After a 1½-month leave, Weekly Digest is back. A BIG Thank You for all your support and referrals!
This blog has been invited to join VerveEarth by its Founder and CEO, who writes, “Your blog Wayne's Real Estate World caught our attention. We are searching the internet for the world's blogs by geography, and we found yours for California. I would like to invite you to our site which plots the content of the internet on an interactive map of the world. VerveEarth is an entirely new way to surf the net. It shows spatial and geographic connections that a blog search engine could never reveal.” Check out the blog at http://www.verveearth.com/dest/user/11094.
Positive News First:
· 32 percent of homeowners nationwide owning a debt-free home (NAR, 5/14)
· As noted in this month’s newsletter, Santa Clarita and San Fernando Valleys are seeing an upswing in prices and/or sales numbers.
Home Sales, Prices Seen Rising in Late '08 - NAR Chief Economist Lawrence Yun predicts more notable improvements in 2009, when sales should climb to 5.71 million units. (NAR, 5/16)
Fannie Mae Scraps Declining Markets Policy - In a change spurred by NAR's concerns, borrowers will no longer need to put up an extra 5 percent down payment in markets where prices have fallen. (NAR, 5/16)
Today real estate is less about “location” and more about “duration,” according to a recent San Francisco Chronicle analysis based on the Standard & Poor’s Case-Shiller home price index. Californians who bought their house two years ago face the reality that it may be worth less than they paid, but those who bought four years ago probably are not “under water.” Those who bought eight years ago, in 2000, on paper have made a tidy profit assuming they haven’t spent all the equity in the meantime. For those who have forgotten that real estate is an asset that matures in value over time, consider this: The recent nationwide decline in home prices was preceded by a decade of year-over-year increases. Nationwide, home prices in February 2008 were 75 percent higher than they were in February 2000 and 15 percent above where they were in February 2004. In the San Francisco Bay Area, prices are down except in San Francisco year over year but up in all metro counties and down slightly in outlaying counties compared with 2004. However, the eight-year change skyrockets to a home price that is 94 percent higher today in San Francisco than it was in 2000. Of the nine Bay Area counties, the lowest eight-year gain was 48.8 percent in Santa Clara County.
Sacramento-based ForeclosureS.com reports a 5 percent drop in foreclosures and a 7.52 percent drop in preforeclosures nationwide between March and April. California recorded the highest number of filings year-to-date with 6.2 per 1,000 households but ranked fourth behind Nevada, Arizona and Florida in the number of preforeclosures (13.9 per 1,000 households) and was down 17.58 percent from March to April. Seventeen states recorded a drop in foreclosure filings between the last quarter of 2007 and the end of the first quarter of 2008. Nationally, 3.8 per 1,000 households have lost their homes to foreclosure so far this year.
NAR: Prices Up in 1 of 3 Metro Areas - During the first quarter, the median single-family home price increased in 48 of 149 U.S. metropolitan statistical areas. (NAR, 5/16)
· The slowdown is most pronounced in high-cost markets. In the West, which includes California, the median price was down 12.3 percent to $296,300 compared with a year ago. That’s due, in part, to the limited availability of mortgage financing in response to the subprime mortgage crisis. NAR believes recent increases in Fannie Mae/Freddie Mac loan limits to encompass jumbo loans will improve the situation somewhat in the months to come, although qualifying criteria will remain stringent.
· Home price and sales declines vary dramatically by neighborhood and are largely based on the extent of a neighborhood’s exposure to subprime mortgages. Neighborhoods with a high percentage of subprime loans are experiencing a higher rate of foreclosures, which typically drives prices down.
· NAR emphasized that the average buyer today intends to stay in the home they purchase for 10 years, which should position them to receive long-term benefits from home ownership. Homes purchased six years ago, for example, would have increased in value by 23.8 percent over that period, based on the difference in national median price between the first quarter of 2002 and first quarter 2008. (CAR, 5/15)
In mortgage market, “walkaway” homeowners may be urban myth - True or false: More and more homeowners who owe more than their house is worth are giving their house keys back to the bank? While anecdotal evidence suggests that mailing the keys back to the bank is occurring, there doesn’t appear to be any evidence that the practice has become widespread. (LA Times, 5/11)
· Data on the number of “walkaway” homeowners is lacking. The Mortgage Bankers Association and major banks believe the practice is increasing but don’t have any numbers to back up this supposition.
· Lenders suggest the practice is more prevalent among investors and “flippers” than among homeowners who live in their home. Bankers confirm that most borrowers are interested in working out a solution when they fall behind in their payments or when their home value is “under water” or their interest rate is about to reset.
· There is no sign that walking away from a mortgage obligation is becoming more “socially acceptable,” observers say. Homeowners historically have been known to do whatever it takes to avoid losing their home to foreclosure. (CAR, 5/15)
Jumbo mortgage rates becoming affordable - In the past week, jumbo conforming loans have become almost as affordable as standard conforming loans thanks to higher loan limits and a drop in bank interest rates. That’s good news for high-cost markets and homeowners with equity in their homes who may be able to refinance to a lower-cost standard conforming rate. However, borrowers still face tightened lending requirements. (San Francisco Chronicle, 5/13)
· Last week, a 30-year fixed-rate jumbo conforming loan with no points averaged 6.125 percent, compared with 5.875 percent for a standard conforming and 6.75 percent for a regular jumbo loan. Jumbo conforming loans are used for home purchases between $417,000 and $729,750, while standard conforming loans apply to homes with a purchase price below $417,000. Conforming loans are those that meet certain underwriting criteria and can be guaranteed by Fannie Mae and Freddie Mac. A lower rate could save borrowers several hundred dollars a month in mortgage costs.
· Both Fannie Mae and Freddie Mac require jumbo loan borrowers to make a higher downpayment (in the 10 percent to 15 percent range); require higher credit scores; provide income documentation; and typically have lower debt-to-income ratios than standard conforming loans.
· Congress recently increased the maximum loan amount to 125 percent of an area’s median home price up to $729,750. The new higher rates were intended to more accurately reflect home prices in high-cost markets and to stimulate housing market activity by allowing lenders to package more loans for sale to Fannie Mae and Freddie Mac.
Conusmer Price Index up 0.2% in April - The Consumer Price Index for All Urban Consumers(CPI-U) increased by an unexpectedly lower margin of 0.2 percent in April according to today's report from Bureau of Labor Statistics of the U.S. Dept. of Labor. The index for petroleum-based energy fell 1.6 percent, offsetting the 2.5 percent increase in the index for energy services. But food prices remain a chief concern: the food index rose 0.9 percent in April; and the food at home index increased 1.5 percent. (CAR, 5/15)
Fast Facts (CAR, 5/14)
· Calif. median home price - March 08: $413,980(Source: C.A.R.)
· Calif. highest median home price by C.A.R. region February 08: Santa Barbara So. Coast $1,140,000 (Source: C.A.R.)
· Calif. lowest median home price by C.A.R. region February 08: High Desert $210,66-(Source: C.A.R.)
· Calif. First-time Buyer Affordability Index - Third Quarter 07: 33 percent (Source: C.A.R.)
Next Week: A run-down of Proposition 98 vs Proposition 99: The Imminent Domain Propositions on the June 3 California Ballot.
Sources: Los Angeles Times, San Francisco Chronicle, California Association of Realtors, National Association of Realtors, ForeclosureS.com, VerveEarth.com
1342
No comments:
Post a Comment