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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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


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