Sunday, March 30, 2008
A Week Off...
This blog will return next week due to personal issues that require my attention. Rest assured that I am currently safe, but I need to work through the legal process to secure my safety. Please keep me in your thoughts and prayers. This blog will return next week. Thank you.
Sunday, March 23, 2008
SPECIAL REPORT-When You're Getting Your Stimulus Check!
If you filed your 2007 taxes and got a refund by direct deposit...and the last 2 digits of your SSN are...
If you filed your 2007 taxes and you didn't get a refund or got a refund by a mailed check...and the last 2 digits of your SSN are...
http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html
Source: Bob McCormick, KCAL 9 News, 3/23, 8pm newscast.
- 00-20, you will get the money by direct deposit around May 2
- 21-75, ... May 9
- 76-99, ... May 16
If you filed your 2007 taxes and you didn't get a refund or got a refund by a mailed check...and the last 2 digits of your SSN are...
- 00-09, you will get a mailed check sent out by the IRS around May 16
- 10-18, ... May 23
- 19-25, ... May 30
- ... goes on and on until...
- 88-99, ... July 11
http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html
Source: Bob McCormick, KCAL 9 News, 3/23, 8pm newscast.
Buyers Fair Galore: Week in Review, March 17-23
Thoughts on the Current Market:
Prospective borrowers worried about the foreclosure crisis should obtain pre-purchase homeownership counseling. A Harvard University analysis found that borrowers who received classroom and individual counseling were, respectively, 23 percent and 41 percent less likely to become 60 days delinquent than equivalent borrowers who did not undergo counseling.
Calling the market low is a difficult task, and it's most often spotted in the rear-view mirror, according to MSN. While prices in many markets may have not yet hit their lowest point, the bottom may be near. And in other areas, only the pace of sales has been affected; prices have held firm or increased. Waiting for the absolute bottom puts consumers at risk of missing the best prices and getting caught up in a market on the upswing. (CAR, 3/20)
AV Home Show – the REALTOR® Association that covers the AV will have a booth for homebuyers and sellers March 28-30 in the Eliopulos Pavillon/Booth #46. Bring unwanted electrical items to be recycled and receive free parking. AVFair.com. (GAVAR, 3/17)
Home Buyer Fair – Southern California Home Buyer’s Fair will occur April 12-13 at the Los Angeles Convention Center in downtown Los Angeles. The REALTOR® Association that covers the SCV and SFV will help buyers access one of 20 $4000 grants and understand issues around purchasing homes in the valley. Educational seminars too. Entrance is free. HomeBuyersFair.com. (SRAR, CAR, 3/23)
Homeowners have filed suit against KB Home and Countrywide Financial Corp. alleging the companies inflated home prices through fraudulent appraisals. (SF Chronicle, 3/21)
Vast numbers of the country’s small and midsize home builders are feeling the pain form the credit crunch and housing downturn. (Wall Street Journal, 3/21)
Los Lomas Development Rejected – this 5,553-home development at the Newhall Pass was rejected by the Los Angeles City Council. (LA Times, 3/20)
California Leads US in Defaults, Price Drop, Slowing Growth - California leads the nation in foreclosures, home-price drops, and slowing economic growth. (Bloomberg, 3/20)
State Breaks Up Alleged Sub-prime Fraud Ring - Five people have been arrested and more are being sought in connection with an alleged mortgage fraud ring suspected of victimizing thousands of Californian homeowners. (LA Times, 3/19)
Capital Requirements Eased for Freddie & Fannie - Federal regulators on Wednesday eased capital requirements for Fannie Mae and Freddie Mac allowing them to pump an expected $200 billion into the troubled U.S. mortgage market. (Reuters, 3/19)
Central Valley Builders rely on the Internet to auction homes in hopes of drawing more buyers. (Fresno Bee, 3/18)
Auction firms are busy, especially in the Inland Empire region, where the number of homes repossessed by lenders in February increased nearly 21-fold in Riverside County and 15-fold in San Bernardino County compared with a year ago. (Riverside Press-Enterprise, 3/17)
Mortgage Rates Harder to Figure Out – Mortgage rates did, in fact, fall this week after the Fed cut rates again and took other steps to ease credit. But if recent history is any guide, the decline in mortgage rates may not last long. On mortgages, banking industry leaders say rate sheets often change several times during the course of a day, making the current situation all the more urgent for borrowers. Mortgages are moved by a variety of factors, with the most important in recent months being the spread, or difference, between 10-year Treasury bond rates and securities issued by secondary mortgage agencies. The difference is a direct reflection of the market's appetite for risk, and the closer the spread gets the more likely mortgage rates are likely to fall. Since the central bank lowered its Fed funds rate by three-quarters of a point Tuesday, rates for 30-year mortgages dropped from 5.96 percent to 5.66 percent, according to Bankrate.com. That's down from 6.37 percent four weeks ago. (CNBC, 3/21)
Mortgage Applications Drop - number of people applying for a home loan fell nearly 3% last week. Refinance volume fell 4.6%, while purchase volume declined 1% during the week. Refinance applications accounted for 49.7% of total applications, the first time all year that purchase application volume was larger than refinance volume. (CNBC, AP, 3/19)
Interest Rates Below 6% - Rates continued their wild swings. Fixed-rate mortgage rates plummeted, while adjustable-rates continued to skyrocket. The average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.98% from 6.37% the previous week. The average rate for 15-year fixed-rate mortgages, which are often used in refinance applications, plummeted to 5.24% from 5.72%. The average rate for one-year adjustable-rate mortgages rose to 6.95% from 6.72%, more than one percent higher than they were just two weeks ago. (CNBC, AP, 3/19)
Perspectives: S&P sees end to subprime mortgage writedowns (CNBC, per CAR, 3/20)
Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.
S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.
Perspectives: Commercial real estate market is running strong (Bakersfield Californian, per CAR, 3/20)
Bakersfield's housing market is facing tough times, but commercial real estate in the area remains relatively strong, due partly to demand from the agriculture and oil industries.
Demand for multifamily housing has surged as potential home buyers face tougher mortgage requirements, higher debt payments, and declining home values.
The office market is solid, but warehouse and distribution sectors may slow if the economy weakens further.
Banks have had trouble selling debt so financing is tight, but the federal government is stepping in aggressively with moves designed to protect large investment banks.
Perspectives: Bear Stearns Rescue Is `Finger in Dike,' Scholars Say (Bloomberg, per CAR, 3/20)
With Bear Stearns Cos.' rescue, the $200 billion subprime crisis joins a long history of government bailouts to preserve jobs, homes, and savings.
Bear Stearns failing would have reverberated well beyond the investment banking sector. Large investment bankers such as Bear Stearns provide much of the capital that eventually finds its way into the pool of money used to fund mortgage loans.
Most investment bankers are heavily leveraged. That means they fund investments by borrowing. If they invest well, they can pay off debt and still make a profit. But if no one will lend to them, investment bankers can neither pay debt nor make investments. That combination can cause an institution to fail. Bear Stearns was not the only heavily leveraged investment bank. Many other large Wall Street firms also are dependent on the ability to borrow to survive, so a loss of confidence resulting from the failure of a major player could easily have brought down several others.
The credit crunch, or consumers' difficulty obtaining mortgage loans, is one of the greatest hindrances to a real estate market rebound. In recent months, even prospective buyers with good credit have had trouble securing a loan. If financial markets stabilize, that could help boost demand for housing.
Fed Cuts Key Interest Rate in Effort to Further Boost Economy - The Federal Reserve on Tuesday lowered the federal funds rate 75 basis points to 2.25 percent citing continued concerns about the country's softening labor market, stalled consumer spending, and turmoil on the financial markets over the mortgage credit crisis. (CAR, 3/19)
New Home Sales Declines 62% - The overall pace of new home sales across California was down just over 62 percent in January compared to the same period a year ago, according to the CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report. Sales of single-family homes dropped by 61 percent in January compared to 2007, while sales of town homes and duplexes were down 71 percent, and condominium sales fell 58 percent. (CAR, 3/19)
HUD Unveils Mortgage Reform Plan – As mentioned last week, the U. S. Dept. of Housing and Urban Development (HUD) last week proposed a plan for mortgage reform designed to help consumers better understand mortgage loan documents and make more informed decisions when it comes to the home purchase, in an attempt to help streamline the home-buying process and mitigate risk connected to the subprime mortgage crisis. HUD's proposal calls for revamping the 30-year old rules of the Real Estate Settlement Procedures Act (RESPA), and calls for changes in disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. HUD also is proposing that mortgage lenders and brokers provide consumers with a standard Good Faith Estimate. (CAR, 3/19)
Sources: CNBC, Associated Press, California Association of REALTORS, Riverside Press-Enterprise, Fresno Bee, Reuters, Bloomberg, Los Angeles Times, Wall Street Journal, San Francisco Chronicle, Southland Regional Association of REALTORS, Greater Antelope Valley Association of REALTORS.
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Prospective borrowers worried about the foreclosure crisis should obtain pre-purchase homeownership counseling. A Harvard University analysis found that borrowers who received classroom and individual counseling were, respectively, 23 percent and 41 percent less likely to become 60 days delinquent than equivalent borrowers who did not undergo counseling.
Calling the market low is a difficult task, and it's most often spotted in the rear-view mirror, according to MSN. While prices in many markets may have not yet hit their lowest point, the bottom may be near. And in other areas, only the pace of sales has been affected; prices have held firm or increased. Waiting for the absolute bottom puts consumers at risk of missing the best prices and getting caught up in a market on the upswing. (CAR, 3/20)
AV Home Show – the REALTOR® Association that covers the AV will have a booth for homebuyers and sellers March 28-30 in the Eliopulos Pavillon/Booth #46. Bring unwanted electrical items to be recycled and receive free parking. AVFair.com. (GAVAR, 3/17)
Home Buyer Fair – Southern California Home Buyer’s Fair will occur April 12-13 at the Los Angeles Convention Center in downtown Los Angeles. The REALTOR® Association that covers the SCV and SFV will help buyers access one of 20 $4000 grants and understand issues around purchasing homes in the valley. Educational seminars too. Entrance is free. HomeBuyersFair.com. (SRAR, CAR, 3/23)
Homeowners have filed suit against KB Home and Countrywide Financial Corp. alleging the companies inflated home prices through fraudulent appraisals. (SF Chronicle, 3/21)
Vast numbers of the country’s small and midsize home builders are feeling the pain form the credit crunch and housing downturn. (Wall Street Journal, 3/21)
Los Lomas Development Rejected – this 5,553-home development at the Newhall Pass was rejected by the Los Angeles City Council. (LA Times, 3/20)
California Leads US in Defaults, Price Drop, Slowing Growth - California leads the nation in foreclosures, home-price drops, and slowing economic growth. (Bloomberg, 3/20)
State Breaks Up Alleged Sub-prime Fraud Ring - Five people have been arrested and more are being sought in connection with an alleged mortgage fraud ring suspected of victimizing thousands of Californian homeowners. (LA Times, 3/19)
Capital Requirements Eased for Freddie & Fannie - Federal regulators on Wednesday eased capital requirements for Fannie Mae and Freddie Mac allowing them to pump an expected $200 billion into the troubled U.S. mortgage market. (Reuters, 3/19)
Central Valley Builders rely on the Internet to auction homes in hopes of drawing more buyers. (Fresno Bee, 3/18)
Auction firms are busy, especially in the Inland Empire region, where the number of homes repossessed by lenders in February increased nearly 21-fold in Riverside County and 15-fold in San Bernardino County compared with a year ago. (Riverside Press-Enterprise, 3/17)
Mortgage Rates Harder to Figure Out – Mortgage rates did, in fact, fall this week after the Fed cut rates again and took other steps to ease credit. But if recent history is any guide, the decline in mortgage rates may not last long. On mortgages, banking industry leaders say rate sheets often change several times during the course of a day, making the current situation all the more urgent for borrowers. Mortgages are moved by a variety of factors, with the most important in recent months being the spread, or difference, between 10-year Treasury bond rates and securities issued by secondary mortgage agencies. The difference is a direct reflection of the market's appetite for risk, and the closer the spread gets the more likely mortgage rates are likely to fall. Since the central bank lowered its Fed funds rate by three-quarters of a point Tuesday, rates for 30-year mortgages dropped from 5.96 percent to 5.66 percent, according to Bankrate.com. That's down from 6.37 percent four weeks ago. (CNBC, 3/21)
Mortgage Applications Drop - number of people applying for a home loan fell nearly 3% last week. Refinance volume fell 4.6%, while purchase volume declined 1% during the week. Refinance applications accounted for 49.7% of total applications, the first time all year that purchase application volume was larger than refinance volume. (CNBC, AP, 3/19)
Interest Rates Below 6% - Rates continued their wild swings. Fixed-rate mortgage rates plummeted, while adjustable-rates continued to skyrocket. The average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.98% from 6.37% the previous week. The average rate for 15-year fixed-rate mortgages, which are often used in refinance applications, plummeted to 5.24% from 5.72%. The average rate for one-year adjustable-rate mortgages rose to 6.95% from 6.72%, more than one percent higher than they were just two weeks ago. (CNBC, AP, 3/19)
Perspectives: S&P sees end to subprime mortgage writedowns (CNBC, per CAR, 3/20)
Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.
S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.
Perspectives: Commercial real estate market is running strong (Bakersfield Californian, per CAR, 3/20)
Bakersfield's housing market is facing tough times, but commercial real estate in the area remains relatively strong, due partly to demand from the agriculture and oil industries.
Demand for multifamily housing has surged as potential home buyers face tougher mortgage requirements, higher debt payments, and declining home values.
The office market is solid, but warehouse and distribution sectors may slow if the economy weakens further.
Banks have had trouble selling debt so financing is tight, but the federal government is stepping in aggressively with moves designed to protect large investment banks.
Perspectives: Bear Stearns Rescue Is `Finger in Dike,' Scholars Say (Bloomberg, per CAR, 3/20)
With Bear Stearns Cos.' rescue, the $200 billion subprime crisis joins a long history of government bailouts to preserve jobs, homes, and savings.
Bear Stearns failing would have reverberated well beyond the investment banking sector. Large investment bankers such as Bear Stearns provide much of the capital that eventually finds its way into the pool of money used to fund mortgage loans.
Most investment bankers are heavily leveraged. That means they fund investments by borrowing. If they invest well, they can pay off debt and still make a profit. But if no one will lend to them, investment bankers can neither pay debt nor make investments. That combination can cause an institution to fail. Bear Stearns was not the only heavily leveraged investment bank. Many other large Wall Street firms also are dependent on the ability to borrow to survive, so a loss of confidence resulting from the failure of a major player could easily have brought down several others.
The credit crunch, or consumers' difficulty obtaining mortgage loans, is one of the greatest hindrances to a real estate market rebound. In recent months, even prospective buyers with good credit have had trouble securing a loan. If financial markets stabilize, that could help boost demand for housing.
Fed Cuts Key Interest Rate in Effort to Further Boost Economy - The Federal Reserve on Tuesday lowered the federal funds rate 75 basis points to 2.25 percent citing continued concerns about the country's softening labor market, stalled consumer spending, and turmoil on the financial markets over the mortgage credit crisis. (CAR, 3/19)
New Home Sales Declines 62% - The overall pace of new home sales across California was down just over 62 percent in January compared to the same period a year ago, according to the CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report. Sales of single-family homes dropped by 61 percent in January compared to 2007, while sales of town homes and duplexes were down 71 percent, and condominium sales fell 58 percent. (CAR, 3/19)
HUD Unveils Mortgage Reform Plan – As mentioned last week, the U. S. Dept. of Housing and Urban Development (HUD) last week proposed a plan for mortgage reform designed to help consumers better understand mortgage loan documents and make more informed decisions when it comes to the home purchase, in an attempt to help streamline the home-buying process and mitigate risk connected to the subprime mortgage crisis. HUD's proposal calls for revamping the 30-year old rules of the Real Estate Settlement Procedures Act (RESPA), and calls for changes in disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. HUD also is proposing that mortgage lenders and brokers provide consumers with a standard Good Faith Estimate. (CAR, 3/19)
Sources: CNBC, Associated Press, California Association of REALTORS, Riverside Press-Enterprise, Fresno Bee, Reuters, Bloomberg, Los Angeles Times, Wall Street Journal, San Francisco Chronicle, Southland Regional Association of REALTORS, Greater Antelope Valley Association of REALTORS.
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Sunday, March 16, 2008
Fed Drops Rates Sunday Night! - Week in Review: March 10-16
This blog is a little late...that’s because I had word of late-breaking news!
JP Morgan Chase to buy Bear Stearns for $2/share. (CNNMoney, 3/16)
The US Federal Reserve cut to its lending rate Sunday night to financial institutions to 3.25% from 3.50% and created another lending facility for big investment banks to secure short-term loans. (CNBC, 3/16)
Feds propose home-loan disclosure reform - President Bush on Friday is expected to announce a plan aimed at making the mortgage application process easier for prospective buyers and lowing closing costs. Require new disclosures by summer in the buying and selling of homes. (AP, 3/14)
Foreclosures up 60% in February - The number of filings jumps year over year but decreases modestly over last month. (CNNMoney, 3/12)
Mortgage Application Fees Rise on appraisal reform - A new agreement between the NY Attorney General and Fannie and Freddie should promote independence and accuracy of appraisals. But it's going to cost buyers. (CNNMoney, 3/12)
US to simplify mortgage process - Buyers would get easier-to-understand mortgage terms and save about $700 in closing costs under a new proposal. (CNNMoney, 3/14)
Mortgage Applications Fall - Volume dropped 1.9% in the week ending March 7. Refinance volume dropped 4.7% while purchase volume increased 1.6%. Refinance applications accounted for 50.6% of total applications. Refinance volume has steadily declined since January, when it accounted for 73% of total applications. (CNNMoney, 3/13)
Mortgage Rates Rise – Mortgage rates rose across the board this week as lower home prices and mortgage rates contributed to a more affordable market for homebuyers. The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.13% for the week ending Thursday, up from 6.03% last week. Freddie Mac also said 15-year fixed-rate loans averaged 5.60%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.58%, up from 5.34% last week. One-year Treasury-indexed ARMs averaged 5.14%, up from 4.94% last week. (CNNMoney, 3/13)
January Pending Home Sales Index Unchanged in December – contrary to consensus expectation of 1% slide. (CNNMoney, 3/13)
Calirfornia February Sales up 7.1% - A total of 20,513 new and resale houses and condos were sold statewide last month. That makes it the slowest February in DataQuick's records, which go back to 1988. Sales were up 7.1 percent from 19,145 in January and down 34.3 percent from 31,228 for February last year. (DQNews, 3/14)
Commercial real estate market fundamentals are fairly stable, although investment is waning following a record year in 2007. (NAR, 3/12)
Fed is poised to cut interest rates further, by possibly as much as 75-basis points when they meet later this month, says Economist Danielle Hale. (NAR 3/14)
Sources: National Association of REALTORS, DQNews, CNNMoney, CNBC, AP.
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JP Morgan Chase to buy Bear Stearns for $2/share. (CNNMoney, 3/16)
The US Federal Reserve cut to its lending rate Sunday night to financial institutions to 3.25% from 3.50% and created another lending facility for big investment banks to secure short-term loans. (CNBC, 3/16)
Feds propose home-loan disclosure reform - President Bush on Friday is expected to announce a plan aimed at making the mortgage application process easier for prospective buyers and lowing closing costs. Require new disclosures by summer in the buying and selling of homes. (AP, 3/14)
Foreclosures up 60% in February - The number of filings jumps year over year but decreases modestly over last month. (CNNMoney, 3/12)
Mortgage Application Fees Rise on appraisal reform - A new agreement between the NY Attorney General and Fannie and Freddie should promote independence and accuracy of appraisals. But it's going to cost buyers. (CNNMoney, 3/12)
US to simplify mortgage process - Buyers would get easier-to-understand mortgage terms and save about $700 in closing costs under a new proposal. (CNNMoney, 3/14)
Mortgage Applications Fall - Volume dropped 1.9% in the week ending March 7. Refinance volume dropped 4.7% while purchase volume increased 1.6%. Refinance applications accounted for 50.6% of total applications. Refinance volume has steadily declined since January, when it accounted for 73% of total applications. (CNNMoney, 3/13)
Mortgage Rates Rise – Mortgage rates rose across the board this week as lower home prices and mortgage rates contributed to a more affordable market for homebuyers. The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.13% for the week ending Thursday, up from 6.03% last week. Freddie Mac also said 15-year fixed-rate loans averaged 5.60%. Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.58%, up from 5.34% last week. One-year Treasury-indexed ARMs averaged 5.14%, up from 4.94% last week. (CNNMoney, 3/13)
January Pending Home Sales Index Unchanged in December – contrary to consensus expectation of 1% slide. (CNNMoney, 3/13)
Calirfornia February Sales up 7.1% - A total of 20,513 new and resale houses and condos were sold statewide last month. That makes it the slowest February in DataQuick's records, which go back to 1988. Sales were up 7.1 percent from 19,145 in January and down 34.3 percent from 31,228 for February last year. (DQNews, 3/14)
Commercial real estate market fundamentals are fairly stable, although investment is waning following a record year in 2007. (NAR, 3/12)
Fed is poised to cut interest rates further, by possibly as much as 75-basis points when they meet later this month, says Economist Danielle Hale. (NAR 3/14)
Sources: National Association of REALTORS, DQNews, CNNMoney, CNBC, AP.
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Monday, March 10, 2008
New Loan Limits Official & Best Time To Buy - Week In Review: March 2-9, 2008
Number One Office Again! - RE/MAX of Valencia has once again earned the award for the NUMBER ONE OFFICE, 2007 - HIGHEST TOTAL TRANSACTIONS (LARGE MARKET) FOR RE/MAX, IN THE STATE OF CALIFORNIA. #1 OFFICE IN THE WHOLE STATE, WAY TO GO !!! We will be sure everyone gets a color copy of the congratulatory letter we received from RE/MAX of California Regional Vice President Adam Contos. (Broker/Owners of RE/MAX of Valencia, 3/6)
The federal government officially raised limits on conforming loans temporarily from $417,000 to as high as $729,750 in fourteen counties in California for loans originated between July 1, 2007 and Dec. 31, 2008. These are loans that may be sold to Fannie Mae or Freddie Mac. (CAR, 3/7)
Also, the government raised FHA conforming loan limits to a maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008. (CAR, 3/7)
Best time to buy in four years - Home values have declined across the country, giving homebuyers the best buys they've had since 2004. (CNNMoney 3/4)
Mortgage Rates Drop This Week - Freddie Mac says the 30-year fixed mortgage rate fell to 6.03 percent during the week ended March 6, from 6.24 percent the prior week. Interest on 15-year, fixed-rate mortgages also declined, falling to 5.47 percent from 5.72 percent over the same period. The five-year adjustable mortgage rate dipped to 5.34 percent from 5.43 percent, while the one-year ARM dropped to 4.94 percent from 5.11 percent. (San Diego Union-Tribune, 3/7; CNNMoney, 3/6)
Fed: Rates May Remain Low for Awhile - The Federal Reserve may need to keep a lid on interest rates for a significant length of time if the financial markets continue to be under duress, New York Fed President Timothy Geithner told the Council on Foreign Relations. (Reuters, 3/6)
Mortgage applications up slightly – Refinance and purchase volume increased in latest week as fixed-rate mortgage rates tumbled. Mortgage application volume increased 3% for the week ending Feb. 29, according to a weekly application survey by the Mortgage Bankers Association. Refinance volume increased 4.5% during the week, while purchase volume grew 1.4%. Refinance applications accounted for 52.4% of all mortgage applications during the week ending Feb. 29. (MBA via CNNMoney, 3/6)
FBI begins investigation of Countrywide – Calabasas-based mortgage lender being investigated for possible securities fraud. (KNX-AM, CBS Radio, 3/9)
Home Equity Falls to Record Low – The percentage of equity Americans with mortgages have in their homes fell below 50 percent in the second quarter of 2007 and declined further through the fourth quarter to 47.9 percent, the Federal Reserve reported yesterday. This is the first time that home owners’ debt exceeds their equity since the Federal Reserve first began keeping records in 1945. Economists expect this figure to drop even further as home prices continue to decline. (AP, NY Times, 3/7)
Moody's Economy.com estimates that 8.8 million U.S. home owners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak. (3/8)
The Mortgage Bankers Association also reported Thursday that loans past due or in foreclosure hit 7.9 percent of the total in the fourth quarter of 2007, up from 6.1 percent in December 2006. While defaults were scattered across the country, 21 percent came from California and Florida. Nevada, Arizona, Michigan, and Ohio also had high default rates. (3/8)
Jobs plunge by 63,000, worst since 2003; Fed steps in - Employers slashed jobs for the second month in February prompting the Fed to raise auctions of short-term loans to aid lenders. (USA Today, 3/7)
Foreclosures hit all-time high - Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments. (CNNMoney, 3/6)
Home sales stay weak in Realtors' report - Homes under contract flat in January but remain near record low, showing continued weakness in market. (CNNMoney, 3/6)
Flat Existing-Home Sales Likely Before Gradual Recovery - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery in the second half of the year. (NAR, 3/6)
This Week:
* Monday – Wholesale Inventories: expected to rise
* Tuesday – International Trade Deficit: expected to widen slightly to $59.5 billion after shrinking to $58.8 billion in December
* Thursday – February Retail Sales Report: expect slight rise in sales (0.2%)
* Thursday – January Business Inventories
* Friday – February Consumer Price Index: expect rise of 0.2% in the core index. (translating to slight inflation)
* Friday – preliminary March consumer sentiment
(AP, 3/9)
Last week - Wall Street balked at the February jobs loss, banks' requests to hedge funds and other borrowers for loan paybacks, and a plan for the troubled bond insurer Ambac Financial Group Inc. that many considered insufficient. (AP, 3/9)
Ending in Foreign News:
Australian Foreclosures Set to Rise as Interest Rates Reach 12-Year High Foreclosures in New South Wales, Australia's biggest state, are set to rise to a record this year after the central bank increased rates twice in the past two months to a 12-year high. (Bloomberg, 3/10)
New Zealand House Prices Rose at Slowest Pace in Three Years in February New Zealand's house prices rose at the slowest pace in three years in February as higher interest rates curbed demand for property. (Bloomberg, 3/10)
Sources: Bloomberg, San Diego Union-Tribune, California Association of REALTORS, National Association of REALTORS, CNNMoney, Reuters, Associated Press, Moody’s Economy.com, New York Times, Mortgage Bankers Association.
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The federal government officially raised limits on conforming loans temporarily from $417,000 to as high as $729,750 in fourteen counties in California for loans originated between July 1, 2007 and Dec. 31, 2008. These are loans that may be sold to Fannie Mae or Freddie Mac. (CAR, 3/7)
Also, the government raised FHA conforming loan limits to a maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008. (CAR, 3/7)
Best time to buy in four years - Home values have declined across the country, giving homebuyers the best buys they've had since 2004. (CNNMoney 3/4)
Mortgage Rates Drop This Week - Freddie Mac says the 30-year fixed mortgage rate fell to 6.03 percent during the week ended March 6, from 6.24 percent the prior week. Interest on 15-year, fixed-rate mortgages also declined, falling to 5.47 percent from 5.72 percent over the same period. The five-year adjustable mortgage rate dipped to 5.34 percent from 5.43 percent, while the one-year ARM dropped to 4.94 percent from 5.11 percent. (San Diego Union-Tribune, 3/7; CNNMoney, 3/6)
Fed: Rates May Remain Low for Awhile - The Federal Reserve may need to keep a lid on interest rates for a significant length of time if the financial markets continue to be under duress, New York Fed President Timothy Geithner told the Council on Foreign Relations. (Reuters, 3/6)
Mortgage applications up slightly – Refinance and purchase volume increased in latest week as fixed-rate mortgage rates tumbled. Mortgage application volume increased 3% for the week ending Feb. 29, according to a weekly application survey by the Mortgage Bankers Association. Refinance volume increased 4.5% during the week, while purchase volume grew 1.4%. Refinance applications accounted for 52.4% of all mortgage applications during the week ending Feb. 29. (MBA via CNNMoney, 3/6)
FBI begins investigation of Countrywide – Calabasas-based mortgage lender being investigated for possible securities fraud. (KNX-AM, CBS Radio, 3/9)
Home Equity Falls to Record Low – The percentage of equity Americans with mortgages have in their homes fell below 50 percent in the second quarter of 2007 and declined further through the fourth quarter to 47.9 percent, the Federal Reserve reported yesterday. This is the first time that home owners’ debt exceeds their equity since the Federal Reserve first began keeping records in 1945. Economists expect this figure to drop even further as home prices continue to decline. (AP, NY Times, 3/7)
Moody's Economy.com estimates that 8.8 million U.S. home owners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak. (3/8)
The Mortgage Bankers Association also reported Thursday that loans past due or in foreclosure hit 7.9 percent of the total in the fourth quarter of 2007, up from 6.1 percent in December 2006. While defaults were scattered across the country, 21 percent came from California and Florida. Nevada, Arizona, Michigan, and Ohio also had high default rates. (3/8)
Jobs plunge by 63,000, worst since 2003; Fed steps in - Employers slashed jobs for the second month in February prompting the Fed to raise auctions of short-term loans to aid lenders. (USA Today, 3/7)
Foreclosures hit all-time high - Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments. (CNNMoney, 3/6)
Home sales stay weak in Realtors' report - Homes under contract flat in January but remain near record low, showing continued weakness in market. (CNNMoney, 3/6)
Flat Existing-Home Sales Likely Before Gradual Recovery - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery in the second half of the year. (NAR, 3/6)
This Week:
* Monday – Wholesale Inventories: expected to rise
* Tuesday – International Trade Deficit: expected to widen slightly to $59.5 billion after shrinking to $58.8 billion in December
* Thursday – February Retail Sales Report: expect slight rise in sales (0.2%)
* Thursday – January Business Inventories
* Friday – February Consumer Price Index: expect rise of 0.2% in the core index. (translating to slight inflation)
* Friday – preliminary March consumer sentiment
(AP, 3/9)
Last week - Wall Street balked at the February jobs loss, banks' requests to hedge funds and other borrowers for loan paybacks, and a plan for the troubled bond insurer Ambac Financial Group Inc. that many considered insufficient. (AP, 3/9)
Ending in Foreign News:
Australian Foreclosures Set to Rise as Interest Rates Reach 12-Year High Foreclosures in New South Wales, Australia's biggest state, are set to rise to a record this year after the central bank increased rates twice in the past two months to a 12-year high. (Bloomberg, 3/10)
New Zealand House Prices Rose at Slowest Pace in Three Years in February New Zealand's house prices rose at the slowest pace in three years in February as higher interest rates curbed demand for property. (Bloomberg, 3/10)
Sources: Bloomberg, San Diego Union-Tribune, California Association of REALTORS, National Association of REALTORS, CNNMoney, Reuters, Associated Press, Moody’s Economy.com, New York Times, Mortgage Bankers Association.
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Tri-Valley Housing Markets at a Glance
As promised in my monthly newsletter, here are the latest trends in the 3 Valleys.
San Fernando Valley Sales Down 35%, While Prices Post a Modest Increase
Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported.
A total of 6,271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions. Annual home sales in the San Fernando Valley have been slowing since 2004.
Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower - below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.
The annual single-family median price came in at $61 1,933 -the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year's annual median price beat the prior record of $605,917 set in 2006.
The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.
There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago. At the current pace of sales, the inventory represents a 10.9-month supply - a buyers' market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.
December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.
Santa Clarita Valley Home Sales At An Impasse
Home sales in the Santa Clarita Valley during January posted a record low of 99 transactions, down 42.4 percent from a year ago when 172 single-family homes changed owners, the Southland Regional Association of Realtors reported.
The prior record low of 105 home sales was recorded in September of 2007 while, for comparison, the record high of 405 sales was set in June 2005.
Likewise, a total of 31 condominiums closed escrow last month, down 57.7 percent from January 2007 and the lowest tally on record. The prior record low of 38 sales came in November 2007 while the record high of 204 sales was set in April 2003.
The median price of single-family homes sold during January fell below the $500,000 for the first time in three and a half years. The median price of $460,000 was down 21.8 percent from a year ago and well below the record high of $643,000 set in April of 2006.
Similarly, the condominium median price fell below $300,000 for the first time in three and a half years with the $284,900 January median down 20.9 percent from the prior year. The record high of $397,000 came two years ago in January 2006.
Statistics produced by the Association indicated that the pending escrow total increased 21.9 percent on a month-to-month basis. That supports the contention that next month's sales numbers may be slightly higher.
However, pendings were down 48.7 percent compared to a year ago.
A total of 2,163 active listings were reported at the end of January, up 22.9 percent from a year ago.
At the current pace of sales, that represents a 16.6-month inventory - a buyers' market by any definition, especially since experts believe a balanced market appears with an inventory of 5- to 6-months.
While statistics are unavailable to support the conclusion, Association executives believe the inventory was much higher during the recession of the early 1990s, a fact reflected by today's relatively modest price declines and one which weighs in against steep price discounts.
Antelope Valley
Greater Antelope Valley Association of REALTORS notes that as of 3/2/2008, there were 4575 active residential listings with an average price of $294,350.
San Fernando Valley Sales Down 35%, While Prices Post a Modest Increase
Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported.
A total of 6,271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions. Annual home sales in the San Fernando Valley have been slowing since 2004.
Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower - below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.
The annual single-family median price came in at $61 1,933 -the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year's annual median price beat the prior record of $605,917 set in 2006.
The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.
There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago. At the current pace of sales, the inventory represents a 10.9-month supply - a buyers' market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.
December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.
Santa Clarita Valley Home Sales At An Impasse
Home sales in the Santa Clarita Valley during January posted a record low of 99 transactions, down 42.4 percent from a year ago when 172 single-family homes changed owners, the Southland Regional Association of Realtors reported.
The prior record low of 105 home sales was recorded in September of 2007 while, for comparison, the record high of 405 sales was set in June 2005.
Likewise, a total of 31 condominiums closed escrow last month, down 57.7 percent from January 2007 and the lowest tally on record. The prior record low of 38 sales came in November 2007 while the record high of 204 sales was set in April 2003.
The median price of single-family homes sold during January fell below the $500,000 for the first time in three and a half years. The median price of $460,000 was down 21.8 percent from a year ago and well below the record high of $643,000 set in April of 2006.
Similarly, the condominium median price fell below $300,000 for the first time in three and a half years with the $284,900 January median down 20.9 percent from the prior year. The record high of $397,000 came two years ago in January 2006.
Statistics produced by the Association indicated that the pending escrow total increased 21.9 percent on a month-to-month basis. That supports the contention that next month's sales numbers may be slightly higher.
However, pendings were down 48.7 percent compared to a year ago.
A total of 2,163 active listings were reported at the end of January, up 22.9 percent from a year ago.
At the current pace of sales, that represents a 16.6-month inventory - a buyers' market by any definition, especially since experts believe a balanced market appears with an inventory of 5- to 6-months.
While statistics are unavailable to support the conclusion, Association executives believe the inventory was much higher during the recession of the early 1990s, a fact reflected by today's relatively modest price declines and one which weighs in against steep price discounts.
Antelope Valley
Greater Antelope Valley Association of REALTORS notes that as of 3/2/2008, there were 4575 active residential listings with an average price of $294,350.
Sunday, March 2, 2008
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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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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Sunday, February 24, 2008
“Painfully Slow Growth”: Week in Review, February 18-24
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Thoughts to consider about homeownership:
• Teenage students raised by home-owning parents are less likely to drop out of school than teens raised by renters, according to the “Journal of Urban Economics.”
• Homeowners are less likely to be crime victims than renters because neighborhoods where owners have a stake in the community are more stable, according to “Social Forces.”
• Equity—the value of a property after all debts have been paid—is an important component of wealth building because it can be a safety net for emergencies or hard times. It also can be used to launch a business or pay for college tuition, both of which have the potential to create future earnings. (CAR, 2/21)
Painfully Slow Growth for California and Southern California in 2008-2009, with “Spot” Recessions – While the economies of California and Southern California overall are not expected to fall into recession in 2008-2009, it will be a painful period for several industries and metro areas, according to the Los Angeles County Economic Development Corporation. (LAEDC, 2/20)
California Home Sales January 2008 - A total of 19,145 new and resale houses and condos were sold statewide last month. That's the lowest number for any month in DataQuick's records, which go back to 1988. It was 25.2 percent lower than December's 25,585 and 41.0 percent lower than 32,425 for January last year. (DataQuick, 2/18)
Commercial real estate market activity - expected to decline moderately with fewer business opportunities for commercial practitioners in the months ahead. (CAR, 2/20)
Fed Hints at More Rate Cuts - Minutes from the Federal Reserve meeting in January that were released Thursday suggest that more rate cuts could be in the offing. The minutes show that at the Jan. 29-30 meeting, the most recent, Fed officials decided that keeping interest rates low “appeared appropriate for a time to counter the factors that were restraining economic growth." (Wall Street Journal, 2/22)
Entry-Level Housing Affordability at 33% - The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago, according C.A.R.'s First-time buyer Housing Affordability Index. CAR calculates affordability based on the minimum household income required to make a 10 percent down payment and secure an adjustable interest rate loan at 6.21 percent. Average monthly payment including taxes and insurance was $2740 for the 4th quarter of 2007. (CAR, 2/20)
New Home Sales Decline 30% in 2007 - The pace of new-home sales across California fell more than 30 percent in 2007 compared with 2006, according to recent data from the California Building Industry Association (CBIA). (via CAR, 2/20)
Consumer Price Index Rises 0.5% in January – This index is often related to inflation, so with this rise, economists are getting wary about inflation pressures. The index for housing climbed 0.2 percent in January, and the index for shelter remained unchanged from December at 0.3 percent. (CAR, 2/20)
Perspectives: More buyers moving in to first homes – Fresno Bee
Declining prices and interest rates and a large number of homes for sale are enticing potential first-time home buyers off the sidelines, experts say.
• Although this story is specific to the San Joaquin Valley, it applies to many regions around the state where prices have declined. Now may be an ideal time to buy an entry-level home.
• If enough first-time home buyers gain entry to the housing market, middle- and upper-tier homeowners will be able to sell and upgrade, and that can only help the economy. (CAR, 2/21)
Perspectives: Group says more Californians can afford to buy their first home – San Francisco Chronicle
As mentioned above, some 33% of households in the state were able to afford their first home in the last three months of the year.
• As the median home price declines, many potential home buyers who had previously believed an entry-level home was out of reach may now find themselves in a position to buy.
• The median price of an existing, single-family detached home in California during December 2007 was $475,460, a 16.5 percent decrease from the revised $569,350 median for December 2006.
• Prospective buyers for the most part need not worry about the bidding wars that drove up home prices during the housing boom.
• First-time home buyers needed to earn an annual income of $82,200 to buy an entry-level home in California in the fourth quarter of 2007, down 15 percent from the $96,600 annual income needed to buy during the last three months of 2006. (CAR, 2/21)
Mortgage rates inch above 6% - Fueled primarily by inflation concerns, interest on long-term mortgage rates moved higher for the week. Freddie Mac reported a rise to 6.04 percent from 5.72 percent last week on 30-year fixed loans, which broke the 6-percent threshold for the first time in seven weeks. Rates on 15-year loans, which are popular in refinance deals, bumped up to 5.64 percent from 5.25 percent; while five-year adjustable-rate mortgages settled at 5.37 percent, up from 5.19 percent. One-year ARMs, however, resisted the downward trend and slipped to 4.98 percent from 5.03 percent in the week-to-week survey. (Freddie Mac 2/21; Baltimore Sun, 2/22; CNNMoney 2/21)
Mortgage Applications Tumble - Volume of applications dropped more than 22% as most interest rates increased sharply. (AP, CNNMoney, 2/20)
Southland Rents Rise Despite Falling Home Prices - Apartment rents across Southern California have increased 4.5 percent over the last three months compared to where they were a year ago, despite falling home prices. (LA Times, 2/22)
Foreclosure Prevention Plan Under Attack - Lenders trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners. (CNNMoney, 2/21)
Subprime Loans Defaulting Even Before Resets - It turns out that massive interest rate spikes aren't the problem; many borrowers couldn't afford these mortgages even at the low, introductory interest rates. (CNNMoney, 2/20)
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 - Fourth Quarter 07: 33 percent (Source: C.A.R.)
Sources: Los Angeles Economic Development Corporation, DataQuick, California Association of REALTORS, Wall Street Journal, Freddie Mac, Baltimore Sun, CNNMoney, Los Angeles Times, San Francisco Chronicle, Fresno Bee, Associated Press.
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Thoughts to consider about homeownership:
• Teenage students raised by home-owning parents are less likely to drop out of school than teens raised by renters, according to the “Journal of Urban Economics.”
• Homeowners are less likely to be crime victims than renters because neighborhoods where owners have a stake in the community are more stable, according to “Social Forces.”
• Equity—the value of a property after all debts have been paid—is an important component of wealth building because it can be a safety net for emergencies or hard times. It also can be used to launch a business or pay for college tuition, both of which have the potential to create future earnings. (CAR, 2/21)
Painfully Slow Growth for California and Southern California in 2008-2009, with “Spot” Recessions – While the economies of California and Southern California overall are not expected to fall into recession in 2008-2009, it will be a painful period for several industries and metro areas, according to the Los Angeles County Economic Development Corporation. (LAEDC, 2/20)
California Home Sales January 2008 - A total of 19,145 new and resale houses and condos were sold statewide last month. That's the lowest number for any month in DataQuick's records, which go back to 1988. It was 25.2 percent lower than December's 25,585 and 41.0 percent lower than 32,425 for January last year. (DataQuick, 2/18)
Commercial real estate market activity - expected to decline moderately with fewer business opportunities for commercial practitioners in the months ahead. (CAR, 2/20)
Fed Hints at More Rate Cuts - Minutes from the Federal Reserve meeting in January that were released Thursday suggest that more rate cuts could be in the offing. The minutes show that at the Jan. 29-30 meeting, the most recent, Fed officials decided that keeping interest rates low “appeared appropriate for a time to counter the factors that were restraining economic growth." (Wall Street Journal, 2/22)
Entry-Level Housing Affordability at 33% - The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago, according C.A.R.'s First-time buyer Housing Affordability Index. CAR calculates affordability based on the minimum household income required to make a 10 percent down payment and secure an adjustable interest rate loan at 6.21 percent. Average monthly payment including taxes and insurance was $2740 for the 4th quarter of 2007. (CAR, 2/20)
New Home Sales Decline 30% in 2007 - The pace of new-home sales across California fell more than 30 percent in 2007 compared with 2006, according to recent data from the California Building Industry Association (CBIA). (via CAR, 2/20)
Consumer Price Index Rises 0.5% in January – This index is often related to inflation, so with this rise, economists are getting wary about inflation pressures. The index for housing climbed 0.2 percent in January, and the index for shelter remained unchanged from December at 0.3 percent. (CAR, 2/20)
Perspectives: More buyers moving in to first homes – Fresno Bee
Declining prices and interest rates and a large number of homes for sale are enticing potential first-time home buyers off the sidelines, experts say.
• Although this story is specific to the San Joaquin Valley, it applies to many regions around the state where prices have declined. Now may be an ideal time to buy an entry-level home.
• If enough first-time home buyers gain entry to the housing market, middle- and upper-tier homeowners will be able to sell and upgrade, and that can only help the economy. (CAR, 2/21)
Perspectives: Group says more Californians can afford to buy their first home – San Francisco Chronicle
As mentioned above, some 33% of households in the state were able to afford their first home in the last three months of the year.
• As the median home price declines, many potential home buyers who had previously believed an entry-level home was out of reach may now find themselves in a position to buy.
• The median price of an existing, single-family detached home in California during December 2007 was $475,460, a 16.5 percent decrease from the revised $569,350 median for December 2006.
• Prospective buyers for the most part need not worry about the bidding wars that drove up home prices during the housing boom.
• First-time home buyers needed to earn an annual income of $82,200 to buy an entry-level home in California in the fourth quarter of 2007, down 15 percent from the $96,600 annual income needed to buy during the last three months of 2006. (CAR, 2/21)
Mortgage rates inch above 6% - Fueled primarily by inflation concerns, interest on long-term mortgage rates moved higher for the week. Freddie Mac reported a rise to 6.04 percent from 5.72 percent last week on 30-year fixed loans, which broke the 6-percent threshold for the first time in seven weeks. Rates on 15-year loans, which are popular in refinance deals, bumped up to 5.64 percent from 5.25 percent; while five-year adjustable-rate mortgages settled at 5.37 percent, up from 5.19 percent. One-year ARMs, however, resisted the downward trend and slipped to 4.98 percent from 5.03 percent in the week-to-week survey. (Freddie Mac 2/21; Baltimore Sun, 2/22; CNNMoney 2/21)
Mortgage Applications Tumble - Volume of applications dropped more than 22% as most interest rates increased sharply. (AP, CNNMoney, 2/20)
Southland Rents Rise Despite Falling Home Prices - Apartment rents across Southern California have increased 4.5 percent over the last three months compared to where they were a year ago, despite falling home prices. (LA Times, 2/22)
Foreclosure Prevention Plan Under Attack - Lenders trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners. (CNNMoney, 2/21)
Subprime Loans Defaulting Even Before Resets - It turns out that massive interest rate spikes aren't the problem; many borrowers couldn't afford these mortgages even at the low, introductory interest rates. (CNNMoney, 2/20)
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 - Fourth Quarter 07: 33 percent (Source: C.A.R.)
Sources: Los Angeles Economic Development Corporation, DataQuick, California Association of REALTORS, Wall Street Journal, Freddie Mac, Baltimore Sun, CNNMoney, Los Angeles Times, San Francisco Chronicle, Fresno Bee, Associated Press.
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Sunday, February 17, 2008
Economic Stimulus Bill Signed: Week in Review, February 11-17
Did you know? You can sign up for my weekly news summaries and monthly newsletters at ChangHomes.Net or either of the blog websites.
Quick Bullets:
• It is more important than ever for potential home buyers to have a good credit score. Consumers should obtain a credit report and take care of any outstanding issues that can be fixed or improved prior to applying for a loan. According to a recent Federal Reserve survey, some 53 percent of lenders tightened requirements for prime-quality borrowers, 72 percent for sub-prime borrowers, and 85 percent for non-traditional mortgage borrowers, including PayOption ARMs, loans with interest-only payment structures, and other such products.
• Whether or not they have children, consumers may want to consider a home in a neighborhood with excellent schools. Homes in good school districts typically are a bit more "recession proof" and appreciate faster than homes near weaker schools, according to MSN Money. (CAR, 2/14)
Bush signs Economic Stimulus Plan – raises conforming loan limits and puts rebate checks in Americans’ hands. For details on this legislation, see http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html (AP, 2/13)
Project Lifeline offers 30-day foreclosure reprieve – Six lenders joined the Treasury Department and the Department of Housing and Urban Development to offer seriously-overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans. The lenders are Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual, and Wells Fargo. All are involved in Hope Now, an effort to freeze rates on some high-cost subprime mortgages for 5 years to aid borrowers whose teaser rates are jumping sharply higher. More details below in Perspectives. (CNNMoney, AP, 2/11)
Home Buyer Fair - C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair for consumers Saturday, April 12, and Sunday, April 13 at the Los Angeles Convention Center in downtown Los Angeles. The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish for consumers, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership. (CAR, 2/11)
Bush Budget seeks $38.5 Billion for HUD - The Bush Administration's FY 2009 budget seeks $38.5 billion for the U.S. Dept. of Housing and Urban Development, a boost of $1 billion more than HUD's current budget. The budget package includes "significant increases for housing counseling, homeless assistance and affordable housing programs," according to HUD Secretary Alphonso Jackson. (NAR, 2/13)
Beginning this week and continuing through September, HUD's Federal Housing Administration (FHA) is mailing 850,000 letters to at-risk borrowers who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. If this has the intended effect of keeping those at risk out of foreclosure, it could help shore up the housing market and the state’s economy. (CAR, 2/14)
Perspectives: New program aims to forestall foreclosures – Washington Post
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under “Project Lifeline,” an initiative the Bush administration announced Tuesday.
· The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation’s largest financial institutions are participating. Together they service almost half of the nation’s mortgages. Fewer foreclosures improves the strength of the housing market.
· The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.
Perspectives: Southern California home sales drop to a 20-year low – LA Times
Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systems said Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.
· The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
· Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
· Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
· Declining home sales have contributed to lower prices, making homes more affordable.
Latest Pending Home Sales Index and Forecast – Soft market conditions continue for existing home sales in the months ahead, with notable improvement expected by the 2nd half of this year as loan limits increase. (NAR, 2/14)
Metro Areas Home Prices Mixed, Half Show Gains - Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the National Association of REALTORS. (2/14)
Home prices fell faster nationally in more places over the last part of 2007. (CNNMoney, 2/14)
The real-estate auction market rose 5.3 percent in 2007, generating $58.4 billion in revenues 39 percent more than it did in 2003, according to the National Auctioneers Association. (NAR, 2/13)
Greenspan says no recession yet – Former Federal Reserve Chairman said the American economy is on the “edge” of a recession, pointing to the slump in the country’s housing market as the primary cause. (CNNMoney, 2/15)
Bernanke optimistic for late 2008 – Current Federal Reserve chairman says the central bank is likely to slash rates further in the coming months, with the benefits of the rate cuts likely appearing in the second half of the year. (NAR, 2/14)
Job losses point to recession – California’s Index of Leading Employment Indicator decreased in the fourth quarter of 2007, marking the seventh consecutive quarterly drop and indicating further declines over the next six months, according to a report released Monday by the A. Gary Anderson Center for Economic Research. The primary factor feeding the decline, according to the report, is the slump in California's construction spending. (CAR, 2/11)
The Consumer Confidence Index fell nearly three points in January. While consumers were more positive about job prospects in January, the sampling from the January household survey of those who view business conditions as "bad" rose to 20 percent from 18.8 percent in December. (CAR, 2/11)
Mortgage Rates Rise to Highest Level in 5 Weeks - 30-year fixed-rate mortgages averaged 5.72% this week, up from 5.67% last week. Rates on 15-year fixed edged up to 5.25% versus 5.15% last week. 5-year adjustable-rate mortgages (ARMs) dipped to 5.19% from 5.21% while 1-year ARMs remained unchanged at 5.03%. One year ago, 30-year mortgages stood at 6.30%, while 15-year were at 6.03%, 5-year ARMs at 6.01% and 1-year ARMS were at 5.52%. Mortgage applications fell during the last week. (AP, 2/14; Mortgage Bankers Association via CNNMoney, 2/16)
Countrywide's Overdue Mortgages Increase to 7.47%; Highest in Six Years Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. (Bloomberg, 2/15)
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.)
Web Spotlight:
CrimeReports.com posts crimes from police departments in 16 states, including California. You can join to receive free regularly-scheduled crime reports via email. You can also choose to receive time sensitive crime alerts, neighborhood and community policing program bulletins and other crime awareness and prevention information as they become available. (Charlie Turner, MarketWatch, KFWB-AM, 2/16; AP, 2/4)
Sources: California Association of REALTORS, Bloomberg, National Association of REALTORS, CNNMoney, Washington Post, Associated Press, MarketWatch, KFWB-AM, Los Angeles Times.
Quick Bullets:
• It is more important than ever for potential home buyers to have a good credit score. Consumers should obtain a credit report and take care of any outstanding issues that can be fixed or improved prior to applying for a loan. According to a recent Federal Reserve survey, some 53 percent of lenders tightened requirements for prime-quality borrowers, 72 percent for sub-prime borrowers, and 85 percent for non-traditional mortgage borrowers, including PayOption ARMs, loans with interest-only payment structures, and other such products.
• Whether or not they have children, consumers may want to consider a home in a neighborhood with excellent schools. Homes in good school districts typically are a bit more "recession proof" and appreciate faster than homes near weaker schools, according to MSN Money. (CAR, 2/14)
Bush signs Economic Stimulus Plan – raises conforming loan limits and puts rebate checks in Americans’ hands. For details on this legislation, see http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html (AP, 2/13)
Project Lifeline offers 30-day foreclosure reprieve – Six lenders joined the Treasury Department and the Department of Housing and Urban Development to offer seriously-overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans. The lenders are Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual, and Wells Fargo. All are involved in Hope Now, an effort to freeze rates on some high-cost subprime mortgages for 5 years to aid borrowers whose teaser rates are jumping sharply higher. More details below in Perspectives. (CNNMoney, AP, 2/11)
Home Buyer Fair - C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair for consumers Saturday, April 12, and Sunday, April 13 at the Los Angeles Convention Center in downtown Los Angeles. The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish for consumers, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership. (CAR, 2/11)
Bush Budget seeks $38.5 Billion for HUD - The Bush Administration's FY 2009 budget seeks $38.5 billion for the U.S. Dept. of Housing and Urban Development, a boost of $1 billion more than HUD's current budget. The budget package includes "significant increases for housing counseling, homeless assistance and affordable housing programs," according to HUD Secretary Alphonso Jackson. (NAR, 2/13)
Beginning this week and continuing through September, HUD's Federal Housing Administration (FHA) is mailing 850,000 letters to at-risk borrowers who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. If this has the intended effect of keeping those at risk out of foreclosure, it could help shore up the housing market and the state’s economy. (CAR, 2/14)
Perspectives: New program aims to forestall foreclosures – Washington Post
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under “Project Lifeline,” an initiative the Bush administration announced Tuesday.
· The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation’s largest financial institutions are participating. Together they service almost half of the nation’s mortgages. Fewer foreclosures improves the strength of the housing market.
· The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.
Perspectives: Southern California home sales drop to a 20-year low – LA Times
Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systems said Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.
· The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
· Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
· Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
· Declining home sales have contributed to lower prices, making homes more affordable.
Latest Pending Home Sales Index and Forecast – Soft market conditions continue for existing home sales in the months ahead, with notable improvement expected by the 2nd half of this year as loan limits increase. (NAR, 2/14)
Metro Areas Home Prices Mixed, Half Show Gains - Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the National Association of REALTORS. (2/14)
Home prices fell faster nationally in more places over the last part of 2007. (CNNMoney, 2/14)
The real-estate auction market rose 5.3 percent in 2007, generating $58.4 billion in revenues 39 percent more than it did in 2003, according to the National Auctioneers Association. (NAR, 2/13)
Greenspan says no recession yet – Former Federal Reserve Chairman said the American economy is on the “edge” of a recession, pointing to the slump in the country’s housing market as the primary cause. (CNNMoney, 2/15)
Bernanke optimistic for late 2008 – Current Federal Reserve chairman says the central bank is likely to slash rates further in the coming months, with the benefits of the rate cuts likely appearing in the second half of the year. (NAR, 2/14)
Job losses point to recession – California’s Index of Leading Employment Indicator decreased in the fourth quarter of 2007, marking the seventh consecutive quarterly drop and indicating further declines over the next six months, according to a report released Monday by the A. Gary Anderson Center for Economic Research. The primary factor feeding the decline, according to the report, is the slump in California's construction spending. (CAR, 2/11)
The Consumer Confidence Index fell nearly three points in January. While consumers were more positive about job prospects in January, the sampling from the January household survey of those who view business conditions as "bad" rose to 20 percent from 18.8 percent in December. (CAR, 2/11)
Mortgage Rates Rise to Highest Level in 5 Weeks - 30-year fixed-rate mortgages averaged 5.72% this week, up from 5.67% last week. Rates on 15-year fixed edged up to 5.25% versus 5.15% last week. 5-year adjustable-rate mortgages (ARMs) dipped to 5.19% from 5.21% while 1-year ARMs remained unchanged at 5.03%. One year ago, 30-year mortgages stood at 6.30%, while 15-year were at 6.03%, 5-year ARMs at 6.01% and 1-year ARMS were at 5.52%. Mortgage applications fell during the last week. (AP, 2/14; Mortgage Bankers Association via CNNMoney, 2/16)
Countrywide's Overdue Mortgages Increase to 7.47%; Highest in Six Years Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. (Bloomberg, 2/15)
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.)
Web Spotlight:
CrimeReports.com posts crimes from police departments in 16 states, including California. You can join to receive free regularly-scheduled crime reports via email. You can also choose to receive time sensitive crime alerts, neighborhood and community policing program bulletins and other crime awareness and prevention information as they become available. (Charlie Turner, MarketWatch, KFWB-AM, 2/16; AP, 2/4)
Sources: California Association of REALTORS, Bloomberg, National Association of REALTORS, CNNMoney, Washington Post, Associated Press, MarketWatch, KFWB-AM, Los Angeles Times.
Sunday, February 10, 2008
Economic Stimulus Bill Passed: Week in Review, February 4-10
NEW! You can sign up for my weekly news summaries and monthly newsletters at ChangHomes.Net or either of the blog websites.
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.
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.
Friday, February 8, 2008
SPECIAL: Economic Stimulus Bill Awaits President’s Signature
Economic Stimulus Bill Awaits President’s Signature
Passes House and Senate Same Day
In an unprecedented move, the House of Representatives passed the same legislation as one that passed the Senate within hours of the Senate’s vote on Thursday, February 7.
A summary of the $170 billion economic stimulus bill:
* $600 per person with adjusted gross income between $3,000 and $75,000 plus $300 per child
* Couples earning up to $150,000 in 2007 will receive $1,200.
* Tax filers who do not owe income taxes because of various credits and deductions but have at least $3,000 in income in 2007- which can include Social Security and disability payments - will get $300 rebates per person or $600 per couple.
An example: A couple with one child and $100,000 in AGI will get a rebate of $1,500 ($1,200 + $300). If they have two children, they will get $1,800 ($1,200 + $600).
If you make more than the limits above, you may be eligible for a partial refund.
Not included in this legislation:
* Extension of employment benefits
* Checks for people aided by the food stamp program and the low-income home energy assistance program
The Senate bill also fixed a “glitch” that would have allowed illegal immigrants to receive checks.
The IRS will handle the “rebate checks” after the bulk of the tax season. Most news reports estimate that first checks will be mailed in May. You must file a federal tax return for 2007 to be eligible for these rebate checks. “Some people are normally not required to file a return,” says CNN. “To get the rebate, however, they have to file a federal return.”
The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds next tax season, says CNBC. CNN states, “Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.” As I haven’t seen the actual legislation (and even if I did, it doesn’t mean I can understand it), I don’t know what the effect of the rebate is on next year’s taxes.
Nearly half (46 percent) of Americans said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.
Some are using the bills’ new housing provisions to buy their next home or to refinance. The bill temporarily raises conforming mortgage loan limits from $417,000 to as high as $729,750 in areas such as California. People with homes between these figures who currently have jumbo loans are looking to refinance to the cheaper conforming loans. Conforming loans are mortgages that can be sold to Fannie Mae or Freddie Mac in the secondary market and carry interest rates of up to 1% less than jumbo loans.
There is also a similar change for loans backed by the Federal Housing Administration, a government agency that insures loans to borrowers with poor credit. They would be able to back $10 billion in additional loan guarantees with higher limits through 2008.
The impact of the Federal Housing Administration change is likely to be smaller. The Congressional Budget Office estimated the agency could back $10 billion in additional loan guarantees through 2008 with higher limits - a tiny fraction of the more than $2 trillion in new mortgage loans made last year.
Written and Edited by Wayne W. Chang with information from CNN.com, CBS Radio, CNBC, and the Associated Pres as of 11pm PT, February 8, 2008. Revised February 10.
The following text comes from an “eNews” from HR Block released February 8, 2008:
Economic Stimulus Act of 2008 (HR 5140)
Congress has passed the Economic Stimulus Act of 2008 and it is expected that the President will sign the bill to law shortly. The major provision of the Act is the advance refund or “rebate” provision. Treasury Secretary Henry Paulson has indicated that the IRS will begin preparations for processing rebate checks immediately and the checks will be issued starting in May.
RECOVERY REBATES
Amount of Rebate
* $600 ($1,200 for joint returns), or
* Net income tax liability, if lower, but not less than $300 ($600 for joint returns)
* Rebate increased by $300 for each qualifying child (generally, a child that qualifies for the child tax credit)
* Fully refundable
Eligible Individuals:
* Must have either
(1) Qualifying Income of at least $3,000 - Qualifying income is defined as earned income, social security benefits and/or disability benefits paid to veterans and surviving spouses, or
(2) Net income tax liability of at least $1 and gross income that is more than the applicable standard deduction + 1 exemption amount (2 exemptions for MFJ) - Generally, net income tax liability is the regular tax + AMT (if any) less allowable credits other than the child tax credit and refundable credits, such as EIC
* Does not apply to nonresident aliens, individuals who could be claimed as dependents, individuals who do not have valid SSNs, and estates and trusts.
Phaseout:
* Reduced by 5% of AGI over $75,000 ($150,000 for joint returns)
* Thus for taxpayers without children, maximum rebate is fully phased out at $87,000 ($174,000 for joint returns)
Timing and reconciliation:
* Generally, based on 2007 return
* Checks ASAP; no later than 12/31/08 (expected to start in May)
* Actual credit to be calculated on 2008 return
* Taxpayer will receive any additional credit due
* Excess credit will not have to be repaid
BUSINESS PROVSIONS
* Section 179 deduction increased to $250,000 (phaseout to start at $800,000) for 2008
* 2008 amounts would have been $128,000 and $510,000 respectively
* 50% bonus depreciation for property placed in service in 2008
* Both provisions apply to 2008 only
Passes House and Senate Same Day
In an unprecedented move, the House of Representatives passed the same legislation as one that passed the Senate within hours of the Senate’s vote on Thursday, February 7.
A summary of the $170 billion economic stimulus bill:
* $600 per person with adjusted gross income between $3,000 and $75,000 plus $300 per child
* Couples earning up to $150,000 in 2007 will receive $1,200.
* Tax filers who do not owe income taxes because of various credits and deductions but have at least $3,000 in income in 2007- which can include Social Security and disability payments - will get $300 rebates per person or $600 per couple.
An example: A couple with one child and $100,000 in AGI will get a rebate of $1,500 ($1,200 + $300). If they have two children, they will get $1,800 ($1,200 + $600).
If you make more than the limits above, you may be eligible for a partial refund.
Not included in this legislation:
* Extension of employment benefits
* Checks for people aided by the food stamp program and the low-income home energy assistance program
The Senate bill also fixed a “glitch” that would have allowed illegal immigrants to receive checks.
The IRS will handle the “rebate checks” after the bulk of the tax season. Most news reports estimate that first checks will be mailed in May. You must file a federal tax return for 2007 to be eligible for these rebate checks. “Some people are normally not required to file a return,” says CNN. “To get the rebate, however, they have to file a federal return.”
The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds next tax season, says CNBC. CNN states, “Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.” As I haven’t seen the actual legislation (and even if I did, it doesn’t mean I can understand it), I don’t know what the effect of the rebate is on next year’s taxes.
Nearly half (46 percent) of Americans said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.
Some are using the bills’ new housing provisions to buy their next home or to refinance. The bill temporarily raises conforming mortgage loan limits from $417,000 to as high as $729,750 in areas such as California. People with homes between these figures who currently have jumbo loans are looking to refinance to the cheaper conforming loans. Conforming loans are mortgages that can be sold to Fannie Mae or Freddie Mac in the secondary market and carry interest rates of up to 1% less than jumbo loans.
There is also a similar change for loans backed by the Federal Housing Administration, a government agency that insures loans to borrowers with poor credit. They would be able to back $10 billion in additional loan guarantees with higher limits through 2008.
The impact of the Federal Housing Administration change is likely to be smaller. The Congressional Budget Office estimated the agency could back $10 billion in additional loan guarantees through 2008 with higher limits - a tiny fraction of the more than $2 trillion in new mortgage loans made last year.
Written and Edited by Wayne W. Chang with information from CNN.com, CBS Radio, CNBC, and the Associated Pres as of 11pm PT, February 8, 2008. Revised February 10.
The following text comes from an “eNews” from HR Block released February 8, 2008:
Economic Stimulus Act of 2008 (HR 5140)
Congress has passed the Economic Stimulus Act of 2008 and it is expected that the President will sign the bill to law shortly. The major provision of the Act is the advance refund or “rebate” provision. Treasury Secretary Henry Paulson has indicated that the IRS will begin preparations for processing rebate checks immediately and the checks will be issued starting in May.
RECOVERY REBATES
Amount of Rebate
* $600 ($1,200 for joint returns), or
* Net income tax liability, if lower, but not less than $300 ($600 for joint returns)
* Rebate increased by $300 for each qualifying child (generally, a child that qualifies for the child tax credit)
* Fully refundable
Eligible Individuals:
* Must have either
(1) Qualifying Income of at least $3,000 - Qualifying income is defined as earned income, social security benefits and/or disability benefits paid to veterans and surviving spouses, or
(2) Net income tax liability of at least $1 and gross income that is more than the applicable standard deduction + 1 exemption amount (2 exemptions for MFJ) - Generally, net income tax liability is the regular tax + AMT (if any) less allowable credits other than the child tax credit and refundable credits, such as EIC
* Does not apply to nonresident aliens, individuals who could be claimed as dependents, individuals who do not have valid SSNs, and estates and trusts.
Phaseout:
* Reduced by 5% of AGI over $75,000 ($150,000 for joint returns)
* Thus for taxpayers without children, maximum rebate is fully phased out at $87,000 ($174,000 for joint returns)
Timing and reconciliation:
* Generally, based on 2007 return
* Checks ASAP; no later than 12/31/08 (expected to start in May)
* Actual credit to be calculated on 2008 return
* Taxpayer will receive any additional credit due
* Excess credit will not have to be repaid
BUSINESS PROVSIONS
* Section 179 deduction increased to $250,000 (phaseout to start at $800,000) for 2008
* 2008 amounts would have been $128,000 and $510,000 respectively
* 50% bonus depreciation for property placed in service in 2008
* Both provisions apply to 2008 only
Sunday, February 3, 2008
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.
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.
Sunday, January 27, 2008
Surprise Fed Cut fuels increase in mortgage apps: Week In Review, Jan. 20-27
Positive News: U.S. homebuilders had their biggest weekly gain since 1995 as investors and analysts say the market for new homes may have hit bottom. (Bloomberg, 1/25)
The Fed cut interest rates by 3/4 point this past Tuesday, the largest adjustment in recent memory. They meet this coming Tuesday and Wednesday. Some suspect they will cut interest rates a further 1/4-1/2 points. Remember that these rate cuts affect short-term loans, such as credit cards and lines of credit, but don’t have a direct effect on home mortgage rates, which is usually correlated with the bond market. (CNNMoney, AP, 1/22, personal interviews during this week)
Economic Stimulus Package: Leaders of the House of Representatives have struck an agreement with Treasury Secretary Paulson on the structure of this package. Now, bills need to be created in the House and the Senate for the President to sign and become law. The stimulus deal may face some resistance in the Senate. Some Democratic senators are unhappy that their House colleagues gave up on the party's push to extend unemployment benefits in addition to offering consumer rebates and business tax breaks. No matter, the earliest we will see these checks will likely be May or June. And until the bills are passed and signed, we won’t know exactly how much money we’ll get back. (CNNMoney, 1/26)
State of the Union Address: The President on Monday will likely spend a bit of time talking about the state of the slowing economy and how to energize it - now and beyond. "Look for a pitch for tax-related provisions, such as opening the door for states to use tax-free bonds to help homeowners refinance out of unaffordable subprime [adjustable-rate mortgages]," said Jaret Seiberg, senior vice president at the Stanford Group, a Washington policy research firm. Seiberg added that he believes Bush may endorse a real estate industry plan to offer $5,000 tax credits to first-time home buyers. (CNNMoney, 1/26)
Increasing Conforming Loan Limits: As part of the Economic Stimulus Package, they agreed to increase conforming loan limits from $417,000 to as high as $729,750 for one year. If this passes, some homeowners with loans within this range might want to refinance to take advantage of interest rate savings of up to 1% on their mortgages. (CAR, 1/23)
IRS Provides Tax Information on Home Foreclosures: The Internal Revenue Service has recently provided information to taxpayers about the possible tax consequences resulting from a home foreclosure. The general rule is that when a lender forgives a portion of a loan, the amount of debt cancelled constitutes taxable income for the taxpayer. The IRS highlights the exceptions to this rule, so taxpayers can consider their options before their property is foreclosed by the lender. Please contact me at changhomes@gmail.com for a copy of this information.
Save on your property taxes: Because home prices have gone down quite a bit since its highs, the LA County Assessors office is sponsoring several meetings to help homeowners who would like to reduce their property taxes on their homes due to the falling values. The meeting is at the Lancaster Public Library at 10am this Wednesday, January 31.
Jobless Claims Drop: The number of U.S. workers applying for jobless benefits fell unexpectedly last week to the lowest level in four months. This may be taken as a sign that the downturn in the economy is stabilizing. (Reuters, 1/24)
Home Loan Applications still rising: Applications for home mortgages soared for a third consecutive week Jan. 18 on top of plunging interest rates, resulting in a 16.9 percent spike in the number of refinancings. Refinancings accounted for two-thirds of all applications. The rise followed a drop in the average 30-year fixed mortgage rate to 5.49 percent last week from 5.62 percent in the previous week and 6.18 percent in mid-December. The 10-year Treasury yield that roughly guides long-term mortgage rates declined by more than 0.2 percentage point since the MBA survey was conducted, suggesting 30-year mortgage rates are below levels measured on Friday. Rates on short-term loans also fell. The average rate on a one-year adjustable mortgage declined to 5.51 percent last week from 5.77 percent in the prior period. (Reuters, 1/23)
California Foreclosure Activity still rising too: The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than 15 years. (unknown source, CAR?, 1/22)
Existing-home sales dropped in December: The median home price dropped for the entire year, the first time that has occurred in four decades. The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units. For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000. (AP, 1/24)
Fast Facts:
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Sources: Associated Press, CNNMoney, California Association of REALTORS, National Association of REALTORS, Reuters
The Fed cut interest rates by 3/4 point this past Tuesday, the largest adjustment in recent memory. They meet this coming Tuesday and Wednesday. Some suspect they will cut interest rates a further 1/4-1/2 points. Remember that these rate cuts affect short-term loans, such as credit cards and lines of credit, but don’t have a direct effect on home mortgage rates, which is usually correlated with the bond market. (CNNMoney, AP, 1/22, personal interviews during this week)
Economic Stimulus Package: Leaders of the House of Representatives have struck an agreement with Treasury Secretary Paulson on the structure of this package. Now, bills need to be created in the House and the Senate for the President to sign and become law. The stimulus deal may face some resistance in the Senate. Some Democratic senators are unhappy that their House colleagues gave up on the party's push to extend unemployment benefits in addition to offering consumer rebates and business tax breaks. No matter, the earliest we will see these checks will likely be May or June. And until the bills are passed and signed, we won’t know exactly how much money we’ll get back. (CNNMoney, 1/26)
State of the Union Address: The President on Monday will likely spend a bit of time talking about the state of the slowing economy and how to energize it - now and beyond. "Look for a pitch for tax-related provisions, such as opening the door for states to use tax-free bonds to help homeowners refinance out of unaffordable subprime [adjustable-rate mortgages]," said Jaret Seiberg, senior vice president at the Stanford Group, a Washington policy research firm. Seiberg added that he believes Bush may endorse a real estate industry plan to offer $5,000 tax credits to first-time home buyers. (CNNMoney, 1/26)
Increasing Conforming Loan Limits: As part of the Economic Stimulus Package, they agreed to increase conforming loan limits from $417,000 to as high as $729,750 for one year. If this passes, some homeowners with loans within this range might want to refinance to take advantage of interest rate savings of up to 1% on their mortgages. (CAR, 1/23)
IRS Provides Tax Information on Home Foreclosures: The Internal Revenue Service has recently provided information to taxpayers about the possible tax consequences resulting from a home foreclosure. The general rule is that when a lender forgives a portion of a loan, the amount of debt cancelled constitutes taxable income for the taxpayer. The IRS highlights the exceptions to this rule, so taxpayers can consider their options before their property is foreclosed by the lender. Please contact me at changhomes@gmail.com for a copy of this information.
Save on your property taxes: Because home prices have gone down quite a bit since its highs, the LA County Assessors office is sponsoring several meetings to help homeowners who would like to reduce their property taxes on their homes due to the falling values. The meeting is at the Lancaster Public Library at 10am this Wednesday, January 31.
Jobless Claims Drop: The number of U.S. workers applying for jobless benefits fell unexpectedly last week to the lowest level in four months. This may be taken as a sign that the downturn in the economy is stabilizing. (Reuters, 1/24)
Home Loan Applications still rising: Applications for home mortgages soared for a third consecutive week Jan. 18 on top of plunging interest rates, resulting in a 16.9 percent spike in the number of refinancings. Refinancings accounted for two-thirds of all applications. The rise followed a drop in the average 30-year fixed mortgage rate to 5.49 percent last week from 5.62 percent in the previous week and 6.18 percent in mid-December. The 10-year Treasury yield that roughly guides long-term mortgage rates declined by more than 0.2 percentage point since the MBA survey was conducted, suggesting 30-year mortgage rates are below levels measured on Friday. Rates on short-term loans also fell. The average rate on a one-year adjustable mortgage declined to 5.51 percent last week from 5.77 percent in the prior period. (Reuters, 1/23)
California Foreclosure Activity still rising too: The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than 15 years. (unknown source, CAR?, 1/22)
Existing-home sales dropped in December: The median home price dropped for the entire year, the first time that has occurred in four decades. The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units. For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000. (AP, 1/24)
Fast Facts:
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Sources: Associated Press, CNNMoney, California Association of REALTORS, National Association of REALTORS, Reuters
Sunday, January 20, 2008
Mortgage applications skyrocket with falling rates! - Week in Review: January 14-20
Good News: Mortgage application volume skyrocketed for the second consecutive week, rising 28.4 percent during the week ending Jan. 11, according to the Mortgage Bankers Association's weekly application survey. Application volume jumped 39 percent during the same week a year ago. Refinance volume rose 43.4 percent, while purchase volume jumped 11.4 percent. Refinance volume accounted for 62.7 percent of total application volume, compared with 57.7 percent the previous week. (via CNNmoney, 1/16)
Applications rose as interest rates continued to fall to the lowest rates since 2005 – the average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.62 percent from 5.73 percent. The average interest rate for 15-year fixed-rate mortgages -- which are typically used to refinance loans -- fell to 5.07 percent from 5.21 percent. Rates for one-year adjustable-rate mortgages fell to 5.77 percent from 6.04 percent. These numbers are different from what I see from CAR and the Baltimore Sun (CNNmoney, 1/16, Baltimore Sun, 1/18))
Sales of existing homes in the U.S. probably fell in December, capping the biggest yearly slump in almost a generation, economists said before a report this week. (Bloomberg, 1/20)
Business Week in an article predicts a home equity crisis coming up because borrowers who tapped into the equity of their properties will have their properties decrease to less than they owe. (1/18)
I mentioned before in a post 2 weeks ago, I believe, stating that homebuilders are beginning to feel positive. This week, CNNmoney reports, Home builders' confidence showed a very slight improvement in January, helped by a narrow gain in their hopes for the market early this summer, according to the latest survey. MSNBC spins this same report saying that “Home builders’ confidence near record low.” (1/16)
Commerce Department says that this past month showed the biggest drop in new homebuilding in 27 years (AP, MSNBC, 1/17)
I'm through talking about a recession - I'm seeing more interest in home buying and predict that things will pick up the 2nd half of this year. If we are/will be in a recession, it started with the home market - so the economy is slagging about 8-12 months behind the home market. As interest returns in the home market this year, it will take a while for the rest of the economy to follow. So you will continue to hear about a recession, while I'm looking beyond it.
Tax rebates – you may have heard in the news that Washington is thinking about giving us money to restart the economy. Right now, the Democrats and Republicans in Congress are hashing out a compromise, which I’ve heard will be done by the end of the month. But don’t hold your breath, you might not see the check until June, once everything is settled. (KNX-AM, 1/17, CNNmoney, 1/19)
The Fed is expected to decrease interest rates by 1/2 to maybe even 3/4 points. (Washington Post, KNX-AM, 1/14)
WaMu accused of appraisal fraud - Lawsuit claims the lender told an appraiser to offer a rosier housing outlook so risky mortgages could get approved. (Money magazine, 1/17)
The median home price in a six-county region of Southern California plunged more than 13 percent in December versus a year ago - The average median price in Los Angeles, Orange, San Diego, Ventura, Riverside and San Bernardino counties hit $425,000 last month, the lowest level since February 2005, when the figure was $420,000. December's median price for the region represents a 2.4 percent dip from November and a 15.8 percent drop from the overall peak price of $505,000 posted last spring and summer. Home sales in the region dropped 45.3 percent to 13,240 from a year ago to the lowest sales total for any December in the 20 years that the firm has been keeping track. Sales were essentially unchanged from November. (DataQuick via CNNmoney, 1/15)
As if you didn’t know: Food prices have gone up a lot! (Seattle Times, 1/17, Washington Post, 1/17)
NAR still seeking loan limit increase on Fannie Mae and Freddie Mac. Currently it's at $417k, which is below the median price for California, to 625k, as part of the federal stimulus package. The FHA Reform Bill is still in committee. (NAR, 1/18)
As U.S. falters, Mexican housing booms - Lower delinquency and declining interest rates are making the market attractive to investors. (CNNMoney, 1/20)
Leaving on a foreign note: Home prices in Spain rose in the fourth quarter at the slowest pace since 1998 after higher borrowing costs damped demand. (Bloomberg, 1/18)
Fast Facts:
* Calif. median home price - November 07: $488,640(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Sources: Bloomberg.com, MSNBC, Associated Press, CNNmoney.com, California Association of REALTORS, National Association of REALTORS, Seattle Times, Washington Post, Money Magazine, KNX-AM, DataQuick, Baltimore Sun, Business Week.
Applications rose as interest rates continued to fall to the lowest rates since 2005 – the average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.62 percent from 5.73 percent. The average interest rate for 15-year fixed-rate mortgages -- which are typically used to refinance loans -- fell to 5.07 percent from 5.21 percent. Rates for one-year adjustable-rate mortgages fell to 5.77 percent from 6.04 percent. These numbers are different from what I see from CAR and the Baltimore Sun (CNNmoney, 1/16, Baltimore Sun, 1/18))
Sales of existing homes in the U.S. probably fell in December, capping the biggest yearly slump in almost a generation, economists said before a report this week. (Bloomberg, 1/20)
Business Week in an article predicts a home equity crisis coming up because borrowers who tapped into the equity of their properties will have their properties decrease to less than they owe. (1/18)
I mentioned before in a post 2 weeks ago, I believe, stating that homebuilders are beginning to feel positive. This week, CNNmoney reports, Home builders' confidence showed a very slight improvement in January, helped by a narrow gain in their hopes for the market early this summer, according to the latest survey. MSNBC spins this same report saying that “Home builders’ confidence near record low.” (1/16)
Commerce Department says that this past month showed the biggest drop in new homebuilding in 27 years (AP, MSNBC, 1/17)
I'm through talking about a recession - I'm seeing more interest in home buying and predict that things will pick up the 2nd half of this year. If we are/will be in a recession, it started with the home market - so the economy is slagging about 8-12 months behind the home market. As interest returns in the home market this year, it will take a while for the rest of the economy to follow. So you will continue to hear about a recession, while I'm looking beyond it.
Tax rebates – you may have heard in the news that Washington is thinking about giving us money to restart the economy. Right now, the Democrats and Republicans in Congress are hashing out a compromise, which I’ve heard will be done by the end of the month. But don’t hold your breath, you might not see the check until June, once everything is settled. (KNX-AM, 1/17, CNNmoney, 1/19)
The Fed is expected to decrease interest rates by 1/2 to maybe even 3/4 points. (Washington Post, KNX-AM, 1/14)
WaMu accused of appraisal fraud - Lawsuit claims the lender told an appraiser to offer a rosier housing outlook so risky mortgages could get approved. (Money magazine, 1/17)
The median home price in a six-county region of Southern California plunged more than 13 percent in December versus a year ago - The average median price in Los Angeles, Orange, San Diego, Ventura, Riverside and San Bernardino counties hit $425,000 last month, the lowest level since February 2005, when the figure was $420,000. December's median price for the region represents a 2.4 percent dip from November and a 15.8 percent drop from the overall peak price of $505,000 posted last spring and summer. Home sales in the region dropped 45.3 percent to 13,240 from a year ago to the lowest sales total for any December in the 20 years that the firm has been keeping track. Sales were essentially unchanged from November. (DataQuick via CNNmoney, 1/15)
As if you didn’t know: Food prices have gone up a lot! (Seattle Times, 1/17, Washington Post, 1/17)
NAR still seeking loan limit increase on Fannie Mae and Freddie Mac. Currently it's at $417k, which is below the median price for California, to 625k, as part of the federal stimulus package. The FHA Reform Bill is still in committee. (NAR, 1/18)
As U.S. falters, Mexican housing booms - Lower delinquency and declining interest rates are making the market attractive to investors. (CNNMoney, 1/20)
Leaving on a foreign note: Home prices in Spain rose in the fourth quarter at the slowest pace since 1998 after higher borrowing costs damped demand. (Bloomberg, 1/18)
Fast Facts:
* Calif. median home price - November 07: $488,640(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Sources: Bloomberg.com, MSNBC, Associated Press, CNNmoney.com, California Association of REALTORS, National Association of REALTORS, Seattle Times, Washington Post, Money Magazine, KNX-AM, DataQuick, Baltimore Sun, Business Week.
Sunday, January 13, 2008
Short & Sweet: Get Ready to Buy! This Week’s Real Estate News, January 7-13
Positive News: Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, and then rise later in the year and continue to improve in 2009, according to NAR’s Pending Home Sales Index (NAR, 1/11)
Pending Homes Sales Index - fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization. The index was 19.2 percent below the November 2006 level of 108.4. In the west, the index fell 2.1 percent to 86.6, which is 18.5 percent below November 2006 levels. (NAR, 1/11, CAR, 1/9)
Stable Existing-Homes Sales in Early 2008, then Gradual Rise - Existing-home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.7 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400. Notice that this forecast expects this to occur no matter who becomes President. (NAR, 1/11)
Mortgage Rates Below 6% - Freddie Mac reports a drop in the 30-year fixed mortgage rate from 6.07 percent to 5.87 percent during the week ended Jan. 10, in response to a recent government report revealing a boost in the unemployment rate to 5 percent in December from 4.7 percent in November. The 15-year fixed mortgage rate fell to 5.43 percent from 5.68 percent over the same period. Meanwhile, the five-year adjustable mortgage rate sank to 5.63 percent from 5.78 percent; and the one-year ARM dropped to 5.37 percent from 5.47 percent. (1/11)
Mortgage Rates Expected to Rise - The 30-year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year, but an additional cut in the Fed funds rate would lower short-term interest rates. (NAR, 1/11)
Bank of America buys Countrywide – this is considered a good situation from the real estate markets. It stabilizes the uncertainty due to the subprime mess. BoA will be punished in the short term as these loans may default, but in the long term, they get the well-established Countrywide network. (KNX-AM, personal interview with NAR President, 1/11)
Cleveland sues Lenders – the City of Cleveland, Ohio, which has been hit hard during this housing slowdown, says 21 banks and mortgage companies signed off of deals they shouldn’t have made (CNNMoney, 1/13)
The “R” Word – As predicted in last week’s blog, there was continued talk about recession this week. I gave the definition that a recession is 2 consecutive quarters of negative growth, but are we currently in that 1st quarter? Merrill Lynch and Goldman Sachs say we are. Goldman further predicts that the recession will be mild, lasting only 2 quarters, the minimum to formally consider it a recession. Others still state that we will squeek by without being in a recession. (CNNMoney, 1/10, KNX-AM, unknown date)
Fed expected to drop rates again – Fed expected to drop rates by 1/2 a point, that’s the push anyway, based on reports I’m hearing, when they meet January 29-30. Their concerns with high energy prices and inflation may prompt them to cut only 1/4 point. Transcript from last month’s meeting where they cut rates 1/4 point show a disagreement between the Fed regional banks with 2 regions saying rates should stay stable, and the rest split between a 1/4 and 1/2 point cut. (CNNMoney, NAR, unknown dates)
World Home Spotlight: New Zealand - New Zealand's home-building approvals fell for a third month in November adding to signs that record- high interest rates are damping demand for property, particularly apartments. New Zealand's house prices rose at the slowest pace in nine months as record-high interest rates and moderating immigration curbed demand for property. (Bloomberg, 1/11)
Fast Facts:
* LA is the 5th most expensive city to rent at $1452 per month, behind NYC ($2922), San Francisco ($1904), Boston ($1658), and San Jose ($1612). (Forbes, 1/7)
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
I probably meet hundreds of people a week, but this week I had the privilege to talk with two leaders in the real estate industry: Richard (Dick) Gaylord, the current president of the National Association of REALTORS and a RE/MAX broker, and Gov Hutchinson, the lead attorney for the California Association of REALTORS. Mr. Gaylord discussed the current news of the day I saw him, about BoA buying Countrywide. Both reviewed current legal issues and contract changes that occurred with the new year. They were both very enlightening, and I look forward to meeting with them again!
Sources: National Association of REALTORS, California Association of REALTORS, Associated Press, CNN Money, Freddie Mac, KNX-AM, Richard Gaylord.
P.S. Just some figures I’m tracking from the NAR report...
Meanwhile, growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent growth rate in 2006; GDP growth will probably be 2 percent this year.
After averaging 4.6 percent for both 2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the second half of 2008. Inflation, as measured by the Consumer Price Index, is projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent in 2006.
Inflation-adjusted disposable personal income is forecast to grow 3.1 percent for 2007, the same as in 2006, and then grow 1.6 percent this year
Pending Homes Sales Index - fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization. The index was 19.2 percent below the November 2006 level of 108.4. In the west, the index fell 2.1 percent to 86.6, which is 18.5 percent below November 2006 levels. (NAR, 1/11, CAR, 1/9)
Stable Existing-Homes Sales in Early 2008, then Gradual Rise - Existing-home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.7 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400. Notice that this forecast expects this to occur no matter who becomes President. (NAR, 1/11)
Mortgage Rates Below 6% - Freddie Mac reports a drop in the 30-year fixed mortgage rate from 6.07 percent to 5.87 percent during the week ended Jan. 10, in response to a recent government report revealing a boost in the unemployment rate to 5 percent in December from 4.7 percent in November. The 15-year fixed mortgage rate fell to 5.43 percent from 5.68 percent over the same period. Meanwhile, the five-year adjustable mortgage rate sank to 5.63 percent from 5.78 percent; and the one-year ARM dropped to 5.37 percent from 5.47 percent. (1/11)
Mortgage Rates Expected to Rise - The 30-year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year, but an additional cut in the Fed funds rate would lower short-term interest rates. (NAR, 1/11)
Bank of America buys Countrywide – this is considered a good situation from the real estate markets. It stabilizes the uncertainty due to the subprime mess. BoA will be punished in the short term as these loans may default, but in the long term, they get the well-established Countrywide network. (KNX-AM, personal interview with NAR President, 1/11)
Cleveland sues Lenders – the City of Cleveland, Ohio, which has been hit hard during this housing slowdown, says 21 banks and mortgage companies signed off of deals they shouldn’t have made (CNNMoney, 1/13)
The “R” Word – As predicted in last week’s blog, there was continued talk about recession this week. I gave the definition that a recession is 2 consecutive quarters of negative growth, but are we currently in that 1st quarter? Merrill Lynch and Goldman Sachs say we are. Goldman further predicts that the recession will be mild, lasting only 2 quarters, the minimum to formally consider it a recession. Others still state that we will squeek by without being in a recession. (CNNMoney, 1/10, KNX-AM, unknown date)
Fed expected to drop rates again – Fed expected to drop rates by 1/2 a point, that’s the push anyway, based on reports I’m hearing, when they meet January 29-30. Their concerns with high energy prices and inflation may prompt them to cut only 1/4 point. Transcript from last month’s meeting where they cut rates 1/4 point show a disagreement between the Fed regional banks with 2 regions saying rates should stay stable, and the rest split between a 1/4 and 1/2 point cut. (CNNMoney, NAR, unknown dates)
World Home Spotlight: New Zealand - New Zealand's home-building approvals fell for a third month in November adding to signs that record- high interest rates are damping demand for property, particularly apartments. New Zealand's house prices rose at the slowest pace in nine months as record-high interest rates and moderating immigration curbed demand for property. (Bloomberg, 1/11)
Fast Facts:
* LA is the 5th most expensive city to rent at $1452 per month, behind NYC ($2922), San Francisco ($1904), Boston ($1658), and San Jose ($1612). (Forbes, 1/7)
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
I probably meet hundreds of people a week, but this week I had the privilege to talk with two leaders in the real estate industry: Richard (Dick) Gaylord, the current president of the National Association of REALTORS and a RE/MAX broker, and Gov Hutchinson, the lead attorney for the California Association of REALTORS. Mr. Gaylord discussed the current news of the day I saw him, about BoA buying Countrywide. Both reviewed current legal issues and contract changes that occurred with the new year. They were both very enlightening, and I look forward to meeting with them again!
Sources: National Association of REALTORS, California Association of REALTORS, Associated Press, CNN Money, Freddie Mac, KNX-AM, Richard Gaylord.
P.S. Just some figures I’m tracking from the NAR report...
Meanwhile, growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent growth rate in 2006; GDP growth will probably be 2 percent this year.
After averaging 4.6 percent for both 2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the second half of 2008. Inflation, as measured by the Consumer Price Index, is projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent in 2006.
Inflation-adjusted disposable personal income is forecast to grow 3.1 percent for 2007, the same as in 2006, and then grow 1.6 percent this year
Sunday, January 6, 2008
Nearing Bottom, Positive Signs and a Short and Sweet Blog! This Week's Real Estate News, Dec 31, 2007- Jan 6, 2008
Positive News: Existing-home sales INCREASED 10.3 percent in November in the western U.S. (NAR, see more below)
More Positive News: Despite all you hear in the news, we are NOT in a Recession right now! No matter how it feels like, a Recession is defined by 2 consecutive quarters of negative growth, as measured by the country’s Gross Domestic Product (GDP). The last two available quarters the GDP grew by 3.8% in the 2nd quarter of 2007 and 4.9% in the 3rd quarter. Economists expect GDP for the quarter that just ended to be about 2%. I know this sounds technical, but it refutes many of the pundits you hear and see. (KNX-AM, 1/5/2008)
Economics News: Consumer confidence up slightly, job growth stalls, and unemployment rises. These numbers make it more likely that the Federal Reserve will once again cut interest rates when they meet later this month. (CNNMoney, 1/4, CAR 1/2)
Sales of new, single-family homes declined 9.0 percent in November 2007 according to new data from the U.S. Census Bureau and the Dept. of Housing and Urban Development. (CAR, 1/2)
But, Existing-home sales rose slightly in November, indicating a stabilization in housing in the wake of mortgage disruptions earlier this year, according to the National Association of REALTORS®. In the West, home sales increased 10.3 percent to a level of 960,000, but are 25 percent below a year ago. Median price: $325,800, which is 6.8 percent lower than November 2006. (NAR, 12/31)
California Builders state the worst is over: California Building Industry Association is predicting that the state's housing slump is near bottom and business will rise steadily. (SF Chronicle, 1/4)
Bush Advisor states that Housing Slump will end by mid-year (CNBC, 1/6)
Lastly, comparing foreign housing markets, as we did in prior weeks. As the Fed has recently decreased the benchmark interest rates, Australia’s central bank has raised its benchmark interest rate to an 11-year high. This has impacted their homebuilding market. In England, U.K. mortgage approvals fell to a three-year low in November, a sign demand from homebuyers is waning as banks provide less access to credit. Manhattan prices are “still crazy” (CNNMoney 1/6, Bloomberg, 1/4)
January’s Newsletter, which will be emailed Monday morning to subscribers, will feature 3 signs of predatory lending and learn the pros and cons of buying in today’s market. That along with the FAQ on how to decrease your property tax bill (legally!) this year and a summary of the housing statistics in the Tri-Valley area of Northern Los Angeles County in the Newsletter. If you wish to subscribe, please send me an email: changhomes@gmail.com. It is free of charge.
Next week's Blog will start the first in a series of Tax Tips! Have a housing-related tax question? Send it to changhomes@gmail.com to have it answered in the series by a tax professional. You might get a $25 discount on your tax return this year from H&R Block.
One of my New Years Resolutions is to keep this blog informative, yet short and sweet. How did I do to start the year off? Send your responses to changhomes@gmail.com.
Sources: National Association of REALTORS, California Association of REALTORS, CNNMoney.com, Bloomberg, CNBC, San Francisco Chronicle, KNX-AM
More Positive News: Despite all you hear in the news, we are NOT in a Recession right now! No matter how it feels like, a Recession is defined by 2 consecutive quarters of negative growth, as measured by the country’s Gross Domestic Product (GDP). The last two available quarters the GDP grew by 3.8% in the 2nd quarter of 2007 and 4.9% in the 3rd quarter. Economists expect GDP for the quarter that just ended to be about 2%. I know this sounds technical, but it refutes many of the pundits you hear and see. (KNX-AM, 1/5/2008)
Economics News: Consumer confidence up slightly, job growth stalls, and unemployment rises. These numbers make it more likely that the Federal Reserve will once again cut interest rates when they meet later this month. (CNNMoney, 1/4, CAR 1/2)
Sales of new, single-family homes declined 9.0 percent in November 2007 according to new data from the U.S. Census Bureau and the Dept. of Housing and Urban Development. (CAR, 1/2)
But, Existing-home sales rose slightly in November, indicating a stabilization in housing in the wake of mortgage disruptions earlier this year, according to the National Association of REALTORS®. In the West, home sales increased 10.3 percent to a level of 960,000, but are 25 percent below a year ago. Median price: $325,800, which is 6.8 percent lower than November 2006. (NAR, 12/31)
California Builders state the worst is over: California Building Industry Association is predicting that the state's housing slump is near bottom and business will rise steadily. (SF Chronicle, 1/4)
Bush Advisor states that Housing Slump will end by mid-year (CNBC, 1/6)
Lastly, comparing foreign housing markets, as we did in prior weeks. As the Fed has recently decreased the benchmark interest rates, Australia’s central bank has raised its benchmark interest rate to an 11-year high. This has impacted their homebuilding market. In England, U.K. mortgage approvals fell to a three-year low in November, a sign demand from homebuyers is waning as banks provide less access to credit. Manhattan prices are “still crazy” (CNNMoney 1/6, Bloomberg, 1/4)
January’s Newsletter, which will be emailed Monday morning to subscribers, will feature 3 signs of predatory lending and learn the pros and cons of buying in today’s market. That along with the FAQ on how to decrease your property tax bill (legally!) this year and a summary of the housing statistics in the Tri-Valley area of Northern Los Angeles County in the Newsletter. If you wish to subscribe, please send me an email: changhomes@gmail.com. It is free of charge.
Next week's Blog will start the first in a series of Tax Tips! Have a housing-related tax question? Send it to changhomes@gmail.com to have it answered in the series by a tax professional. You might get a $25 discount on your tax return this year from H&R Block.
One of my New Years Resolutions is to keep this blog informative, yet short and sweet. How did I do to start the year off? Send your responses to changhomes@gmail.com.
Sources: National Association of REALTORS, California Association of REALTORS, CNNMoney.com, Bloomberg, CNBC, San Francisco Chronicle, KNX-AM
Sunday, December 30, 2007
Positive News and a Happy New Year! This Week’s Real Estate News: December 24-30
I am continuing to strive for positive news to start off the weekly headlines...
Price declines in the tri-valley area of Los Angeles County are not nearly as great as the media would have you believe. The overly-negative Standard & Poor’s/Case-Shiller index shows home prices declined only 8.8% over the past quarter. More below... (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)
Los Angeles area isn’t even mentioned among the top housing decliners in a survey by CNNMoney. More below... (12/28)
High Desert area, including the Antelope Valley, continues to have the most affordable homes in the state. More below in Fast Facts (CAR, 12/27)
U.S. home prices fell 6.7 percent in October, their largest monthly drop since early 1991, according to the Standard & Poor’s/Case-Shiller index. This index surveys over 100 markets, but does not adjust for price differences between markets. It therefore tends to overestimate the swings of the higher-priced markets, such as LA. (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)
Least Expensive Housing Market: Killeen, TX, with average price of $136,725 (CNNMoney, 12/28)
Least Affordable Major City: Los Angeles, CA, only 3.7% of homes sold in L.A. during the third quarter were affordable to families earning the median income for the area ($61,700). (CNNMoney, 12/28)
Fastest Price Gains: Bismark, ND had a 12-month increase in home prices at 15.3%; Salt Lake City, UT; Yakima, WA; Binghampton, NY; and Charlotte, NC all had at least 11% price gains over the past 12 months. (CNNMoney, 12/28)
Biggest Drop in Home Price: Palm Bay, FL, followed by Sacramento, CA, Sarasota, FL, New Orleans, LA, and Hagerstown, MD with greater than 8% drops in price. Notice that although S&P/Case-Shiller showed the LA dropped more than 8.8%, the area didn’t even rank on is list, giving credence to the S&P/Case-Shiller index being overly pessimistic on LA housing price drop. (CNNMoney, 12/28)
Biggest Projected Decline expected in Punta Gorda, FL (35% from its peak to the expected trough), Stockton, CA (31.6%), Modesto (31.3%), Ft. Walton Beach, FL (30.4%), and Naples, FL (29.6%). (CNNMoney, 12/28)
Standard & Poor’s/Case-Shiller index numbers: Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent. Only Charlotte, N.C. (4.3 percent), Portland, Ore. (1.1 percent), and Seattle (3.3 percent) showed positive price growth. (CNNMoney, 12/28)
Mortgage Applications Up from Last Year: Mortgage applications fell last week but they were up nearly 10 percent compared to the same week last year, according to the Mortgage Bankers Association’s weekly survey. The seasonally adjusted mortgage application index fell 7.6 percent in the week ended December 21 to 603.8 -- its lowest reading since falling to 575.6 in the December 29, 2006 week. The applications slump this week and last, however, appears to more closely reflect the status of ailing housing sales. The MBA's seasonally adjusted refinancing applications index fell 8.5 percent to 1,915.3 last week, its weakest point since early September. Home applications trailed off last week despite falling mortgage rates. One-year adjustable mortgages tumbled 45 basis points in the week to 6.03 percent, the lowest since mid-November. Fixed 30-year mortgage rates averaged 6.10 percent last week, down 8 basis points, the association said. (AP, 12/26)
Commerce Department reported that new home sales in November plunged to their lowest level in 12 years, tumbling 9 percent to a seasonally adjusted annual rate of 647,000. (AP, 12/28)
Weak Dollar Continues – Due to uncertainty after assassination of former Pakistani Prime Minister Benazir Bhutto and a report that new home sales dropped in the United States. (AP, 12/28)
National Association of REALTORS to report existing house sales numbers on Monday 12/31. (AP, 12/26)
Orders for the big-ticket manufactured items known as durable goods fell significantly short of expectations in November, the Commerce Department said Thursday, in a disappointing report that added to the growing concerns about the U.S. economy's health. (CNNMoney, 12/27)
California Housing Starts Down 45% - The number of permits issued for new homes in California in November was 5,498, a 45-percent decline from November 2006, according to new data from the California Building Industry Association. Year-over year production of single-family homes declined by roughly 50 percent in November, and construction of multifamily units slid 36 percent. (CAR, 12/27)
Lastly Ending off in Worldwide Real Estate - U.K. Nationwide House Prices Fall for Second Month in December, Drop 0.5% U.K. house prices fell for a second month in December, indicating that higher credit costs are snuffing out a decade-long property market boom, Nationwide Building Society said. (Bloomberg, 12/28)
Fast Facts:
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 12/20: 30-yr. fixed: 6.14%; Fees/points: 0.4% 15-yr. fixed: 5.79%; Fees/points: 0.4% 1-yr. adjustable: 5.51%; Fees/points: 0.6% (Source: Freddie Mac)
Sources: KNX-AM, Freddie Mac, California Association of Realtors, Bloomberg, CNNMoney, Associated Press, Los Angeles Times.
Price declines in the tri-valley area of Los Angeles County are not nearly as great as the media would have you believe. The overly-negative Standard & Poor’s/Case-Shiller index shows home prices declined only 8.8% over the past quarter. More below... (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)
Los Angeles area isn’t even mentioned among the top housing decliners in a survey by CNNMoney. More below... (12/28)
High Desert area, including the Antelope Valley, continues to have the most affordable homes in the state. More below in Fast Facts (CAR, 12/27)
U.S. home prices fell 6.7 percent in October, their largest monthly drop since early 1991, according to the Standard & Poor’s/Case-Shiller index. This index surveys over 100 markets, but does not adjust for price differences between markets. It therefore tends to overestimate the swings of the higher-priced markets, such as LA. (AP, 12/26; LA Times, 12/27; KNX-AM, 12/27)
Least Expensive Housing Market: Killeen, TX, with average price of $136,725 (CNNMoney, 12/28)
Least Affordable Major City: Los Angeles, CA, only 3.7% of homes sold in L.A. during the third quarter were affordable to families earning the median income for the area ($61,700). (CNNMoney, 12/28)
Fastest Price Gains: Bismark, ND had a 12-month increase in home prices at 15.3%; Salt Lake City, UT; Yakima, WA; Binghampton, NY; and Charlotte, NC all had at least 11% price gains over the past 12 months. (CNNMoney, 12/28)
Biggest Drop in Home Price: Palm Bay, FL, followed by Sacramento, CA, Sarasota, FL, New Orleans, LA, and Hagerstown, MD with greater than 8% drops in price. Notice that although S&P/Case-Shiller showed the LA dropped more than 8.8%, the area didn’t even rank on is list, giving credence to the S&P/Case-Shiller index being overly pessimistic on LA housing price drop. (CNNMoney, 12/28)
Biggest Projected Decline expected in Punta Gorda, FL (35% from its peak to the expected trough), Stockton, CA (31.6%), Modesto (31.3%), Ft. Walton Beach, FL (30.4%), and Naples, FL (29.6%). (CNNMoney, 12/28)
Standard & Poor’s/Case-Shiller index numbers: Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent. Only Charlotte, N.C. (4.3 percent), Portland, Ore. (1.1 percent), and Seattle (3.3 percent) showed positive price growth. (CNNMoney, 12/28)
Mortgage Applications Up from Last Year: Mortgage applications fell last week but they were up nearly 10 percent compared to the same week last year, according to the Mortgage Bankers Association’s weekly survey. The seasonally adjusted mortgage application index fell 7.6 percent in the week ended December 21 to 603.8 -- its lowest reading since falling to 575.6 in the December 29, 2006 week. The applications slump this week and last, however, appears to more closely reflect the status of ailing housing sales. The MBA's seasonally adjusted refinancing applications index fell 8.5 percent to 1,915.3 last week, its weakest point since early September. Home applications trailed off last week despite falling mortgage rates. One-year adjustable mortgages tumbled 45 basis points in the week to 6.03 percent, the lowest since mid-November. Fixed 30-year mortgage rates averaged 6.10 percent last week, down 8 basis points, the association said. (AP, 12/26)
Commerce Department reported that new home sales in November plunged to their lowest level in 12 years, tumbling 9 percent to a seasonally adjusted annual rate of 647,000. (AP, 12/28)
Weak Dollar Continues – Due to uncertainty after assassination of former Pakistani Prime Minister Benazir Bhutto and a report that new home sales dropped in the United States. (AP, 12/28)
National Association of REALTORS to report existing house sales numbers on Monday 12/31. (AP, 12/26)
Orders for the big-ticket manufactured items known as durable goods fell significantly short of expectations in November, the Commerce Department said Thursday, in a disappointing report that added to the growing concerns about the U.S. economy's health. (CNNMoney, 12/27)
California Housing Starts Down 45% - The number of permits issued for new homes in California in November was 5,498, a 45-percent decline from November 2006, according to new data from the California Building Industry Association. Year-over year production of single-family homes declined by roughly 50 percent in November, and construction of multifamily units slid 36 percent. (CAR, 12/27)
Lastly Ending off in Worldwide Real Estate - U.K. Nationwide House Prices Fall for Second Month in December, Drop 0.5% U.K. house prices fell for a second month in December, indicating that higher credit costs are snuffing out a decade-long property market boom, Nationwide Building Society said. (Bloomberg, 12/28)
Fast Facts:
* Calif. median home price - November 07: $488,640 (Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 12/20: 30-yr. fixed: 6.14%; Fees/points: 0.4% 15-yr. fixed: 5.79%; Fees/points: 0.4% 1-yr. adjustable: 5.51%; Fees/points: 0.6% (Source: Freddie Mac)
Sources: KNX-AM, Freddie Mac, California Association of Realtors, Bloomberg, CNNMoney, Associated Press, Los Angeles Times.
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