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

... but I worked hard to keep the Summary short!

Housing Facts from CAR (1/31):
• Interest rates continue to remain near their historic lows. The fixed-rate mortgage was 6.10 percent in December, below November’s 6.21 percent, and slightly lower than 6.14 percent from December 2006.
• December’s fixed-rate was at its lowest level in the past five months, having peaked in July 2007 at 6.7 percent.
• Month-to-month sales increased for the second month in a row, rising 4.7 percent in December compared with November.
• The time a home remained on the market prior to selling improved to 67.2 days in December compared to 72.1 days for the same period a year ago.
• In December, it would have taken 14.5 months to sell all the homes on the market at the current sales rate, an improvement compared with November, when it would have taken 15.4 months.
• Although seasonally adjusted sales fell 33.4 percent year to year in December 2007 compared with 2006, they were above the 300,000-unit level for the first time since August 2007.

Fed Cuts Interest Rates by 1/2-point. This is in addition to a 3/4-point cut last week. Can you believe that interest rates went down 1.25% in less than a week? (Washington Post, via CAR 1/31, 1/30; CNN, 1/30)

Mortgage Interest Rates Rise this week, ending 5-week decent, but still well below historical averages, per Freddie Mac. If you read last week’s blog, you would have expected this. (CNNMoney, 1/31)

FBI Probes 14 Companies in Subprime mess. New York Attorney General and the SEC also conducting probes. WSJ names UBS and Merrill Lynch as being under New York’s and SEC’s scrutiny. (MSNBC, 1/30; CNBC, 1/30; Reuters, 1/30; and Washington Post, 1/30)

House passes $146 billion economic stimulus package on Tuesday, January 29. It includes a provision increasing conforming loan limits. As mentioned in last week’s blog, it would help people who got homes between $417k and $729k to get up to possibly 1% lower interest rates by moving from a Jumbo Mortgage to a conventional one. Senate Finance Committee is to vote this Wednesday, February 6 on its version. This stimulus plan is expected to spark the housing market. (CAR, 1/30; CNNMoney, 1/25 and 1/29;.NY Times, 1/30)

Foreclosure Bill Rejected in CA Senate by 1 vote. (LA Times, 1/30)

New $20 billion subprime bailout being proposed in the U.S. Senate. Senator Chris Dodd proposes setting up a fund that would buy defaulting subprime mortgages and restructure loans for borrowers. (CNNMoney, 2/3)

Housing Slump gives rise to Repo Tours. NBC’s Michael Okwu reports potiental buyers can take bus tours of repossessed homes. (MSNBC, 2/3)

UCLA’s Anderson Forecast Center still says no recession. GDP for the 4th quarter showed a growth of a measly 0.6%. (KNX-AM, 2/3)

Home Sales decreased 33.4% in December in California compared with the same period a year ago, while median price of an existing home fell 16.5%. (CAR, 1/29)

Sales of New Homes down 26.4% for the year, down 4.7% for December, per U.S. Commerce Department, and down 40.7% year-over-year. Dr. Lawrence Yun of the National Association of REALTORS says that this is a proper adjustment that is needed and is positive. Existing home sales will pick up. (KNX-AM, 1/28; AP, 1/28; CAR 1/30)

Riverside and SB counties’ foreclosure rates among the worst in the U.S. (Riverside Press-Enterprise, 1/29)

Home ownership plunges 1.1%. U.S. Census Bureau reports homeowners accounted for 67.8% of occupied homes in the 4th quarter, down 1.1 points from the prior year and the largest year-over-year decline on record (CNNMoney, 1/29)

Construction Spending Drops by record 2.6%, driven by 18.3% drop in residential projects by private companies, per U.S. Commerce Department (CNNMoney, 2/3)

Most Middle Class Still Cannot Buy Home. Prices have fallen but not by enough to make it possible for nurses, fireman or teachers to buy homes of their own. (CNNMoney, 1/30)

Beazer closes mortgage division and promotes Countrywide as preferred lender. (CNNMoney 2/3)


Sources: Associated Press, MSNBC, CNBC, CNNMoney, Reuters, Washington Post, Wall Street Journal,California Association of REALTORS, National Association of REALTORS, CNN Money, Riverside Press-Enterprise, Los Angeles Times, KNX-AM.