August sales and price report

California home sales edged up 1.8 percent from July, but were down 14.9 percent from August 2009, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported. The statewide median home price also increased 1.2 percent from July and was up 8.6 percent from a year ago.

“Buyers who are holding out should consider the opportunities in today’s market,” said C.A.R. President Steve Goddard. “Favorable home prices and interest rates at or near historic lows make housing affordability the best in recent memory. Anyone who is in a position to buy a home should do so before either of these key factors rise.”

Closed escrow sales of existing, single-family detached homes in California totaled 447,530 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 14.9 percent from the revised 526,110 sales pace recorded in August 2009. Sales in August 2010 increased 1.8 percent compared with July.

FHA to Raise Monthly Insurance Premiums by over 63%

FHA Gives Home Buyers One-Month Window
September 1, 2010--The Federal Housing Administration (FHA) is giving homeowners and buyers until October 4 to lock in a low monthly insurance premium, according to Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. “After October 4, the monthly insurance premiums on FHA loans will increase by over 63%.”

What does this mean for home buyers?
A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01.

“In this example, the home buyer would lose $59.55 per month, or $7,146 over a 10-year timeframe,” Nicholas said. “Although the upfront mortgage insurance premium is going down after October 4, the real impact to the home buyer is actually a net increase in their out of pocket costs because the monthly premium is going up by 63%. Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so homebuyers rarely pay the upfront premium out of pocket. On the other hand, the increase in the monthly premiums will be paid right out of the home buyer’s pocket with their mortgage payment each month.”

Refi Protection for Purchase Money Debt

LOS ANGELES (Aug. 19) – The California State Assembly today approved SB 1178 (D-Corbett) by a 49 to 14 vote, extending anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is the sponsor of the consumer-protection legislation.

Under existing law, if a homeowner defaults on a mortgage used to purchase a home—commonly referred to as a “purchase money mortgage”—the homeowner's liability on the mortgage is limited to the property itself. However, homeowners who refinanced the original purchase debt, even if only to obtain a lower interest rate, were not extended the same protections. SB 1178 corrects this unfairness and extends the same protections to consumers who refinance their home loans.

“Cash-out” debt for home improvement or consumer expenses is not protected by SB 1178. Similarly, additional new debt secured by the home, such as a home improvement loan, is not protected—only original acquisition debt.

“Today’s vote was a victory for homeowners in California, but the fight is not yet finished,” said C.A.R. President Steve Goddard. “We are urging Gov. Schwarzenegger to swiftly sign into law this crucial piece of legislation. Passage of SB 1178 will ensure lenders underwrite refinance loans at least as carefully as purchase money mortgages and will provide much-needed consumer protection.”

SB 1178 now moves to Gov. Schwarzenegger for his signature. If signed, SB 1178 will become effective June 2011.

905 Travaille in Ripon

5 Good Reasons to Buy NOW.

1)Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.
2)Houses are in move-in condition. Many homes are available where home owners have continued to spend on maintenance and repair.
3)Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.
4)Appraisal regulations are finally beginning to align with market conditions. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the market more accurately.
5)Plenty of programs. Many programs, like FHA loans, that encourage middle-class families to buy homes continue to exist, despite market downturns.

Top 10 "Don'ts" During Your Home Purchase

Leading nationwide credit expert and President of Credit Resource Corporation, Linda Ferrari, developed the top 10 credit don'ts during the loan process, to help you get your arms around those things that can unknowingly wreak havoc on your loan transaction.

1. Don't do anything that will cause a red flag to be raised by the scoring system (i.e. big purchases, atypical spending patterns, etc)
2. Don't apply for new credit of any kind
3. Don't pay off collections or charge offs
4. Don't max out or over charge on your credit card accounts
5. Don't consolidate your debt onto 1 or 2 credit cards
6. Don't close credit card accounts
7. Don't pay late
8. Don't allow any accounts to run past due-even one day!
9. Don't dispute anything on your credit report
10. Don't lose contact with your mortgage and real estate professionals

Please contact me anytime if I can help you...I'm happy to hear from you!

Accurate Pricing For Sale

Accurately pricing a home for sale continues to be one of the most important factors in determining whether a home sells or lingers on the market. In some cases, sellers may need to reduce their asking price to attract buyers and offers. Some homeowners may struggle with determining whether or not they should reduce their list price. Receiving the guidance of a REALTOR® may help sellers decide if they should reduce the asking price. Sellers also may want to consider reducing their asking price if the following applies:
The sales prices of recently sold homes in the area are
lower than the list price of the home listed for sale.
Feedback from buyers’ agents suggests the home is
overpriced.
The home isn’t receiving any showings, even though it is
well marketed.
There have been multiple offers, but they consistently have
been significantly lower than the list price.

Closing Deadline Extended for Federal Credit

President Obama signed a bill extending the closing deadline for the federal home buyer tax credit to Sept. 30, 2010. The bill is retroactive and covers the lapse period from June 30, 2010 to the date of enactment of the extension. Congress passed the bill earlier this week.

Nearly 180,000 home buyers would have missed out on the tax credit had Congress and the president not taken action to extend the deadline to close escrow. Estimates from NAR show as many as 17,700 home buyers in California would not have received the tax credit without the extension.

Pending Home Sales Drop as Expected

Following a surge driven by the home buyer tax credit, pending home sales fell with the expiration of the deadline for qualified buyers to sign a purchase contract, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator, dropped 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff comes on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.

Yun noted the tax credit has broadly stabilized home prices. “Without the tax credit, there will be more aggressive price negotiations between buyers and sellers. The key test on whether the housing market can stand on its own without stimulus medicine will depend critically on private sector job creation in the second half of the year. We’ll also keep a close eye on market conditions on the Gulf Coast.”

Through May of this year 495,000 net private sector jobs have been created; NAR’s forecast for employment growth is about 1 million additional net new jobs over the balance of the year and another 2 million in 2011.

“If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions,” Yun said.

“In most areas of the country there will be no sharp snap back in home prices in the upcoming years, although some local markets have experienced double-digit gains this year,” Yun said. NAR forecasts the national median home price to rise only 4 percent cumulatively over the next two years.

“One factor that could lead to price acceleration in upcoming years for some markets is if the very low levels of new-home construction were to persist for another year or two,” he added.

Is a Housing Shortage on the Horizon???

Some experts are saying that the next big real estate problem could be a shortage of homes.

Only 672,000 new homes were started in April. That’s less than half the number needed to meet the country’s average population growth.

In the past, an average of more than 1.3 million households have been built each year, creating demand for 1.5 million new homes. In 2009, only 398,000 new households were formed, according to the Census Bureau.

"The decline in household formation is artificial," says James Gaines, a real estate economist with Texas A&M. "The young are moving in with their parents. There's even doubling up among working-class people. There's a pent-up demand coming if and when the economy recovers."

Some economists believe this analysis fails to take into account the changing economy or the large inventory of vacant properties. But Gaines and others say these factors are unlikely to significantly drive down demand.

Source: CNNMoney.com, Les Christie (06/15/2010)

House Hunting? 5 Things to Keep in Mind....

1. Expect stiff competition for some homes. There still seems to be an abundance of buyers and homes for sale are still receiving multiple offers. In most areas homes are selling on average at or just above (101-103%) of asking price. Bottom line is expect some competition and be proactive!

2. Getting a loan may be more complicated and time-consuming than you expect. With all of the questionable lending in recent years underwriters are being VERY cautious these days. Tax returns, pay stubs, verification of employment, and credit checks right before funds are drawn are not uncommon. Be VERY careful in escrow not to make any large purchases and do your homework ahead of time - GET PRE-APPROVED.

3. Buyers, be prepared to try, try again. It can be extremely frustrating for buyers right now. It feels as though foreclosure banks and short-sale servicers are holding all the cards and buyers are forced to play by their rules. Be patient, don't get emotionally attached to any one house, and be persistent. There are great deals to be had if you can survive the journey.

4. The appraisal process can throw a monkey wrench into a sale. Appraisals seem to be coming in lower than usual, possibly from increased scrutiny and the fear that lenders will crack down on any appraiser that causes them to lend more than the home is worth. If the home appraises at or above the offered price then everybody is happy. But if it comes in below the offered price then renegotiation must take place until funds are conceded to the appraised value.

5. Completing a "short sale" can be a hassle. Although programs like H.A.F.A. seem to be helping, the short sale process can still take months (depending on the servicer). There are typically savings to be had if one can stomach the ride and, in my opinion, short sales are worth the wait.

If you have any questions in regards to any of the above then I'd be happy to discuss things with you further. Please contact me anytime at tcrekevin@gmail.com with any questions or concerns.

High Level of Pending Home Sales Continues

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”

Some good signs for a change....

Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions, according to the latest survey. Existing-home sales increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009. Monthly sales rose 7.0 percent in March. Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”

Home appraisals still fraught with uncertainty despite new code of conduct

Last year, the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, and the New York State General Attorney created an agreement titled the Home Valuation Code of Conduct (HVCC), which prohibits lenders, mortgage brokers, and real estate agents from selecting and having any “substantive” communication with a home appraiser. HVCC was created to protect consumers against fraudulent appraisals, which some industry experts believe was a contributing factor to inflated home values. However, many lenders have turned to the use of third-party appraisal management companies and the practice has led to complaints.

MAKING SENSE OF THE STORY FOR CONSUMERS
HVCC, which may result in appraisers evaluating homes in areas with which they are not familiar and using comparables that are inaccurate, has caused delays in closing sales, and in some cases, undermined sales if the appraisals undervalue a home’s current worth.
HVCC applies to conventional, single-family loans that are sold to Fannie Mae or Freddie Mac. It does not apply to loans backed by the Federal Housing Administration (FHA) or the Veterans Administration.
Through HVCC guidelines, borrowers are entitled to receive, free of charge, a copy of the home appraisal at least three days prior to closing, giving the borrowers more time to contest what they view as an inaccurate appraisal.
Borrowers and/or sellers who believe a home valuation is too low may appeal the valuation or request a second option. It’s important to note that the second valuation must be more than five percent higher than the first--anything less is considered an acceptable difference.
Appraisers are required to view the inside of homes being valuated, but not homes used as comparables. More often than not, the appraiser’s knowledge of the property is based solely on the description in the MLS or on the public land records. Yet, the previous owners may have removed appliances and caused other damages to the property. To guard against appraisers using non-comparable homes in the valuation, borrowers can work with their REALTOR® to review comparable homes in the neighborhood for differences the appraiser did not know about or failed to consider.

To read the full story, please click here

Job Gains Speed Up And More Seek Work

The Labor Department report, released Friday, showed jobs grew in a wide swath of the economy, from manufacturing to professional services, and offered reassuring signs that the U.S. economy is recovering. "We're on more solid ground after these data than we thought we were," said Alan Levenson, an economist for T. Rowe Price Associates. "That should reduce, at least at the margins, the concerns that ones might have had of the impact on our economy of what's going on in Europe."

The government said 290,000 jobs were created in April and it revised upward by a total of 121,000 the gains for the previous two months.

The jobless rate ticked up to 9.9% from 9.7% as 805,000 workers left the sidelines and entered or rejoined the labor force. The flood of new job seekers comes amid signs that employers are hiring, as often happens in the early innings of a recovery. "People are encouraged to come back in the labor force and start looking for jobs," said Julia Coronado, a BNP Paribas analyst. "It's good that they're not so discouraged anymore."

(more at http://online.wsj.com/article/SB10001424052748703338004575229932760855258.html)