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