio communications amongst all the agencies. We've got fire departments coming from all over California, and I still hear we're stretched thin (LA City also had a major building fire requiring 200 firefighters this afternoon). Tomorrow I am on reserve, but I will likely be activated too. Today, I've been making sure my clients are safe today and helping them out with evacuations.
I just want to thank all of you for your thoughts. If you're wanting to follow along, you can view live coverage online at cbs2.com (or kcal9.com, same website) and hear good coverage on knx1070.com.
--Wayne
Wednesday, October 17, 2007
The Real State of Real Estate
The Real State of Real Estate
Presented by: Gary Watts – Real Estate Economist, California Previews Retreat
Monterey, August 2007
Brief History of Real Estate
Historically, housing downturns average 27 months. We are in the 23rd month of the current downturn, so once we are past this financial over-reaction, things should improve. The national median price of a resale home is 3.4% higher than a year ago and the pending sales index is moving back up. There may just be some light beginning to shine at the end of this tunnel!
1970 to 1980
Prior to my entering real estate in 1971, a quote appeared in Business Week (late 1969) due to an increase in housing prices: “The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000. “In 1972, interest rates were 7% and it would take over 24 years before a home buyer could be able to obtain those low rates once again - today, we are in the low 6’s. In 1973, banks had a run on deposits and for a period of approximately 8 months there were no lenders who were in a position to make loans to home buyers. This should have caused a collapse in the real estate market, but home prices continued to rise. In 1977, the National Business magazine stated: “The median price of a home today is approaching $50,000. Housing experts predict price rises in the future won’t be that great.”
1980 to 1990
At the end of the 70’s and into the 80’s, inflation hit 21.5% and home loans were reaching 18%! This was followed by a crash (and later bail out) of the savings & loans industry in America. Although large job losses were creating foreclosures, home prices continued to rise. By 1985, Money Magazine made this prediction about home prices: “The golden-age of risk free run-ups in home prices is gone.” With a buildup in defense spending and huge growth in manufacturing sector in the late 1980’s, increased job creation led to a boom in home construction and home prices continued to rise. Then on November 11, 1989, a dramatic event took place: the Berlin Wall came down! With the Evil Empire (the Soviet Union) breaking up, things were going to change around the world and change quickly!
1990 to 2000
In early 1990, Congress began slashing funds for defense spending. Within a very short period of time, a lot of highly paid workers in both defense and manufacturing had lost their jobs. California home prices declined about 12% by 1996 when the San Francisco Examiner said: “A home is where the bad investment is. “In the following 3 years, California home prices rose 19.7% wiping out all the losses of the early ’90’s and ended the decade with a net gain of 9.35%. The median price in California has not declined since 1996.
The Media
Today’s media plays up bad economic news now more than ever, which leads to misconceptions about economic realty. Our economy is extremely strong, profits are superb and the world economy is exploding.
• All you read and hear is that real estate is going down, yet last month, prices in the U.S. rose
3.4% from a year ago and California is up almost 1%. The Bay Area prices have gained 4.1%
over the last year and southern California median price is up 3.7%.
• Foreclosures are supposed to be at a record high - but last year 98.83% or mortgages did not go to foreclosure. Today, the Bay Area’s foreclosure rate is up only 1.5% over last year while southern
California’s foreclosure rate is up 2%.
• The media reported 53,942 notices of default for the 2nd Quarter - a near record high. They are
comparing it to the 1st Q. of ‘96 when 61,541 notices were filed but fail to mention that 2 million
more home have been built in California since then!
• What if the media’s headlines read: 99.2% of Mortgages are Not in Foreclosure?
• The media and the financial markets have greatly over-reacted, to the real problems that have
been revealed in the lending marketplace, which is typical.
The Sub-Prime Market
It may surprise you to know that sub-prime loans make-up only 5% of the U.S. total loan market and Alt - A loans (those with credit better than sub-prime but less than prime) total only 8% of all loans in the U.S.!
1. These exotic loans became a major influence in the early 2000’s, but anyone obtaining them up through 2004 had very few problems due to rapid equity growth. Many with no-money-down purchases soon found they had 20% (+) equity within a year or two!
2. Most of the problems with sub-prime loans originated in the summer of2005 through 2006. In
California, 43% of all loans funded during that time were sub-prime loans.
3. Sub-prime loan investors that needed to sell their loans were liquidating their paper for $.96 on the dollar. There has been no current data on sales since August 5th, but with the current turmoil in the financial markets, I am sure they are being “dumped” for less.
4. Here is a financial report on some of the banks that provided the sub-prime money:
• Bear Stearns 2nd quarter revenue was $2.512 billion - a new record!
• Merrill Lynch saw 2nd quarter profits rise 30.2% Morgan Stanley (holding $5.2 billion in subprime
loans) had a 60% jump in earnings.
• Goldman Saks earned $2.33 billion in the past year.
• Bank of America (#2 U.S. bank), after putting aside $1.81 billion for potential credit losses, saw
net income rise to $5.76 billion - up from $5.48 billion last year.
The media will still report about massive delinquencies and huge foreclosures in the sub-prime market, but those reports will not be accurate because they don’t explain the difference between a delinquent payment, a notice of default or a foreclosure. They tell us “Foreclosures at Record High!” but that is not accurate.
Source: Mortgage Bankers Association, National Homebuilders Association, Inside Mortgage Finance
Delinquencies vs. Notices of Default vs. Foreclosures Delinquencies
Delinquencies cover any missed payment - even if it is just for one month, it is reported as a delinquency.
1. The delinquency rate on sub-prime loans was running at 13.77%, which is up 13.44% from the
previous year. In the last quarter, the delinquency rate dropped to 12.4%!
2. The delinquency rate on Alt-A loans is only 2.69%, while prime loans are at 2.57%.
3. Combining the three rates with the loan volume gives you a delinquency rate for all loans in the U.S. of only 4.84%. The record low is 4.0%.
4. On jumbo mortgages (anything larger than $417,000) the delinquency rate is 0.37% 5. California’s delinquency rate is only 3.25%.
Notices of Default
Notices of Default are filed when lenders’ loans have been delinquent for a specific period of time. These loans begin the foreclosure process. The four states of California, Florida, Nevada and Arizona currently have the largest amount of loans in the foreclosure process. Yet, in the 1st Quarter, 24 states saw a decline in foreclosure starts and 36 states saw a decline in the 2nd quarter!
1. Only 3.23% of all sub-prime loans have entered the foreclosure process, with most of the defaults occurring on loans from Jan. 2005 to June 2006.
2. Only 1.28% of all prime loans have entered the foreclosure process.
3. In California, the last quarter saw 53,943 notices filed, with most filings being on loans from the summer of 2005 to the summer of 2006.
4. The lowest number was 12,417 in the 3rd Quarter of 2004.
Foreclosures
Foreclosures occur when the buyer has been unsuccessful in curing the debt, and either a lender or an investor has acquired the property. As of last month, there was 1 foreclosure filing for every 693 homes in America.
1. For sub-prime loans, 68% of the buyers are able to prevent the foreclosure by either refinancing the property or successfully selling their home.
2. For prime loans, the foreclosure rate is 0.86%. Last year, the U.S. saw a combined foreclosure rate of only 1.09% while California’s rate was 1.17%!
3. California now ranks #4 in the nation in foreclosures - down from #1!
The media will try to scare you with numbers like $1 trillion in loans needs to be recast this year and that foreclosures could cost lenders as much as $2.3 billion dollars! They never mention that there is $10.4 trillion of mortgages with $56 trillion dollars of equity in American households.
Add to that the wealth of the U.S. at $70 trillion, with the value of stocks between $15 and $20 trillion, while the bond market is even larger. So these loses (should they occur) should not have any great effect on home prices.
A final note about foreclosures: The #1 reason they occurred was due to fraud. The #2 reason was
unethical lending, followed by #3 - loss of job, and finally #4 was medical reasons. By the way,
mortgage insurers are in a good position to cover losses at these (high) levels.
Source: Mortgage Bankers Association, Federal Reserve, Federal Bureau of Investigation
Why the World Changed in 1979 Baby Boomers’ Impact
Never before in the history of the world has a generation accumulated so much wealth as the baby
boomers. The Internal Revenue Service will tell you that from 1945 to 1979, incomes increased at the same rate for all tax brackets. By 1979, the early baby boomers had been in the workplace for over 10 years. They were the most educated generation to enter the work force, and they had the skills for our changing world. Today, the IRS tells us that, from 1979 to 2004, the median income in the U.S. rose 18%. From 2004 to 2005, incomes grew 5.8%.
The number of taxpayers making more than $100,000 grew by 3.4 million and accounted for more than two-thirds of the growth vs. 2000! Half of Americans make less than $30,000 and two-thirds make less than $50,000.
Those making more than $1 million grew by 26% and numbered 303,817 in 2005! These individuals, who constitute less than a quarter of 1 percent of all taxpayers, reaped almost 47 percent of the total income gains in 2005.
The top 85% of the nation’s wealth resides with the richest 15% of Americans; the bottom 50% of Americans holds only 2.5% of the nation’s wealth. Over the next decade, there will be a 25% increase in the population over 50 years of age. They have more money than any preceding generation, due to having dual incomes, equity growth, and record inheritances (60% goes to the top 40%)! This age group is spending $2 trillion dollars annually! Last year, 2.1 million boomers turned 60, with 25% planning on not retiring.
They found a way to mix leisure with work and are not ready to fully retire - they have money and income and they are still investing in real estate.
Sunday, October 14, 2007
Weekly Roundup, October 14
No new housing stats from Antelope Valley, as I was hoping for last week.
Foreclosures drop, but they're nearly double 2006Home foreclosure filings dropped 8 percent in September, nearly twice what they were a year ago.
House OKs $1 billion-a-year housing fundThe House of Representatives approved legislation Wednesday that would siphon off up to $1 billion a year from Fannie Mae, Freddie Mac and the Federal Housing Administration to build affordable rental housing and provide down-payment assistance for first-time home buyers.
C.A.R.'s California Housing Market Forecast for 2008:Statewide median price down, pace of sales decline moderates after tumultuous 2007 Home prices throughout most of California will post modest declines next year while sales of existing homes will stabilize from the precipitous decrease experienced in 2007, according to C.A.R.'s "2008 California Housing Market Forecast" released today.
C.A.R. reports sales decrease 27.8 percent in August, entry-level median home price falls 5. 1 percent Home sales decreased 27.8 percent in August in California compared with the same period a year ago, while the median price of an existing home increased 2 percent.
USA Today: Home builders' foundations shift with shaky market10/09/2007Home builders are bracing for what many predict will turn out to be a more painful market correction than the real estate downturn of the 1980s.
Associated Press: Foreclosures drop, but they're nearly double 200610/10/2007Home foreclosure filings fell 8 percent in September, but are still at levels nearly twice what they were a year ago.
September foreclosures fall
10:06am: Mortgage delinquencies slip 8% nationwide; Sun Belt, Rust Belt states continue to dominate top foreclosure rates, according to a monthly survey.
Dems OK on Fannie, Freddie caps
Oct 11: The move would allow the government-sponsored mortgage companies to increase debt holdings for six months.
Mortgage rates edge up
Oct 11: Employment figures push fixed 30-year rate up to 6.4%, according to a weekly report.
Sources: CAR, SRAR, AP, CNN, USA Today.
Foreclosures drop, but they're nearly double 2006Home foreclosure filings dropped 8 percent in September, nearly twice what they were a year ago.
House OKs $1 billion-a-year housing fundThe House of Representatives approved legislation Wednesday that would siphon off up to $1 billion a year from Fannie Mae, Freddie Mac and the Federal Housing Administration to build affordable rental housing and provide down-payment assistance for first-time home buyers.
C.A.R.'s California Housing Market Forecast for 2008:Statewide median price down, pace of sales decline moderates after tumultuous 2007 Home prices throughout most of California will post modest declines next year while sales of existing homes will stabilize from the precipitous decrease experienced in 2007, according to C.A.R.'s "2008 California Housing Market Forecast" released today.
C.A.R. reports sales decrease 27.8 percent in August, entry-level median home price falls 5. 1 percent Home sales decreased 27.8 percent in August in California compared with the same period a year ago, while the median price of an existing home increased 2 percent.
USA Today: Home builders' foundations shift with shaky market10/09/2007Home builders are bracing for what many predict will turn out to be a more painful market correction than the real estate downturn of the 1980s.
Associated Press: Foreclosures drop, but they're nearly double 200610/10/2007Home foreclosure filings fell 8 percent in September, but are still at levels nearly twice what they were a year ago.
September foreclosures fall
10:06am: Mortgage delinquencies slip 8% nationwide; Sun Belt, Rust Belt states continue to dominate top foreclosure rates, according to a monthly survey.
Dems OK on Fannie, Freddie caps
Oct 11: The move would allow the government-sponsored mortgage companies to increase debt holdings for six months.
Mortgage rates edge up
Oct 11: Employment figures push fixed 30-year rate up to 6.4%, according to a weekly report.
Sources: CAR, SRAR, AP, CNN, USA Today.
Sunday, October 7, 2007
Weekly Roundup October 1-7
The news in real estate in bullet points!
* San Fernando Valley: 33% decline in home sales, yet median resale price continues to rise
* Santa Clarita Valley single-family home sales off 26%, prices down 9%
* Antelope Valley has not published new numbers since early September. Hopefully it will be posted next week.
* Gov. Schwarzenegger announced Wednesday he intends to sign two bills aimed at protecting homeowners from falling prey to unscrupulous lending practices.
* The Mortgage Tax Relief Bill (H.R. 3648) passed the House on 10/4, next step is the Senate. Officially termed the “Mortgage Debt Forgiveness Relief Act,” the bill passed by a wide bipartisan majority [386-27] to help address the subprime lending crisis and ongoing turmoil in the housing market.
* August National Association of Realtors Pending Home Sale Index released 10/2 is at an all-time low, but was expected considering the severe credit crunch. Expect September numbers to also be artificially depressed, but with credit market problems largely over, NAR expects October numbers, released in early December to be better.
* Up to 30% of accepted contracts fell through during escrow in August, mostly due to the changes in the mortgage programs.
Other Economic Numbers:
* Job Growth back on track in September. August number revised to a gain.
* Factory-order drop was the worst in 7 months
* Unemployment claims soar, higher numbers than national average in the Southern California area.
* Expect a less than stellar holiday season with average Holiday Sales rising 2-5% (most numbers at the lower end of the range), versus last year’s sales rising 4.6% over the prior year.
* Federal Reserve meets October 30-31. Next rate announcement on Halloween. Most expect at least one or two more quarter-point drops by the end of the year.
* Announcement this past week that CitiBank and other banking companies consider their losses from the mortgage sector to be a one-time hit. CitiBank expects following quarter to be back to normal. These announcements helped fuel the stock market hitting new record highs this past week.
* Fannie Mae stated mortgage rates eased a little bit this week: 30-year prime conforming mortgages was 6.37% versus 6.42% last week. 15y fixed averages 6.03%, 5/1 adjustible hybrid 6.11%, 1y adj 5.58% (all these numbers were on programs with 1/2 point in upfront fees and charges). Jumbo loans (over $417k) were 1/2 to a full percentage point more expensive versus the conforming programs.
Sources: Southland Association of Realtors, KNX-AM los Angeles, CNN, Sacramento Bee
For further information, please contact changhomes@gmail.com.
Latest Housing Numbers in the Tri-Valley Area
San Fernando Valley: 33% decline in home sales, yet median resale price continues to rise
Realtors helped negotiate and complete a total of 552 single-family home sales throughout the San Fernando Valley during August, a drop of 33.1 percent compared to the 825 sales of August 2006, the Southland Regional Association of Realtors reported Monday, Oct. 1.
Condominium sales of 188 units were 40.7 percent below year ago levels.
The median price of single-family homes that changed owners during August was $645,000, up 5.7 percent compared to a year ago. The August median price was $10,000 below the record high median price of $655,000 which was set in June.
The condominium median price of $389,000 was down 2.8 percent from a year ago and off 4.5 percent from this July. The record high median condo price of $415,000 was set in February 2006.
Lenders continue to offer a wide variety of loan options at attractive terms and low interest rates. No doubt, it takes longer to obtain a loan and lending is stricter, conforming to traditional standards – such as, showing proof of income, savings and a consistent, solid credit history. Yet by no means does the disappearance of loans in the sub-prime market – where loans were made to buyers with shaky or no credit – suggest that this is a difficult time to obtain a mortgage.
There were 7,706 active listings at the end of August, up 12.8 percent from a year ago. Of that total, 5,566 listings were single-family homes and 2,140 were condominiums.
At the current pace of sales, the total active inventory represents a 10.4-month supply. August was the first month since September 1995 that the supply broke into double digits.
While a 10.4-month supply is above the 5- to 6-month inventor that real estate experts believe represents a balanced market, it still is well below peak levels reported during the national recession of the 1990s and the restructuring of the local economy.
The inventory peaked in July 1992 with a record 14,976 active listings – which equaled a 17.6-month supply at the then current pace of sales. In February 1993 the inventory compared to the pace of sales hit a record 23.0-month supply.
At the height of the recent sellers’ market the inventory often hovered at barely a 1-month supply.
Santa Clarita Valley single-family home sales off 26%, prices down 9%
Single-family homes sales in the Santa Clarita Valley during August totaled 186 transaction, down 25.6 percent from a year ago, the Southland Regional Association of Realtors reported on Monday, Oct. 1.
It was the second lowest tally for the month, behind the 169 sales reported in August of 1997, however, the 25.6 percent drop was lower than the statewide average decline in resale activity of 28 percent.
The median price of single-family homes sold during August in the Santa Clarita Valley was $560,000.
That was down 8.9 percent from a year ago, or $55,000 lower than the August 2006 median of $615,000 – well above the statewide median price of $588,070. The record high median price of single-family homes in the Santa Clarita Valley of $643,000 was set in April of 2006.
Realtors also negotiated a total of 63 condominiums sales last month, down 40.6 percent from a year ago.
The median price of condominiums that changed owners during August was off 2.2 percent to $362,000 from a year ago August when the median was $370,000.The record high condo median of $397,000 was set in January of 2006.
There were 2,509 properties listed for sale throughout the Santa Clarita Valley at the end of August. That was down 3.4 percent from a year ago, but up 6.4 percent from the July tally. Of that total1,852 were single-family homes and 657 were condominiums.
At the current pace of sales the inventory represents a 10.2-month supply – above the 5- to 6-month inventory that Realtors believe represents a balanced market. At the height of the recently concluded sellers’ boom market, the inventory hovered for many months at less than 1-month supply.
Antelope Valley has not published new numbers since early September. Hopefully it will be posted next week.
Realtors helped negotiate and complete a total of 552 single-family home sales throughout the San Fernando Valley during August, a drop of 33.1 percent compared to the 825 sales of August 2006, the Southland Regional Association of Realtors reported Monday, Oct. 1.
Condominium sales of 188 units were 40.7 percent below year ago levels.
The median price of single-family homes that changed owners during August was $645,000, up 5.7 percent compared to a year ago. The August median price was $10,000 below the record high median price of $655,000 which was set in June.
The condominium median price of $389,000 was down 2.8 percent from a year ago and off 4.5 percent from this July. The record high median condo price of $415,000 was set in February 2006.
Lenders continue to offer a wide variety of loan options at attractive terms and low interest rates. No doubt, it takes longer to obtain a loan and lending is stricter, conforming to traditional standards – such as, showing proof of income, savings and a consistent, solid credit history. Yet by no means does the disappearance of loans in the sub-prime market – where loans were made to buyers with shaky or no credit – suggest that this is a difficult time to obtain a mortgage.
There were 7,706 active listings at the end of August, up 12.8 percent from a year ago. Of that total, 5,566 listings were single-family homes and 2,140 were condominiums.
At the current pace of sales, the total active inventory represents a 10.4-month supply. August was the first month since September 1995 that the supply broke into double digits.
While a 10.4-month supply is above the 5- to 6-month inventor that real estate experts believe represents a balanced market, it still is well below peak levels reported during the national recession of the 1990s and the restructuring of the local economy.
The inventory peaked in July 1992 with a record 14,976 active listings – which equaled a 17.6-month supply at the then current pace of sales. In February 1993 the inventory compared to the pace of sales hit a record 23.0-month supply.
At the height of the recent sellers’ market the inventory often hovered at barely a 1-month supply.
Santa Clarita Valley single-family home sales off 26%, prices down 9%
Single-family homes sales in the Santa Clarita Valley during August totaled 186 transaction, down 25.6 percent from a year ago, the Southland Regional Association of Realtors reported on Monday, Oct. 1.
It was the second lowest tally for the month, behind the 169 sales reported in August of 1997, however, the 25.6 percent drop was lower than the statewide average decline in resale activity of 28 percent.
The median price of single-family homes sold during August in the Santa Clarita Valley was $560,000.
That was down 8.9 percent from a year ago, or $55,000 lower than the August 2006 median of $615,000 – well above the statewide median price of $588,070. The record high median price of single-family homes in the Santa Clarita Valley of $643,000 was set in April of 2006.
Realtors also negotiated a total of 63 condominiums sales last month, down 40.6 percent from a year ago.
The median price of condominiums that changed owners during August was off 2.2 percent to $362,000 from a year ago August when the median was $370,000.The record high condo median of $397,000 was set in January of 2006.
There were 2,509 properties listed for sale throughout the Santa Clarita Valley at the end of August. That was down 3.4 percent from a year ago, but up 6.4 percent from the July tally. Of that total1,852 were single-family homes and 657 were condominiums.
At the current pace of sales the inventory represents a 10.2-month supply – above the 5- to 6-month inventory that Realtors believe represents a balanced market. At the height of the recently concluded sellers’ boom market, the inventory hovered for many months at less than 1-month supply.
Antelope Valley has not published new numbers since early September. Hopefully it will be posted next week.
Sunday, September 30, 2007
News Roundup for the last week of September 2007
For additional news articles, view my newsletter’s articles at http://changhomes1.blogspot.com/. To subscribe, please email changhomes@gmail.com.
Locally, we expect the latest housing market statistics this upcoming week. Look for the latest information on home sales in the Tri-Valley area in next week’s summary.
The LA Times report that new solar-powered homes are beginning to outsell traditionally wired new homes in several markets, catching the attention of developers across the state. (9/25)
Nationally,
Sales of new single-family homes in August slid 8.3 percent according to the latest data from the U.S. Census Bureau and Department of Housing and Urban Development. (9/27)
Mortgage Bankers Association states application volume for the week ending Sept. 21 declined 2.8 percent to 654.2, down from 673.2 a week ago. (9/26)
U.S. Housing and Urban Development Assistant Secretary Darlene Williams says mortgage defaults are stabilizing, and subprime loans are still needed. (9/24 via AP)
CNN featured two organizations that are helping families prevent foreclosures. "In the past, most people came to us seeking advice on how to buy a home. Today, they're looking for advice on how to save a home," said Doug Robinson, spokesman for Neighborworks.
Tracy Morgan is a spokeswoman for the Home Ownership Preservation Foundation, which operates a foreclosure hotline (1-800-995-HOPE) for Neighborworks. Last year, she said, the hotline handled about 75 calls a day nationwide. By June, 2007, the number ballooned to 750. For this September, the average day has brought about 1,300 calls.
CNN also reports Housing markets continued to slump across the nation in August as the number of existing homes sold dropped for the sixth straight month to their lowest level in five years, according to the latest report from the National Association of Realtors. Sales fell 4.3 percent from July to a seasonally adjusted annualized rate of 5.50 million. Sales have fallen 12.8 percent since last August's pace of 6.31 million homes.
Lawrence Yun, senior economist for NAR, blamed the current credit crunch. "The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through," he said in a statement.
The slump pushed up the inventory glut to 4.58 million existing homes, an all-time high. There is now a 10-month supply of homes on the market at the present rate of sales.
For more information or a copy from the primary source, please email changhomes@gmail.com.
Locally, we expect the latest housing market statistics this upcoming week. Look for the latest information on home sales in the Tri-Valley area in next week’s summary.
The LA Times report that new solar-powered homes are beginning to outsell traditionally wired new homes in several markets, catching the attention of developers across the state. (9/25)
Nationally,
Sales of new single-family homes in August slid 8.3 percent according to the latest data from the U.S. Census Bureau and Department of Housing and Urban Development. (9/27)
Mortgage Bankers Association states application volume for the week ending Sept. 21 declined 2.8 percent to 654.2, down from 673.2 a week ago. (9/26)
U.S. Housing and Urban Development Assistant Secretary Darlene Williams says mortgage defaults are stabilizing, and subprime loans are still needed. (9/24 via AP)
CNN featured two organizations that are helping families prevent foreclosures. "In the past, most people came to us seeking advice on how to buy a home. Today, they're looking for advice on how to save a home," said Doug Robinson, spokesman for Neighborworks.
Tracy Morgan is a spokeswoman for the Home Ownership Preservation Foundation, which operates a foreclosure hotline (1-800-995-HOPE) for Neighborworks. Last year, she said, the hotline handled about 75 calls a day nationwide. By June, 2007, the number ballooned to 750. For this September, the average day has brought about 1,300 calls.
CNN also reports Housing markets continued to slump across the nation in August as the number of existing homes sold dropped for the sixth straight month to their lowest level in five years, according to the latest report from the National Association of Realtors. Sales fell 4.3 percent from July to a seasonally adjusted annualized rate of 5.50 million. Sales have fallen 12.8 percent since last August's pace of 6.31 million homes.
Lawrence Yun, senior economist for NAR, blamed the current credit crunch. "The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through," he said in a statement.
The slump pushed up the inventory glut to 4.58 million existing homes, an all-time high. There is now a 10-month supply of homes on the market at the present rate of sales.
For more information or a copy from the primary source, please email changhomes@gmail.com.
Sunday, September 23, 2007
Weekly Real Estate News Roundup: Sep. 16-23
NEW YORK (AP) -- Last Tuesday, Wall Street got exactly what it was angling for: a half-point reduction in interest rates. Now it wants to make sure rates will stay low.
This week, investors will be looking for signs that inflation is under control. If prices accelerate, the Federal Reserve may bump rates back up. The market is also hoping that readings on durable goods demand, the housing market and consumer spending power will show that the economy isn't heading for recession.
The personal consumption expenditures deflator is released in the Labor Department's Friday report on personal spending. The core PCE, which eliminates volatile food and energy prices, is anticipated to show a year-over-year rise of 1.9 percent, according to the median estimate of economists surveyed by Thomson Financial.
Meanwhile, personal spending in August is expected to have risen by 0.3 percent after increasing by 0.5 percent. Though it's not directly correlated, investors will try to gauge future spending patterns through consumer confidence reports from the Conference Board and the University of Michigan, on Tuesday and Friday, respectively.
Bad news on the housing front has become a given on Wall Street, but market participants will continue to monitor the industry's failing health. On Tuesday, the National Association of Realtors reports on existing home sales and homebuilder Lennar Corp. releases its quarterly earnings. Later, on Thursday, the Commerce Department comes out with its new home sales data, and KB Home posts its earnings.
The Commerce Department's Wednesday report on August durable goods orders will be particularly important. Economists are anticipating a 3.1 percent decline, following a solid 5.9 percent advance in July.
The next day, the Commerce Department releases its final measure of second-quarter gross domestic product, and Friday, the Chicago purchasing managers index of September manufacturing activity in the Midwest. The Chicago PMI is seen as a precursor to next week's September manufacturing report from the Institute for Supply Management.
Besides economic data, Wall Street will be watching out for profit warnings from companies ahead of October's flood of third-quarter earnings. Investors are a bit nervous about how corporate America fared during August's stock market volatility and credit tightness, but they are optimistic at this point, particularly given that international growth is a big source of income for many companies.
Source: Associated Press
This week, investors will be looking for signs that inflation is under control. If prices accelerate, the Federal Reserve may bump rates back up. The market is also hoping that readings on durable goods demand, the housing market and consumer spending power will show that the economy isn't heading for recession.
The personal consumption expenditures deflator is released in the Labor Department's Friday report on personal spending. The core PCE, which eliminates volatile food and energy prices, is anticipated to show a year-over-year rise of 1.9 percent, according to the median estimate of economists surveyed by Thomson Financial.
Meanwhile, personal spending in August is expected to have risen by 0.3 percent after increasing by 0.5 percent. Though it's not directly correlated, investors will try to gauge future spending patterns through consumer confidence reports from the Conference Board and the University of Michigan, on Tuesday and Friday, respectively.
Bad news on the housing front has become a given on Wall Street, but market participants will continue to monitor the industry's failing health. On Tuesday, the National Association of Realtors reports on existing home sales and homebuilder Lennar Corp. releases its quarterly earnings. Later, on Thursday, the Commerce Department comes out with its new home sales data, and KB Home posts its earnings.
The Commerce Department's Wednesday report on August durable goods orders will be particularly important. Economists are anticipating a 3.1 percent decline, following a solid 5.9 percent advance in July.
The next day, the Commerce Department releases its final measure of second-quarter gross domestic product, and Friday, the Chicago purchasing managers index of September manufacturing activity in the Midwest. The Chicago PMI is seen as a precursor to next week's September manufacturing report from the Institute for Supply Management.
Besides economic data, Wall Street will be watching out for profit warnings from companies ahead of October's flood of third-quarter earnings. Investors are a bit nervous about how corporate America fared during August's stock market volatility and credit tightness, but they are optimistic at this point, particularly given that international growth is a big source of income for many companies.
Source: Associated Press
Tuesday, September 18, 2007
Economics of Mortgage Rates
Originally Published January 2007:
This week, I received a bit of news from the economic front, but before I get to it, some background. Looking over the past year, you might have heard "The Fed" keeping interest rates stable and raising them on at least one occasion. These rates that the Fed determines don't directly affect the mortgage rates. They affect credit card and savings interest rates, which affect how people buy, save, and spend money. Mortgage rates are more closely tied to treasury bonds' interest rates.
Bond prices have been disappointing over the past week, and the effect is that home loan rates have increased - about .125% higher across the board.
As a REALTOR(R), I focus on providing the utmost service to my buyers to find the right home with the least amount of their effort and to my sellers to sell their home at the best price and at the shortest time possible. I rely on my support circle of lenders to provide the day-to-day analysis of mortgage rates and assist my buyers with the best mortgage programs available.
You can check out http://www.bankrate.com to find the latest mortgage rates nationwide. Of course there are tools available not only there but on my website, http://www.changhomes.net.
Fed cuts interest rate by 1/2% - to 4.75% - and signals more cuts could be coming
The Federal Reserve cut the target on a key short-term interest rate by half of a percentage point Tuesday to 4.75% in a bold acknowledgement that the central bank is concerned the mortgage meltdown plaguing Wall Street and Main Street could hurt the economy.
The Fed also indicated that more rate cuts could be on the way, news that investors cheered.
The cut to the federal funds rate, the first since June 2003, was widely anticipated by investors and followed a surprise cut to the Fed's discount rate on Aug. 17. The only question was whether the Fed would lower the federal funds rate by 25 basis points or 50 basis points. (There are 100 basis points in a full percentage point.)
On Tuesday, the Fed also cut its discount rate by another half of a point to 5.25 percent. The central bank said that the vote to lower both rates was unanimous.
Some investors had thought that Fed chair Ben Bernanke would take a more cautious approach and not cut rates by such a large margin, because a half-point cut could signal the Fed was acting out of desperation to save the economy.
The federal funds rate, an overnight lending rate that banks charge each other, is important since it influences the amount of interest consumers must pay for various types of debt, such as credit cards, home equity lines of credit and auto loans. The rate cut should help some beleaguered home borrowers who are set to see monthly payments on adjustable rate mortgages rise later this year.
In its statement, the Fed said that "the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally" and that the rate cut "is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."
The Fed cut also hurts rates of return on investments, which gives foreign investors less incentive to invest in US securities. This has sent the Dollar much lower against the currency of most major foreign countries. This makes foreign goods more expensive for us to buy, which adds to inflation pressures.
Overall, the Fed cut is good news for the economy, but may nudge inflation a bit higher.
Although the federal funds rate and the discount rate doesn't directly affect mortgage interest rates, there will be a trickle-down effect. Already stocks had its largest gain since 2003, and bond rates are likely to decrease more, which will likely push mortgage rates down.
How do bond rates affect mortgage rates? I'll post an FAQ that was published in my newsletter earlier this year.
Sources: CNN and MMG II, LLC.
The Fed also indicated that more rate cuts could be on the way, news that investors cheered.
The cut to the federal funds rate, the first since June 2003, was widely anticipated by investors and followed a surprise cut to the Fed's discount rate on Aug. 17. The only question was whether the Fed would lower the federal funds rate by 25 basis points or 50 basis points. (There are 100 basis points in a full percentage point.)
On Tuesday, the Fed also cut its discount rate by another half of a point to 5.25 percent. The central bank said that the vote to lower both rates was unanimous.
Some investors had thought that Fed chair Ben Bernanke would take a more cautious approach and not cut rates by such a large margin, because a half-point cut could signal the Fed was acting out of desperation to save the economy.
The federal funds rate, an overnight lending rate that banks charge each other, is important since it influences the amount of interest consumers must pay for various types of debt, such as credit cards, home equity lines of credit and auto loans. The rate cut should help some beleaguered home borrowers who are set to see monthly payments on adjustable rate mortgages rise later this year.
In its statement, the Fed said that "the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally" and that the rate cut "is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."
The Fed cut also hurts rates of return on investments, which gives foreign investors less incentive to invest in US securities. This has sent the Dollar much lower against the currency of most major foreign countries. This makes foreign goods more expensive for us to buy, which adds to inflation pressures.
Overall, the Fed cut is good news for the economy, but may nudge inflation a bit higher.
Although the federal funds rate and the discount rate doesn't directly affect mortgage interest rates, there will be a trickle-down effect. Already stocks had its largest gain since 2003, and bond rates are likely to decrease more, which will likely push mortgage rates down.
How do bond rates affect mortgage rates? I'll post an FAQ that was published in my newsletter earlier this year.
Sources: CNN and MMG II, LLC.
Sunday, September 16, 2007
Weekly Real Estate News Roundup: Week of Sep 10-16
This week's news roundup on the Real Estate markets:
Countrywide workers sue company
Sep 12: The mortgage lender's employees say the value of retirement accounts plummeted by millions as the company's stock fell.
Mortgage rates tumble
Sep 13: Fixed 30-year rate slips to 6.31% and may help home buyers looking to reset rates, says Freddie Mac. The government-sponsored loan buyer said the average rate on a 30-year fixed-rate loan averaged 6.31 percent for the week ended Sept. 13, down from 6.46 percent last week. Last year at this time, 30-year mortgage rates averaged 6.43 percent.
Hottest housing markets
The top 10 U.S. counties ranked by housing growth rate were in Arizona and Florida, primarily. (U.S. Census Bureau/CNNMoney.com)
Greenspan: I didn't grasp subprime threat
Sep 13: Former Federal Reserve Chairman says he didn't see early on the damage that lending to those with questionable credit could do to the economy. In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where home buyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do. (AP)
Realtors: Home price slump through '08
Sep 12: Home values and housing sales will take an even bigger hit than previously forecast and will not recover to their earlier levels throughout all of 2008, at least, according to the latest economic outlook from the National Association of Realtors released Tuesday.
Builder Hovnanian offers extreme discounts
Sep 13: The company resorts to 20-percent or six-figure discounts on some of its properties this weekend, amid the worst housing downturn in 16 years. The sales blitz involves dropping prices by more than 20 percent on some of its prime real estate.
Mortgage apps up in short week
Sep 12: Mortgage Bankers Association reports 5.5 percent increase in Memorial Day week and uptick in refinancing activity as well. Taking into account the Labor Day holiday, the industry group's seasonally adjusted index of mortgage applications climbed 5.5 percent to 657.4 in the week ended Sept. 7, from 622.9 one week earlier. The four-week moving average, which smoothes out volatility in the weekly figures, fell by 0.8 percent.
Washington Mutual sees more 2007 loan losses
Sep 10: Washington Mutual Inc said on Monday that most U.S. housing markets are weakening, creating a "near perfect storm" that may force the largest U.S. savings and loan to set aside more money for bad loans. (Reuters)
NATIONAL ASSOCIATION OF REALTORS®: Mortgage Problems to Dampen Home Sales in the Short Term
09/11/2007: Tougher lending practices will continue to stall sales activity for the short term and extend recovery of existing-home sales into 2008.
Reuters: U.S. FTC warns some mortgage ads may violate law
09/11/07-The U.S. FTC is warning mortgage brokers and lenders that some TV, online, and print advertisements for home mortgages could be deceptive and possibly illegal.
Mortgage Bankers Association: Holiday-Adjusted Mortgage Applications Increase
09/12/2007 -The Mortgage Bankers Association reports that mortgage applications were up 5.5 percent for the week ending Sept. 7.
USA Today: Greenspan says he was slow to see subprime danger
09/14/2007-Former Federal Reserve chairman Alan Greenspan says he didn’t anticipate a surge in subprime loans would have a negative impact on the nation’s economy.
JD Power & Associates show a increase in customer satisfaction among new home buyers. (KNX-AM, 9/12/2007)
John Caravall (ph), Real Estate Analyst with DataQuick Information Systems states that number of homes sold in August was the slowest since August 1992. Overall, price in SoCal average $500,000, up 2.7% year-over-year, but down from the peak of $505,000. The upper end market continues to go “pretty good,” while the entry market is not. When taking this into account they show a 3.5% decrease in home prices versus last year when they take a look at like-kind homes. (KNX-AM, 9/12/2007)
UCLA Anderson Forecast shows housing problems will bring SoCal economy to the brink of recession, but the hosing problems will stay mainly in that sector. The rest of the economy will get along well and continue to do so. (KNX-AM, 9/12/2007)
Sources: Associated Press, Reuters, KNX-AM Los Angeles, California Association of Realtors and CNN.
Countrywide workers sue company
Sep 12: The mortgage lender's employees say the value of retirement accounts plummeted by millions as the company's stock fell.
Mortgage rates tumble
Sep 13: Fixed 30-year rate slips to 6.31% and may help home buyers looking to reset rates, says Freddie Mac. The government-sponsored loan buyer said the average rate on a 30-year fixed-rate loan averaged 6.31 percent for the week ended Sept. 13, down from 6.46 percent last week. Last year at this time, 30-year mortgage rates averaged 6.43 percent.
Hottest housing markets
The top 10 U.S. counties ranked by housing growth rate were in Arizona and Florida, primarily. (U.S. Census Bureau/CNNMoney.com)
Greenspan: I didn't grasp subprime threat
Sep 13: Former Federal Reserve Chairman says he didn't see early on the damage that lending to those with questionable credit could do to the economy. In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where home buyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do. (AP)
Realtors: Home price slump through '08
Sep 12: Home values and housing sales will take an even bigger hit than previously forecast and will not recover to their earlier levels throughout all of 2008, at least, according to the latest economic outlook from the National Association of Realtors released Tuesday.
Builder Hovnanian offers extreme discounts
Sep 13: The company resorts to 20-percent or six-figure discounts on some of its properties this weekend, amid the worst housing downturn in 16 years. The sales blitz involves dropping prices by more than 20 percent on some of its prime real estate.
Mortgage apps up in short week
Sep 12: Mortgage Bankers Association reports 5.5 percent increase in Memorial Day week and uptick in refinancing activity as well. Taking into account the Labor Day holiday, the industry group's seasonally adjusted index of mortgage applications climbed 5.5 percent to 657.4 in the week ended Sept. 7, from 622.9 one week earlier. The four-week moving average, which smoothes out volatility in the weekly figures, fell by 0.8 percent.
Washington Mutual sees more 2007 loan losses
Sep 10: Washington Mutual Inc said on Monday that most U.S. housing markets are weakening, creating a "near perfect storm" that may force the largest U.S. savings and loan to set aside more money for bad loans. (Reuters)
NATIONAL ASSOCIATION OF REALTORS®: Mortgage Problems to Dampen Home Sales in the Short Term
09/11/2007: Tougher lending practices will continue to stall sales activity for the short term and extend recovery of existing-home sales into 2008.
Reuters: U.S. FTC warns some mortgage ads may violate law
09/11/07-The U.S. FTC is warning mortgage brokers and lenders that some TV, online, and print advertisements for home mortgages could be deceptive and possibly illegal.
Mortgage Bankers Association: Holiday-Adjusted Mortgage Applications Increase
09/12/2007 -The Mortgage Bankers Association reports that mortgage applications were up 5.5 percent for the week ending Sept. 7.
USA Today: Greenspan says he was slow to see subprime danger
09/14/2007-Former Federal Reserve chairman Alan Greenspan says he didn’t anticipate a surge in subprime loans would have a negative impact on the nation’s economy.
JD Power & Associates show a increase in customer satisfaction among new home buyers. (KNX-AM, 9/12/2007)
John Caravall (ph), Real Estate Analyst with DataQuick Information Systems states that number of homes sold in August was the slowest since August 1992. Overall, price in SoCal average $500,000, up 2.7% year-over-year, but down from the peak of $505,000. The upper end market continues to go “pretty good,” while the entry market is not. When taking this into account they show a 3.5% decrease in home prices versus last year when they take a look at like-kind homes. (KNX-AM, 9/12/2007)
UCLA Anderson Forecast shows housing problems will bring SoCal economy to the brink of recession, but the hosing problems will stay mainly in that sector. The rest of the economy will get along well and continue to do so. (KNX-AM, 9/12/2007)
Sources: Associated Press, Reuters, KNX-AM Los Angeles, California Association of Realtors and CNN.
Sunday, September 9, 2007
Weekly News Break: Week of Sep 3-9
This is a briefing of the week's news affecting the real estate industry for my clients and prospective buyers and sellers in the "tri-Valley" area of Northern Los Angeles County.
This week’s national news focuses on news released Friday by the Labor Department showed the nation's payrolls shrank by 4,000 in August. It was the first decline in jobs since August 2003. Most experts were expecting a slight increase in jobs – so this was quite a surprise, causing the market to fall nearly 250 points on Friday. It also increases pressure on the Fed to decrease the Federal Funds Rate during its meeting on September 18 by 1/2 or 1/4 points.
Subprime Finger Pointing Begins! In a Fortune magazine article, Peter Eavis shows there’s enough blame to go around for the Subprime/Housing crisis. In a review of the role of borrowers, lenders, appraisers, Wall Street and others, the Federal Reserve appears to come up with the most blame. Portions of the article are found at CNN:
http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune/index.html
More layoffs in the mortgage and title industry. Countrywide announces layoffs for 1300 more workers to add to the prior layoffs of 900 and 600 employees nationwide. It is expected that a lot of the cuts will affect its headquarters in the Los Angeles suburb of Calabasas. Santa Ana-based title insurer First American plans to lay off 1,300 workers and shutter more than a dozen offices in an effort to ride out the housing market’s slowdown.
July home sales figures released. Santa Clarita Valley home sales down 18%; Median price of $570,000 off 5.8% - San Fernando Valley home sales down 24% during July; median price of $630,000 up 4% - Antelope Valley home sales down 57%; median price $333,984 down 7% from 2006. From my perspective, it is because the upper end homes of the San Fernando are still selling well. The buyers in this price range are not as much affected by the subprime mortgage mess and the withdraw of many loan programs from lenders. Some of the median home price increases therefore can be attributed to a greater percentage higher-end homes changing hands versus those at the other end of the spectrum.
Mortgage Bankers Association states foreclosures hit record highs during the 2nd quarter. The number of mortgage-holders who entered into foreclosure activity during the April-June quarter reached 0.65 percent.
Pending Home Sales Index down 12.2% in July. Tighter lending practices in the mortgage sector resulted in a 12.2 percent decline in July compared with June in the number of pending home sales contracts, according to the NATIONAL ASSOCIATION OF REALTORS® Pending Home Sales Index. NAR's index, a leading indicator of future existing home sales, shows a reading of 89.9 in July compared with 102.4 in June. The July index is down 16.1 percent from July 2006 when the reading stood at 107.1. "These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers," said Lawrence Yun, NAR's senior economist.
Construction Spending falls 0.4% in July. U.S. construction spending fell 0.4 percent in July compared with June, the sharpest decline since January, the Commerce Department said Tuesday. Spending dropped to a seasonally adjusted annual rate of $1,169.1 billion, not the flat showing analysts had predicted for the month. Total residential construction spending in July was down 1.4 percent at $541.9 billion compared with June at $549.7 billion, and $642.2 billion in July 2006. Residential construction figures account for the building industry's worst slump in 16 years and reflect a continued slowdown of construction plans as builders focus on moving stagnant inventories.
For additional information or background data for any of these news stories, contact Wayne Chang at changhomes@gmail.com.
News Sources:
AP, KNX-AM 1070 Los Angeles, Southland Regional Association of Realtors, Los Angeles Times, email from California Association of Realtors and National Association of Realtors
This week’s national news focuses on news released Friday by the Labor Department showed the nation's payrolls shrank by 4,000 in August. It was the first decline in jobs since August 2003. Most experts were expecting a slight increase in jobs – so this was quite a surprise, causing the market to fall nearly 250 points on Friday. It also increases pressure on the Fed to decrease the Federal Funds Rate during its meeting on September 18 by 1/2 or 1/4 points.
Subprime Finger Pointing Begins! In a Fortune magazine article, Peter Eavis shows there’s enough blame to go around for the Subprime/Housing crisis. In a review of the role of borrowers, lenders, appraisers, Wall Street and others, the Federal Reserve appears to come up with the most blame. Portions of the article are found at CNN:
http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune/index.html
More layoffs in the mortgage and title industry. Countrywide announces layoffs for 1300 more workers to add to the prior layoffs of 900 and 600 employees nationwide. It is expected that a lot of the cuts will affect its headquarters in the Los Angeles suburb of Calabasas. Santa Ana-based title insurer First American plans to lay off 1,300 workers and shutter more than a dozen offices in an effort to ride out the housing market’s slowdown.
July home sales figures released. Santa Clarita Valley home sales down 18%; Median price of $570,000 off 5.8% - San Fernando Valley home sales down 24% during July; median price of $630,000 up 4% - Antelope Valley home sales down 57%; median price $333,984 down 7% from 2006. From my perspective, it is because the upper end homes of the San Fernando are still selling well. The buyers in this price range are not as much affected by the subprime mortgage mess and the withdraw of many loan programs from lenders. Some of the median home price increases therefore can be attributed to a greater percentage higher-end homes changing hands versus those at the other end of the spectrum.
Mortgage Bankers Association states foreclosures hit record highs during the 2nd quarter. The number of mortgage-holders who entered into foreclosure activity during the April-June quarter reached 0.65 percent.
Pending Home Sales Index down 12.2% in July. Tighter lending practices in the mortgage sector resulted in a 12.2 percent decline in July compared with June in the number of pending home sales contracts, according to the NATIONAL ASSOCIATION OF REALTORS® Pending Home Sales Index. NAR's index, a leading indicator of future existing home sales, shows a reading of 89.9 in July compared with 102.4 in June. The July index is down 16.1 percent from July 2006 when the reading stood at 107.1. "These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers," said Lawrence Yun, NAR's senior economist.
Construction Spending falls 0.4% in July. U.S. construction spending fell 0.4 percent in July compared with June, the sharpest decline since January, the Commerce Department said Tuesday. Spending dropped to a seasonally adjusted annual rate of $1,169.1 billion, not the flat showing analysts had predicted for the month. Total residential construction spending in July was down 1.4 percent at $541.9 billion compared with June at $549.7 billion, and $642.2 billion in July 2006. Residential construction figures account for the building industry's worst slump in 16 years and reflect a continued slowdown of construction plans as builders focus on moving stagnant inventories.
For additional information or background data for any of these news stories, contact Wayne Chang at changhomes@gmail.com.
News Sources:
AP, KNX-AM 1070 Los Angeles, Southland Regional Association of Realtors, Los Angeles Times, email from California Association of Realtors and National Association of Realtors
Tuesday, September 4, 2007
What does the Fed Discount Rate Cut mean to you?
I received the following text in an email explaining the Federal Reserve Discount Rate reduction, which I featured in my last blog and my newsletter of 9/3/2007 (articles can be found at http://changhomes1.blogspot.com/):
The Federal Reserve has taken significant action lately due to the credit crunch. And now they've made an unexpected move by cutting the discount window rate, which is great news. We'll get to that in a minute, but first let's look at recent events and understand what they mean.
Market movement
To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: borrowers who want to take out non-conforming loans have fewer, more expensive options.
Many media outlets have incorrectly added fuel to the fire by stating mortgage lending has stopped altogether and borrowers can't get a loan without a 20% down-payment. This is not true.
Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.
What did the Fed do?
Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.
How exactly does this provide stability? Here's an example: imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you’ll eventually be reimbursed by your insurance company, you still need the cash now. So, do you sell off stocks to get the cash, or tap into an equity line of credit?
Most likely, you draw from that line of credit rather than liquidating a long-term investment.
This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.
It's important to note the discount rate is different than the Fed Funds Rate, which directly impacts interest rates you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact home loan rates.
What should you do now?
Information, knowledge, and expertise are the building blocks of sound financial decision making. If you are considering financing or are in the process of financing a home, you should tap into the knowledge and resources of a skilled mortgage professional. I would welcome the chance to help you navigate these choppy financial waters.
And even if you are not presently planning on any home financing--it still pays to make sure your credit score is as high as possible, in case a credit or lending need does come up before you expect it.
Again, please feel free to contact me--I am ready to help on all fronts.
For additional information or background data for any of these news stories, contact Wayne Chang at changhomes@gmail.com.
News Sources:
Mortgage Market Guide, LLC
The Federal Reserve has taken significant action lately due to the credit crunch. And now they've made an unexpected move by cutting the discount window rate, which is great news. We'll get to that in a minute, but first let's look at recent events and understand what they mean.
Market movement
To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: borrowers who want to take out non-conforming loans have fewer, more expensive options.
Many media outlets have incorrectly added fuel to the fire by stating mortgage lending has stopped altogether and borrowers can't get a loan without a 20% down-payment. This is not true.
Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.
What did the Fed do?
Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.
How exactly does this provide stability? Here's an example: imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you’ll eventually be reimbursed by your insurance company, you still need the cash now. So, do you sell off stocks to get the cash, or tap into an equity line of credit?
Most likely, you draw from that line of credit rather than liquidating a long-term investment.
This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.
It's important to note the discount rate is different than the Fed Funds Rate, which directly impacts interest rates you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact home loan rates.
What should you do now?
Information, knowledge, and expertise are the building blocks of sound financial decision making. If you are considering financing or are in the process of financing a home, you should tap into the knowledge and resources of a skilled mortgage professional. I would welcome the chance to help you navigate these choppy financial waters.
And even if you are not presently planning on any home financing--it still pays to make sure your credit score is as high as possible, in case a credit or lending need does come up before you expect it.
Again, please feel free to contact me--I am ready to help on all fronts.
For additional information or background data for any of these news stories, contact Wayne Chang at changhomes@gmail.com.
News Sources:
Mortgage Market Guide, LLC
Sunday, September 2, 2007
Housing Troubles Burden the Poor
According to a new study from the Center for Housing Policy (CHP), released Thursday, August 30, the percentage of low income households forced to spend more than half their earnings for housing needs exploded as housing prices boomed.
From 1997 to 2005, the study said, the number of low-income workers who rented their homes and spent more than half their income on housing more than doubled to 2.1 million from about 1 million.
Most experts recommend not spending more than 36 percent of your net income on housing costs.
Low-income homeowners fared slightly better; there were 2.4 million of them in 2005, 75 percent more than the 1.4 million in 1997, according to the study.
Fed Chief Gives No Hint of Imminent Rate Cut
The New York Times reports Friday, August 31, that the chairman of the Federal Reserve Board says the central bank is poised to protect the broader economy from the mortgage crisis, but stopped short of promises of a rate cut.
General consensus is that when it meets September 18, the Federal Reserve’s Open Market Committee will drop its Federal Funds Rate, the interest rates banks pay to borrow money from each other, by a quarter to a half point to put it in line with the discount rate (the rate The Fed charges banks to borrow money from it), which was dropped by a half a point on August 17.
First-Time Buyer Housing Affordability Index remains at 24%
California Association of REALTORS®(C.A.R.) announced Thursday, August 29, that the percentage of households that could afford to buy an entry-level home in California stood at 24 percent in the second quarter of2007, compared with 23 percent for the same period a year ago.
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures thepercentage of households that can afford to purchase an entry-level home inCalifornia. C.A.R. also reports first-time buyer indexes for regions and selectcounties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
At 45 percent, the High Desert region of the Antelope and Apple Valleys and Mojave Desert was the most affordable in the state, followed by the Sacramento region at 44 percent. Santa Barbara was the least affordable region in the state at 12 percent, followed by the Monterey region at 17 percent.
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