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Housing market may have turned a pivotal corner

January 30th, 2009 9:33 AM

With home prices in many areas declining to the point where owning a home is a more affordable option than renting, especially in the West, many potential home buyers appear to be getting off the fence and starting to purchase. Add affordable prices to record-low interest rates and the demand for housing has reached a pivotal turning point.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Home prices in some areas of California have dropped so much that monthly mortgage payments on single-family homes are comparable to apartment rents, according to recent data. Mollie Carmichael, a senior vice president with John Burns Real Estate Consulting, says that in the Inland Empire , the average monthly rent for an apartment is $1,157. Carmichael adds that the average after-tax monthly mortgage payment on a median-priced single-family detached home is $1,154 in the same area.

· The large number of distressed properties has led to a surge in home sales around the country. Existing home sales across the U.S. rose 6.5 percent to an annual rate of 4.74 million units in December, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). A senior director of housing economics at Moody’s Economy.com believes the latest NAR report means sales have reach bottom.

· Interest rates on 30-year, fixed-rate mortgages averaged 5.12 percent for the week ending Jan. 22, which is almost 1 percentage point lower than the average rate in late November 2008, according to Freddie Mac. The prior week, 30-year mortgage rates average 4.96 percent, the lowest since Freddie Mac began its weekly survey in 1971.

Posted by Gail McClendon on January 30th, 2009 9:33 AMPost a Comment (0)

House Passes Stimulus Package

January 30th, 2009 9:31 AM

Jan. 29, 2009

Wall Street Journal

The U.S. House of Representatives approved an $819 billion stimulus package -- the Economic Recovery

Package -- this week, which if approved by the Senate will extend all 2008 Metropolitan Statistical Areas’

(MSAs’) Fannie Mae, Freddie Mac, and FHA loan limits through the end of this year. The extension will

prevent an MSA’s 2008 loan limit from being reduced in 2009 for Fannie Mae, Freddie Ma and the FHA.

The bill also specifies that if an MSA’s loan limit is set to change, it can increase, but is prohibited from

decreasing.

KEEP THIS IN MIND

• The proposed legislation will eliminate an existing payback requirement on the first-time home

buyer tax credit for qualified buyers who purchase a home between Dec. 31, 2008 and July 1.

• The package also will provide up to $1,000 per year in tax relief for most families, increase funding

for alternative energy production, and direct more than $300 billion in aid to states to help rebuild

schools, provide health care, and reconstruct highways and bridges.

• The Senate currently is working on its version of the stimulus legislation, and is expected to vote on

it next week. Congress would like to get a bill to he President’s desk by President’s Day, Feb. 16.

To read the full story, please click here:

http://online.wsj.com/article/SB123315486943524321.html

To read additional articles about the Economic Recovery Package, which may be of interest to you and your

clients, please visit:

Homebuyers get a bonus in the stimulus bill

http://money.cnn.com/2009/01/29/real_estate/tax_credit_near/index.htm?postversion=2009012907

Global Worries Over U.S. Stimulus Spending

http://www.nytimes.com/2009/01/30/business/worldbusiness/30davos.html?_r=1&hp

Biden: Stimulus Package Will Get Better With Changes

http://www.cnbc.com/id/28917177

Jan. 29, 2009 Page 2 of 7

C.A.R. Mortgage Update

This week’s C.A.R. Mortgage Update contains information about the possibility of a national banking system;

how to decide if refinancing is the best option; strategies under consideration to mitigate U.S. foreclosures;

and Fannie Mae and Freddie Mac.

What if Uncle Sam takes over your bank?

Approximately 315 financial institutions have signed over some of their shares and other securities to the

U.S. Dept. of the Treasury in exchange for a portion of the Troubled Asset Relief Program (TARP) funds.

The government may take complete ownership of certain troubled banks if the credit crisis does not ease.

If banks are nationalized, consumers probably will not directly be affected. The FDIC will continue to insure

deposits up to $250,000 through Jan. 1, 2010, and may make it easier for qualified borrowers to receive

loans. Credit lending standards also may be loosened, enabling borrowers with less-than-perfect credit

scores to receive loans.

According to a senior financial analyst at Bankrate.com, homeowners at nationalized banks also would

benefit because the government is likely to halt foreclosure proceedings.

To read the full story, please click here:

http://online.wsj.com/article/SB123258304319904345.html

Refinance? First, see whether you will save

Homeowners thinking of refinancing their home loans should consider if the long-term savings is beneficial

prior to making a decision. Although there isn’t a standard formula to determine whether refinancing is the

best option, there are some basic guidelines.

Focusing on the potential savings, rather than the new rate is the first step. To determine the break-even

point -- the number of months it will take to pay off the cost to refinance -- divide the total cost of the loan by

the monthly savings from refinancing. That number is how long the homeowners should live in the house for

the refinance to be viable. For example, if the refinance will cost $5,000 and the monthly savings is $200,

then the homeowner will have to live in the home for a little over two years to recoup the costs of the

refinance and begin to realize a true savings.

To read the full story, please click here:

http://www.orlandosentinel.com/business/orl-refinance2109jan21,0,4772660.story

To view additional articles about the mortgages, please visit:

U.S. weighs strategies to stem home foreclosures

To read the full story, please click here:

http://www.latimes.com/business/la-fi-housing26-2009jan26,0,5664777.story

Fannie, Freddie may tap U.S. Treasury for $51 billion

To read the full story, please click here:

http://www.reuters.com/article/gc03/idUSTRE50P7EG20090127

New Fannie, Freddie rules on the way

To read the full story, please click here:

http://money.cnn.com/2009/01/23/news/economy/Fannie_freddie/index.htm?postversion=2009012319

Jan. 29, 2009 Page 3 of 7

Reuters

Housing market may have turned a pivotal corner.

With home prices in many areas declining to the point where owning a home is a more affordable option

than renting, especially in the West, many potential home buyers appear to be getting off the fence and

starting to purchase. Add affordable prices to record-low interest rates and the demand for housing has

reached a pivotal turning point.

KEEP THIS IN MIND

• Home prices in some areas of California have dropped so much that monthly mortgage payments

on single-family homes are comparable to apartment rents, according to recent data. Mollie

Carmichael, a senior vice president with John Burns Real Estate Consulting, says that in the Inland

Empire, the average monthly rent for an apartment is $1,157. Carmichael adds that the average

after-tax monthly mortgage payment on a median-priced single-family detached home is $1,154 in

the same area.

• The large number of distressed properties has led to a surge in home sales around the country.

Existing home sales across the U.S. rose 6.5 percent to an annual rate of 4.74 million units in

December, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). A senior director

of housing economics at Moody’s Economy.com believes the latest NAR report means sales have

reach bottom.

• Interest rates on 30-year, fixed-rate mortgages averaged 5.12 percent for the week ending Jan. 22,

which is almost 1 percentage point lower than the average rate in late November 2008, according

to Freddie Mac. The prior week, 30-year mortgage rates average 4.96 percent, the lowest since

Freddie Mac began its weekly survey in 1971.

To read the full story, please click here:

http://www.reuters.com/article/ousiv/idUSTRE50L35320090127

Jan. 29, 2009 Page 4 of 7

Chicago Tribune

Granite countertops are out? What’s in?

Although new home building activity is at a slower pace than in previous years, many home buyers have

changed what characteristics they look for in a home. To reflect this, some home builders are developing

not only homes with less square footage, but also ones with less dead space, fewer fireplaces, and energyefficient

amenities.

KEEP THIS IN MIND

• Homes are being built smaller, with simpler designs, and less “bump-outs” or dead space.

According to a design editor at Builder magazine, boxes are cheaper, easier and faster to build.

The heating and cooling bills also may be lower with less dead space.

• While homes may be smaller, home buyers aren’t skimping on luxury. Some master bathrooms

may have a shower with upgrades, such as multiple body sprays, radiant heat in the bathroom floor

and the shower walls, along with warming drawers for towels and robes, rather than a simple

shower and whirlpool spa tub.

• Specialty rooms, like a home office, exercise and theater rooms are transitioning in multi-function

spaces. Traditional home offices are no longer off limits to children, but rather the tech center of

the house, with ample space for computers and electronic gadget chargers.

• The newest trend in countertops is quartz surfacing, recycled glass, cement or paper-based

products, not granite. Along the same lines, stainless-steel appliances also are becoming less

popular. Appliances with built-in panels that resemble the cabinetry also are in higher demand.

To read the full story, please click here:

http://www.chicagotribune.com/classified/realestate/advice/chi-localscene_

chomes_0123jan23,0,1091270.column

Jan. 29, 2009 Page 5 of 7

Fresno Bee

Home sales increase in California, Valley

The CALIFORNIA ASSOCIATION OF REALTORS® this week reported home sales in California soared

84.9 percent in December, compared with the previous year. The median price of an existing, single-family

home declined 41.5 percent to $281,100.

KEEP THIS IN MIND

• Sales continued to be strong in December, exceeding 500,000 units for the fourth consecutive

month. Year-to-date sales are nearly 27 percent above last year. Many California home buyers

benefited during the last half of 2008 from the high-cost loan limit of $729,750, which fell to

$625,500 as of Jan. 1. The restoration of the high-cost loan limit to the previous level would not

only help a housing market still struggling to turn around, but also make financing more affordable

for home buyers.

• Median prices continued to decline in December, and based on preliminary calculations, the

statewide annual median price declined 38 percent for all of 2008 compared with 2007. While the

month-to-month decrease in December was considerably smaller than in recent months, it remains

too early to determine if prices are beginning to stabilize. Many distressed sales still must work

their way through the system.

• A bright spot in the declining median home price is that the cost of housing is more in line with

household income, improving affordability across the state. This should be especially helpful for

first-time buyers who can qualify for a home loan.

• C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in December 2008

was 5.6 months, compared with 13.4 months for the same period a year ago. The index indicates

the number of months needed to deplete the supply of homes on the market at the current sales

rate.

• Thirty-year fixed-mortgage interest rates averaged 5.29 percent during December 2008, compared

with 6.10 percent in December 2007, according to Freddie Mac. Adjustable-mortgage interest rates

averaged 4.97 percent in December 2008, compared with 5.50 percent in December 2007.

• The median number of days it took to sell a single-family home was 46.1 days in December 2008,

compared with 66.7 days for the same period a year ago.

To read the full story, please click here:

http://www.fresnobee.com/business/story/1158525.html

Jan. 29, 2009 Page 6 of 7

In Other News…

Sacramento Bee

2008 was year home buyers finally got off fence

To read the full story, please click here:

http://www.sacbee.com/business/story/1560703.html

San Francisco Chronicle

Home sales soar as foreclosures drive down prices

To read the full story, please click here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/22/MNBG15EFC6.DTL&type=business

Mercury News

2008: Silicon Valley’s worst year for home sales in decades

To read the full story, please click here:

http://www.mercurynews.com/realestatenews/ci_11513904?nclick_check=1

San Francisco Chronicle

Consumer confidence darkens further in January

To read the full story, please click here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/01/27/financial/f070114S70.DTL

Jan. 29, 2009 Page 7 of 7

San Diego Union-Tribune

Low-cost units stuck in limbo

To read the full story, please click here:

http://www3.signonsandiego.com/stories/2009/jan/26/1n26afford1234230-low-cost-units-stucklimbo/?

zIndex=43017

San Francisco Chronicle

All price ranges share pain of home sales drop

To read the full story, please click here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/25/REBL15FAKS.DTL

Los Angeles Times

New-home construction falls to all-time low

To read the full story, please click here:

http://www.latimes.com/business/la-fi-housing23-2009jan23,0,3305475.story

San Francisco Chronicle

Property tax revenue plummets with home values

To read the full story, please click here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/25/MNV7155VSC.DTL

Posted by Gail McClendon on January 30th, 2009 9:31 AMPost a Comment (0)

Snap shot of Mission Viejo homes for sale - Foreclosures, short sales, all sales

January 22nd, 2009 10:29 AM

There are currently 340 homes for sale in Mission Viejo and an additional 149 homes in escrow. This includes condos as well as single family detached homes.

23 of the total active homes for sale in Mission Viejo are Bank Owned properties, REOs. There are another 33 REOs in escrow.

218 of the total 489 homes in for sale and in escrow are short sales.

That means less than half of the total homes currently on the market are regular, equity seller, sales.

Contact gail@viphousesearch.com or 949 422-4343 for more information or visit my website @ www.viphousesearch.com.

Posted by Gail McClendon on January 22nd, 2009 10:29 AMPost a Comment (0)

Record Low Mortgage Rates Boost Refinance Activity in Latest MBA Weekly Survey

January 22nd, 2009 9:35 AM

Press Release - Weekly Application Survey


Source:	MBA
Date:	1/14/2009

WASHINGTON, D.C. (January 14, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 9, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 1324.8, an increase of 15.8 percent on a seasonally adjusted basis from 1143.8 one week earlier. On an unadjusted basis, the Index increased 95.7 percent compared with the previous week and was up 52.4 percent compared with the same week one year earlier.

The Refinance Index increased 25.6 percent to 7414.1 from 5904.5 the previous week and the seasonally adjusted Purchase Index decreased 14.1 percent to 295.8 from 344.2 one week earlier. The Refinance Index is at its highest level since the week ending June 27, 2003, when it was 8599.1.

The seasonally adjusted Conventional Purchase Index decreased 10.3 percent while the Government Purchase Index (largely FHA) decreased 21.8 percent.

The four week moving average for the seasonally adjusted Market Index is up 10.8 percent. The four week moving average is up 0.8 percent for the seasonally adjusted Purchase Index, while this average is up 13.8 percent for the Refinance Index.

The refinance share of mortgage activity increased to 85.3 percent of total applications from 79.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 1.1 percent from 0.9 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.89 percent from 5.07 percent, with points increasing to 1.20 from 1.16 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The contract rate for 30-year fixed-rate mortgages is the lowest recorded in the survey. The previous low was 4.99 percent for the week ending June 13, 2003.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.63 percent from 4.67 percent, with points decreasing to 1.14 from 1.16 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.89 percent from 5.90 percent, with points decreasing to 0.11 from 0.31 (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

Please note that the survey results scheduled to be released on Wednesday, January 21, 2009, will be released at 7 a.m. on Thursday, January 22, 2009 instead due to Inauguration Day.

The survey covers approximately 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.

Posted by Gail McClendon on January 22nd, 2009 9:35 AMPost a Comment (0)