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

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Bush to sign Economic Stimulus Bill on Wednesday – Legislation that gives $300-$600 per person passed both the House and Senate the same day. For details on the legislation, please see my Special Report at http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html or send me an email for a PDF version. (CNBC, 2/10; other sources noted on Special Report)

The stimulus package temporarily raises the maximum size of mortgages that Fannie Mae and Freddie Mac can purchase and market as securities from $417,000 to as high as $729,750 in expensive parts of the country like New York City and California. (AP, 2/8; NAR 2/8)

Homeowners Confident on Market - Despite plenty of evidence to the contrary, 77 percent of homeowners believe that their homes are worth as much or more as they were in 2006, according to a Harris Interactive survey conducted for Zillow.com. And 36 percent say their homes increased in value in 2007. The slow market also isn’t discouraging homeowners from major transactions. Despite what they read and hear about the real estate market, 34 percent say they are equally or more likely to consider selling their homes this year, and 35 percent are just as likely as before to take out a home equity loan. 36 percent would consider a second mortgage. Homeowners continue to forge ahead on projects that they believe improve the value of their homes. (Zillow, 2/7; NAR 2/7, CNNMoney 2/7)

Statewide MLS being established in California - C.A.R.'s board of directors has approved a plan to establish a statewide hybrid multiple listing service for California (the "California MLS"), which will be owned and operated by C.A.R. This effort is focused on providing the most innovative and cost effective MLS services delivered to members through their local association or regional MLS. Its goal is to provide statewide coverage of listing data to all those who choose to participate. (CAR, 2/6)

Home Prices Spark Suit - Two California couples are suing KB Home and mortgage lender Countrywide Financial, contending the companies collaborated with home appraisers to inflate home prices. (San Jose Mercury-News, 2/8)

Home Sales Flat Before Rise - A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®. New-home sales are likely to decline 17.7 percent to 637,000 in 2008 before rising 7.6 percent to 685,000 in 2009. (2/7)

Pending Home Sales Fell 1.5% in December - The NATIONAL ASSOCIATION OF REALTORS® reports that pending sales of previously owned homes trended further downward than expected in December, falling by 1.5 percent. (Reuters, 2/7)
Construction Spending Falls 2.8% in December - Reflecting builders' continuing efforts to balance bloated inventories against a nationwide decline in home sales, residential construction spending in December fell 2.8 percent to $462 billion from the revised November estimate of $475.1 billion. (CAR, 2/6)

Las Vegas tops foreclosure list – the Nevada area has 7 of the top 10 zip codes hardest hit by the housing meltdown (CNNMoney, 2/5)

Stockton highlighted in National News - The CBS news magazine "60 Minutes" recently identified Stockton as “ground zero” for the nation’s foreclosure crisis. (Stockton Record, 2/3)

Freddie Mac Looks at Apartment Financing - Freddie Mac is looking to expand into financing multi-family buildings in an effort to bolster its competitive edge with Wall Street. (NY Times, 2/4)

Mortgage Rates Forecast to Rise Slowly This Year - The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9 percent range in the fourth quarter, and then average 6.3 percent in 2009. (NAR, 2/7)

Banks Tighten Mortgage Loan Standards - The rise in mortgage defaults and construction costs are making the process of obtaining a home or building construction loan more difficult, according a Federal Reserve survey released Monday. More than half of the U.S. lenders who responded to the January 2008 Senior Loan Officer Opinion Survey reported having tightened standards for prime mortgages during the quarter, an increase of 40 percent from the Fed's survey conducted during the previous quarter. (CAR, 2/6; NAR, 2/5)

Harder to get Refi – Lenders are studying applicants credit scores and the home’s appraisal numbers in much more detail than before. (CNNMoney, 2/8)

Mortgage Rates Flat – on news of slowing service sector report earlier in the week, the 30-year fixed-rate loan averaged 5.67% for the week ending Thursday, down from 5.68% last week, and still well below rates at this time last year Freddie Mac noted. At this time last year, the 30-year fixed-rate mortgage averaged 6.28%. 15-year fixed-rate loans averaged 5.15%, down from 5.17% last week. A year ago, the 15-year rate averaged 6.02%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.21%, down from 5.32% last week. The 5-year rate averaged 5.99% at this time last year. One-year Treasury-indexed ARMs averaged 5.03%, down from 5.05% last week. At this time a year ago, the 1-year ARM averaged 5.49%. Mortgage application volume increased 3% during the week ending 2/1. (CNNMoney, 2/7; MSNBC, 2/6)

Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)

Perspectives: “Foreclosures up 75% in 2007” – RealtyTrac.
* Foreclosures were lower prior to last year, and that causes the numbers to appear to be soaring only when looked at purely in terms of percentage gains.
* RealtyTrac reports defaults on loans, not on properties, so one household that defaults on a primary loan and an equity line will be counted as two defaults, even though both loans were for the same house. This could artificially inflate foreclosure statistics.
* A foreclosure filing includes default notices, auction sale notices and bank repossessions. One home may fall into each of these categories as it moves through the long foreclosure process. RealtyTrac counts each step along the way separately. This also skews foreclosure statistics.
* The overwhelming majority of homes are not in danger of foreclosure. If slightly more than 1 percent of U.S. homes were in some stage of foreclosure last year, then 99 percent of homes were not. Although some of the hardest hit communities with high concentrations of defaults are suffering, those communities do not reflect California overall.
* There are tremendous differences between counties and cities as well as neighborhoods in the same town—all the more reason consumers need a REALTOR® who is a local community expert. (CAR, 2/6)

Perspectives: “Even in today’s market, homeowners needn’t have a stratospheric down payment and the squeakiest of credit histories to get into a house.” – USA Today
* Clients who don’t have 20 percent to put down will find a 10 percent down payment is often acceptable with good credit.
* Loans for 100 percent of the purchase price are extremely rare but are still available for a conforming loan of $417,000 or less and for consumers with a credit score of 700 or higher.
* Congress is considering loosening rules on the Federal Housing Administration’s mortgage-insurance program, which gives buyers with imperfect credit better odds of approval.
* Over the long-run, the median home price of an existing single-family home in California has increased about 9 percent a year since 1969, according to the CALIFORNIA ASSOCIATION OF REALTORS®.
* The Mortgage Bankers Association in Washington said Wednesday that its index of total mortgage applications rose 3 percent last week to its highest level since March 2004, and applications were up 73 percent from a year earlier. This could be a sign that potential buyers are regaining confidence in the market.
* Homeowners accumulate significantly more wealth than renters. According to the most recent Federal Reserve Survey of Consumer Finances, the median net wealth of a renter household is $4,800, while the median net wealth of a homeowner household is $171,700. (CAR, 2/6)

Web Spotlight:
RottenNeighbor.com is a Web site that lets people dish about their neighbors — both the good and the bad. Type in any address and if someone has posted something negative about it, a bright red house pops up on top of the satellite image. Green house icons show up where the nice neighbors live. (Orlando Sentinel, 2/1; NAR 2/4)

Overseas Spotlight:
British Housing Repossessions Rose to Highest Level Since 1999 Last Year - U.K. housing repossessions reached the highest since 1999 last year and will increase further this year as banks curb lending and the economy slows, the Council for Mortgage Lenders said. (Bloomberg, 2/8)

Ending with Interesting News:
Bear Stearns Makes $1 Billion Bet That Subprime Market Will Continue Slide - Bear Stearns Cos., the U.S. securities firm that posted its first-ever loss last quarter on mortgage writedowns, has more than $1 billion of trades that profit if subprime home loans and bonds continue to deteriorate. (Bloomberg, 2/8)


Sources: CNBC, Associated Press, National Association of REALTORS, San Jose Mercury-News, Reuters, Stockton Record, New York Times, California Association of REALTORS, Zillow.com, CNNMoney, MSNBC, Orlando Sentinel.