Fannie: 'Recovery is here'

11% growth in home sales forecast for 2010

By Inman News, Thursday, November 19, 2009.

Inman News

The deepest and longest recession since the Great Depression appears to be over, Fannie Mae economists say, projecting sales of new and existing homes will jump 11 percent next year and that national home prices will stabilize, remaining essentially flat.

The mortgage guarantor's monthly housing forecast projects 5.96 million home sales in 2010, with sales of existing homes growing by 10 percent, to 5.46 million. New-home sales are expected to rebound even more sharply in 2010, growing by 24 percent to 498,000.

"It appears that the economic recovery is here," Fannie Mae economists Doug Duncan and Orawin Velz said in a report summarizing their economic and mortgage forecasts, although they expect it will be weak compared to previous recoveries from deep recessions.

Real gross domestic product (GDP) grew at a 3.5 percent annualized pace in the third quarter, following five declines in the prior six quarters, they noted, but growth is likely to moderate in the final three months of the year before strengthening in late 2010.

The first-time homebuyer tax credit helped boost third-quarter home sales, which also led to a jump in real estate brokerage commissions, Duncan and Velz said in their report.

A 23.3 increase in the annualized rate of residential investment (home sales) in the third quarter was the largest in more than two decades, although it came from "extremely depressed" levels, the report said. Real residential investment was contributing to economic growth again, adding 0.5 percentage points to third-quarter GDP growth.

But a survey of consumers in October showed the percentage of respondents indicating that "jobs are hard to get" hitting a new high for the downturn. In their economic forecast, Duncan and Velz said they expect the unemployment rate to average 10 percent next year, up from 9.3 percent this year and 4.6 percent in 2007.

Their housing forecast projects that housing starts will surge by 35 percent next year, from a recent historic low of 462,000 projected starts in 2009 to 624,000 next year.

Fannie Mae expects national home prices will stabilize next year, with the median resale home price remaining essentially unchanged at $170,800. That's a 0.2 percent decline from 2009 and a 22 percent decline from 2007. The median price of a new home is expected to fall by nearly 2 percent from this year to next, to $208,400 -- a 16 percent decline from 2007.

Although new-home sales fell in September after five consecutive months of increases, the months' supply of new homes was unchanged at 7.5 months. New-home stocks have fallen steadily since May 2007, and are at the lowest levels since 1982, Duncan and Velz said in their analysis.

Other data indicate "a substantial excess supply of housing." The homeowner vacancy rate grew to 2.6 percent during the third quarter -- still below the 2.9 percent level reached at the end of 2008 but well above the long-term average of 1.7 percent.

At 11.1 percent, the third-quarter rental vacancy rate was the highest since record-keeping began in 1965. That has depressed rents, which along with stagnating wages relieves pressure on the consumer price index, and that should in turn allow the Federal Reserve to keep short-term interest rates on hold until late 2010, the Fannie Mae economists project.

Mortgage originations are expected to plummet 29 percent next year from 2009 levels, to $1.34 billion, as mortgage rates rise and this year's refinancing boom comes to an end.

Fannie Mae projects $1.3 billion in mortgages will be refinanced this year, accounting for two-thirds of mortgage originations by dollar volume. Only about half the volume in refinancings is expected next year, as many who are eligible to refinance will have already done so. Also, interest rates for 30-year fixed-rate conforming mortgages are expected to rise from an average 5.07 percent this year to 5.42 percent in 2010.

Rates on 30-year fixed-rate mortgages hit a record low of 4.78 percent in April, largely due to the Federal Reserve's purchases of up to $1.25 trillion in mortgage-backed securities in a temporary program that's scheduled to end in March 2010.

With purchase-loan volume expected to climb 13 percent in 2010, to $733 billion, refinancings will make up less than half of the total dollar volume of mortgage loans.

Applications for adjustable-rate mortgage (ARM) loans are expected to account for 8 percent of loan requests next year, up from 5 percent this year but significantly less than the 20 percent market share ARMs caputured in 2007, when the financial crisis began.

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  March is the month where real estate activity traditionally springs forward. The National Association of Realtors® forecasts that the housing market will start to move up in the second half of this year. Chief NAR Economist Lawrence Yun reports that sales have held steady at 5 million (plus or minus 100,000) since September of last year.

  Still, the old cliché holds true – it’s all about location, location, location.

  So is real estate springing forward? The real estate service ShowingTime reports that January 2008 showing requests jumped 40% compared to January 2007, a terrific start to the year. In addition, the increase in showings from December 2007 to January 2008 was the biggest month-to-month increase recorded since ShowingTime began tracking this metric in 2001.

  They are always a few months behind in their stats/reports to compile the statistics, I think you will see a great turn for the better here this spring and summer. The Pendings have gone way up! 2009 has seen many months of increase in sales and a big drop in inventory in our market also. Many homes on the lower price end have multiple offers. There are many short sales now listed in that range now also. The prices are stabilizing on the low price range and inventory is lower than it has been, lower than the normal market which is considered a 6 month supply, it is now in July a little less than or around a 4 month supply of houses now 2009.

  At least some of the home areas are appreciating or holding their value! A lot of our beach towns are still ok!!!!  And are getting revitalization! Some big players coming in here too ~ Hyatt and Marriott amoung a few and our beaches and lagoon areas are still selling with a lot of buyers coming out here!

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  NEW RULES FOR FHA BORROWERS

  The Federal Housing Administration (FHA) today outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan. Rising defaults on FHA loans have led to the FHA'�s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger position and are less likely to default. Policy changes include: Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on January 21 making the premium increase effective in the spring.   Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA's 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. . FHA expects this to take effect in early summer after it goes through the normal regulatory process.   Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process. In addition to the changes, proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward. HUD Press Release

      Wonderful news! The worst is over. Nearly everyone (Moody’s, CNN Money, etc.) agrees: the economy and real estate will turn around by the end of this year. You will never experience times like this again in your lifetime—low, low prices, great interest rates and positive cash flows.

  Pending Home Sales Rise for Record Eight Straight Months

  Washington, November 02, 2009

  Pending home sales rose again, marking eight consecutive monthly gains – the longest streak since measurement began in 2001, according to the National Association of Realtors®.

  The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

  Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

  NAR estimates approximately 3 million renters are now financially well-qualified to buy a median-priced home. “As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” Yun said. “Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans.”

  The Pending Home Sales Index in the Northeast slipped 2.0 percent to 83.6 in September but remains 16.9 percent above September 2008. In the Midwest the index rose 8.1 percent to 98.2 in September and is 17.8 percent higher than a year ago. In the South, pending home sales increased 4.9 percent to an index of 109.7 and is 22.8 percent above September 2008. In the West the index jumped 10.2 percent to 143.8 and is 23.7 percent above a year ago.

  Yun added that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.”

  The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

  # # #

  Forecast Hopeful with First-Time Home Buyers Leading the Way

  San Diego, November 13, 2009

  Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.

  Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

  A large consumer study being released later today, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows first-time buyers accounted for a record 47 percent share of home sales over the past year, up from 41 percent in the 2008 survey. The share has risen steadily since a cyclical low of 36 percent in 2006.

  Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0 percent over last year, and then are forecast to rise 13.6 percent to 5.69 million in 2010. “A steady draw down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy,” Yun said.

  New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.

  The 30-year fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year. NAR’s housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.

  “We’ve seen a steady downtrend in housing inventory for well over a year and home prices appears to be in the early stages of stabilizing. With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5 percent in 2010, but with wide geographic differences,” Yun said.

  He expects growth in the U.S. gross domestic product to be at a pace of 2.5 percent in the current quarter, with GDP up 2.8 percent in 2010.

  The unemployment rate is close to peaking and is projected to ease to 9.5 percent by the end of next year.

  “The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4 percent this year, then rising 1.6 percent in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4 percent this year and 1.2 percent next year.

  The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

  # # #

  *The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

  The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

  An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

  A forecast for housing and the economy will be released November 13 at 11 a.m. PST at the 2009 REALTORS® Conference & Expo in San Diego. Existing-home sales for October will be reported November 23 and the next Pending Home Sales Index will be on December 1; release times are 10 a.m. EST.

  Information about NAR is available at www.realtor.org

  SPECIAL REPORT: NAR Chief Economist Lawrence Yun Predicts 2nd Half '09 Economic Turnaround with Federal Housing Stimulus Package

   Posted by Scott Kauffman 11/13/08 11:07 PM EST

   

  ArticleComments (0), FL) There are two questions on the minds of most American homeowners:  when will the housing market finally start to rebound and how long will the current recession last? One person who understands these subjects as well as anybody is Lawrence Yun, chief economist for the National Association of Realtors.
  
  
  In a special one-on-one interview with the Real Estate Channel at this weekend's NAR national convention, Yun spoke candidly about the state of the U.S. housing market, the overall economy, and where both are headed.
  
  In one of his bolder predictions, Yun predicts the housing market can rebound from its three-year slump and jolt the country out of its current recession during the second half of 2009, so long as the U.S. government implements a housing stimulus package of some kind.
  
  "For the next six months we will have job losses, unfortunately," Yun told the Real Estate Channel. "I anticipate probably 1 million additional job losses. Now there is a discussion of an economic stimulus plan in Washington and I think some form of stimulus will be passed.
  
  "Hopefully they concentrate on the sector that needs it most and will help revive the economy - and that's the housing sector.
  
  "If there can be some stimulus to create additional buyers back into the marketplace I think the recession will be very short and mild. If the housing market continues to struggle then we could see a deeper recession. So for the next six months we will see job losses. After that it will depend upon what type of stimulus package. But assuming that it is focused on the housing, I think we can begin to see the economy turning around in the second half of 2009."
  
  Specifically, the NAR, which is the country's largest trade association with 1.2 million members, is calling for Congress to take action on a "Four-Point Housing Stimulus Plan" presented to lawmakers and the administration last month. Among the plan's highlights, according to a Nov. 6 NAR press release:
  
   

   

  • Eliminate the repayment of the $7,500 first-time home buyer tax credit and make the credit available to all home buyers.

  • Make increased mortgage loan limits backed by Government Sponsored Enterprises permanent.

  • Get the government's economic stabilization efforts focused on the housing and mortgage markets instead of providing capital to banks with no strings attached.

  Another measure strongly being pushed by the NAR is having the government support a 1 percent reduction or "buydown" of interest rates. According to recent NAR economic analysis, this measure alone could result in up to 840,000 additional home sales and reduce the inventory of homes by as much as 20 percent. The current 9.9-month inventory supply would decrease approximately to a 7.5-month supply.
  
  A lower interest rate combined with removing the home buyer tax credit repayment would reduce inventory by an additional 10 percent, the NAR adds, bringing the country's total number of homes for sale to an even more manageable 6.5-month supply. The rate cut would also produce modest home price gains of 2 - 4 percent, generating up to $760 billion in housing equity for the nation's 75 million homeowners.
  
  "We have been pushing for these four points heavily because once the housing market recovers, the economy will be on track for recovery," Yun says.
  
  Federal housing stimulus notwithstanding, Yun feels the housing market is already starting to get back on track in many parts of the country. For example, in the most recent Pending Home Sales Index report released last Friday, the index dropped 4.6 percent in September to 89.2 from an upwardly revised reading of 93.5 percent in August. However, the index still remained 1.6 percent higher than the previous September's reading.
  
  And it was the second month in a row pending sales have been above year-ago levels.
  
  "The month-to-month weakening in pending home sales is understandable, but because the index remains above year-ago levels it means we're still in a broad period of stabilization," Yun pointed out. "Conditions remain mixed around the country, but markets that are showing annual sales gains include Long Island, N.Y.; Boston; Minneapolis; Denver and Washington, D.C., in addition to consistent solid gains in California and Florida."
  
  Other positive signs that the housing market continues to stabilize - and perhaps already hit bottom - is the shrinking inventory of homes for sale.
  
  For instance, the number of new homes has been falling since a peak inventory of 570,000 in August 2006, to 394,000 this past September.  Meanwhile, the number of existing homes in September was 4.27 million - a 9.9-month supply at the current rate of sales, down from an 11.2-month supply in April.
  
  "There are many housing market indicators," Yun points out. "Some have already shown that it has stabilized and maybe on a recovery. Home sales and buyers are coming back - nationally speaking - modestly higher. But some markets like Florida and California, a significantly higher number of buyers are coming back into the marketplace. So in terms of sales (the real estate market) appears to have already bottomed."
  
  To be sure, much of the heightened sales activity across the country involves distressed properties - a figure a recent NAR survey shows could be as high as 35-40 percent of all recent sales. Consequently, affordability is as high as it's been since 2003, as measured by NAR's Housing Affordability Index. The current index is at 130, which means that a family earning the median family income has 130 percent of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home ($191,600 as of September, down 9 percent from the previous year's median of $210,500).
  
  Clearly, the upside of many of these bank-owned foreclosed homes or short sales is a boon to the American public. For instance, the NAR reports sales increases of 20 percent or more between the first and second quarters of 2008 in Arizona, California and Nevada, a 51 percent jump in Idaho and more than 10 percent gains in Florida and Virginia.
  
  The recent presidential election also appears to be fueling Yun's optimistic outlook for the coming year(s).
  
  "We're always interested in the housing agenda independent of the political party," says Yun, explaining the NAR did not endorse either candidate. "Fifty two percent of the population is obviously very happy about their candidate having won the election. We're interested in the housing issues. And President-Elect (Barack) Obama has said that he is very open to looking into housing stimulus measures, and we will provide him with information necessary and ideas as to how he can stimulate the housing.
  
  "Furthermore his team believes in the fundamental long-term benefit of homeownership. So we are very fortunate that independent of the political party that it is the imbedded American value that owning a property is part of owning America."

  Conforming loan limits extended through 2010
  Friday, Oct. 30, 2009
  
  Extension of conforming loan limits through 2010 earns praise from C.A.R.
  
  LOS ANGELES (Oct. 30) –The U.S. Congress late yesterday passed a congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including many in California. President Obama is expected to sign the resolution today or tomorrow as part of a broader piece of budgetary legislation that will prevent a government shutdown.
  
  The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® (NAR) have long advocated making permanent higher conforming loan limits. As a result of C.A.R.’s and NAR’s efforts, a provision of the Housing and Economic Recovery Act of 2008 included temporarily raising the conforming loan limits from $625,500 in high-cost areas to $729,750 and extending the limits through 2009. Yesterday’s actions effectively extend the higher conforming loan limits for Fannie, Freddie, and FHA loans through 2010.
  
  “There is no doubt that higher loan limits and the federal tax credit for first-time home buyers have helped stabilize California’s housing market over the last year,” said C.A.R. President James Liptak. “C.A.R. applauds our congressional representatives for their actions to extend the higher loan limits through 2010. They now should focus on making higher loan limits permanent.”
  
  The conforming loan limit determines the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.
  
  Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 163,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
   

  Home Prices Buoyed by First-Time Buyers and Continued Tight Supply
  By: Oscar Wei, Senior Research Analyst
  
  

  Low prices, historically low mortgage rates, and tax credit incentives offered to first-time buyers, provided support to the California housing market to remain solid in the late summer.  Despite a decline of 5.1 percent from the prior month, the seasonally adjusted annualized sales of existing single-family homes in August exceeded 500,000 for the twelfth consecutive month, and increased 9.0 percent year over year to 526,970 from 483,400 in the same month of last year.  For the first eight months of the year, sales were 38.2 percent ahead of last year on a year-to-date basis.
   

  The August median price increased 2.6 percent month-to-month to $292,960 from a revised July figure of $285,480, but declined 16.9 percent from $352,730 in the same month of last year.  The yearly decline, nevertheless, was the smallest in the last 20 months.  In fact, the statewide median price increased for the sixth month in a row and the August median price was 19.5 percent above the recent low of $245,170 reached earlier this year in February.
  
  The growth in price is due in part to the imbalance between supply and demand in the housing market.  Although statewide sales were almost 40 percent stronger than last year on a year-to-date basis, inventory levels were 35.0 percent lower than a year earlier in August.  The unsold inventory index was 4.3 months, a slight increase from 3.9 months a month earlier, but below the 7.0 month figure of a year ago. At 4.1 months, the 3-month average for the unsold inventory was well below the long run average of 7 months, and had been displaying a declining trend throughout the past 19 months.
  
  Supply was especially tight at the low-end of the market.  The unsold inventory index for homes that were priced below $500,000 was 3.4 months in August, as compared to 4.7 months for homes with price between $500,000 and $1 million, and 12.9 months for homes with price over $1 million.  The unsold inventory index was at 7.0 months, 6.8 months, and 11.0 months respectively for the same month last year.
  
  Tight inventory at the low-end market was largely attributed to the increase in the demand of entry-level homes by first-time buyers. Results from the latest CALIFORNIA ASSOCIATION OF REALTORS^®’ (C.A.R) “Annual Housing Market Survey” suggest that nearly half of all buyers in 2009 are first –time buyers, up from 36 percent in 2008.
  
  First-time buyers are motivated to buy now because of the tax credit incentive offered by the federal government.  According to the C.A.R. “2009 First-time Home Buyers Tax Credit Survey”, four out of ten (39 percent) first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered.  Over nine of ten first-time buyers (94 percent) were aware of the tax credit before they purchased their homes, and 72 percent planned to apply for the Federal First-Time Home Buyer Tax Credit when they file their taxes.  The federal tax credit is a big factor in many first-time buyers’ decision to purchase a home: 69 percent of those surveyed said that the federal tax credit was either “very important” or “most important” in their home buying decision now. The Federal First-Time Buyer Tax Credit is scheduled to expire on November 30, 2009, but a 6-month extension is under consideration at this time.  An extension, if passed by the legislation, will undoubtedly contribute to the recovery in the California housing market. 

  2009 Survey of California Home Buyers - Highlights

  find the article at:

  http://www.car.org/economics/currentresearch/homebuyer2009/

   

  After back-to-back years of sharp declines in sales, the California housing market bounced back in 2008 with a 27 percent increase in sales. The increase was due in large part to the growth in the absorption of distressed properties, which comprised over half of the sales. With deeply discounted distressed sales flooding the market, prices have dropped significantly since early 2008. The accumulation of foreclosures, REOs, and short sales will continue to put downward pressure on home prices, until mortgage problems begin to subside in the second half of 2009. Despite their negative impact on home owners’ equity, the decline in home prices, combined with historically low mortgage rates, have dramatically improved housing affordability and have created opportunities for home buyers.

   

  The Survey of California Home Buyers is the 10th annual CALIFORNIA ASSOCIATION of REALTORS® (C.A.R.) buyer survey that details how home buyers have changed their behaviors in recent years to adapt to the new housing market environment and to the increased use of the Internet in the real estate business. Some of the key findings include:

  • Distressed sales made up more than half of sales in California. According to results from the survey, 49 percent of all buyers bought a home through a regular market sale, 38 percent bought an REO/bank-owned property, and 13 percent bought a short-sale property.

  • Home buyers, in general, were optimistic about the future direction of home prices in their neighborhood. While fewer than one in ten believed prices would go up over the next year, one-third believed prices would go up in the next 5 years, and 60 percent thought prices would go up in 10 years.

  • Home buyers continued to experience considerable difficulty in obtaining financing for the homes they bought. On a scale of “1” to “10”, with “1” being “very easy” to obtain financing and “10” being “very difficult”, home buyers reported a high average level of difficulty in obtaining finance of 8.1.

  • A recent study by the CALIFORNIA ASSOCIATION OF REALTORS® suggests that the financial benefits of owning a home outweigh that of renting for first-time buyers. For a first-time buyer household that purchases an entry-level home between Jan. 1 and Nov. 30, 2009, the overall tax liability savings in the first five years of homeownership is well over $11,000 when compared to renters.

  • When asked why they were satisfied with their agent, home buyers continued to cite “always quick to respond” (73 percent) and “negotiated good deal on their behalf” (61 percent) as the top two reasons.

  • Home buyers needed the most help with price negotiation (36 percent), determining prices for comparable homes (24 percent), finding the right home to purchase (21 percent), negotiating the purchase of distressed property with banks (18 percent), and negotiating the terms of sale (2 percent). 

  • Home buyers offered some suggestions to agents on how to improve their services. Home buyers would like their agents to improve the speed of communications (33 percent); provide references for lenders who will perform (32 percent), become more knowledgeable on how to deal with banks on REOs, short sales, and other distressed properties (32 percent), demonstrate the ability to negotiate aggressively for buyers (31 percent), and provide references for lenders who will recommend the best product for the buyer (28 percent). 

   
  Entry-level housing affordability reaches 64 percent
  The percentage of households that could afford to buy an entry-level home in California stood at 64 percent in the third quarter of 2009, compared with 55 percent for the same period a year ago, according to a report released last week by C.A.R.  The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

• 
  The minimum household income needed to purchase an entry-level home at $247,150 in California in the third quarter of 2009 was $43,500, based on an adjustable interest rate of 4.79 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $1,450 for the third quarter of 2009.

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  At 85 percent, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 47 percent, followed by the San Francisco Bay region at 49 percent.

  •  
    Consumer interest in investing doubles
    A new survey found that 12.1 percent (one out of eight) of today’s home buyers plan to purchase a home as an investment property, compared with 5.6 percent in March 2009, according to the Move.com Homeownership Survey.  Of those interested in buying a home as an investment, 15.8 percent were men and 8.1 percent were women.  

  • 
    The survey also found that buyers who plan to purchase foreclosures expect to profit both from deeply discounted purchase prices, as well as healthy appreciation rates over the next five years.  Most foreclosure buyers (58.2 percent) expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a discount of 25 percent or greater.  While, 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more during that same investment horizon.  

     

     

California housing market turns corner, REALTORS® say California, one-time hub of subprime mortgage lending and the nation’s leader in home foreclosures, has turned the corner toward a housing recovery, according to the state association of REALTORS®.   By Daniel Taub Nov. 25 (Bloomberg) -- California, one-time hub of subprime mortgage lending and the nation’s leader in home foreclosures, has turned the corner toward a housing recovery, according to the state Association of Realtors. Single-family home prices in California rose for the eighth consecutive month in October. The median cost of an existing, detached house gained 0.3 percent from the previous month to $297,500. Prices dropped about 3.2 percent from a year earlier, compared with annual declines of 7.3 percent in September and 17 percent in August. “California has hit and passed the bottom of this real estate cycle,” Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based Realtors group, said in a statement today. Sales of existing houses climbed 1 percent in October from a year earlier, the Realtors group said. The state is on pace to record 562,400 sales in 2009, based on the rate of transactions last month. Foreclosures represented 41 percent of sales, down from a peak of 59 percent in February, research company MDA DataQuick said on Nov. 19. Home sales throughout the U.S. are being boosted by a drop in interest rates and a federal tax credit for homebuyers. Fixed 30-year mortgage rates dropped for a fourth consecutive week to 4.78 percent, matching a record low set in April, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. The median single-family house price in California is 50 percent below the peak of $594,530 reached in May 2007, the state Realtors group said. California Unemployment California, the most-populous state, has one of the highest jobless rates in the country. The state’s unemployment rate is 12.5 percent, compared with the national rate of 10.2 percent, according to the U.S. Department of Labor. Dangers still facing the state housing market include joblessness and the end of the federal tax credit next year, Appleton-Young said in an interview. “There are a lot of minefields -- a lot of uncertainty going forward -- but we were looking at eight consecutive months of increases in the statewide median, and we are seeing multiple offers” on many homes for sale, she said. “It’s going to be a slow recovery.” Obstacles also may include homeowners who want to sell their houses and are waiting for higher prices, and an unknown number of foreclosed properties that have yet to hit the market, said Andrew LePage, an analyst with MDA DataQuick, in a Nov. 17 interview. ‘Aren’t Normal Times’ “The market’s starting to tighten up a little bit,” LePage said. “In normal times, we would technically be in a seller’s market. Of course, these aren’t normal times.” The median time it took a median to sell a California house fell to 34.1 days in October from 45.5 days a year earlier, the Realtors group said. The association’s index of unsold inventory dropped to a four-month supply from 6.1 months a year earlier. The index shows the time needed to deplete the supply of homes on the market at the current sales rate. The median price for a California condominium was $267,520, down 3.6 percent from a year earlier and 1 percent from September, the Realtors group said. Condominium sales rose 9.4 percent from a year earlier and 5.5 percent from September. Last Updated: November 25, 2009 15:27 EST

 
C.A.R. releases California Housing Market Forecast for 2010