SALES MAY BE DOWN, BUT APPRECIATION UP....
Looking over the real estate market stats for the last 12 months leads many to believe it will end up being a 'bad year'. Sales are at their lowest level since 1992, when the average price was a whopping $254,000 and appreciation was a 3.5%. 2007 will most likely end up with over $1B (that's correct billion) in total sales, the average price most likely in excess of $850,000 and appreciation an estimated 3.0%.
So was this year actually all that bad in our County? Or is it just a factor of the amount of existing inventory? Take a look at these inventory numbers from previous years...........
December 2000 = 3.2 months
December 2001 = 4.2 months
December 2002 = 3.3 months
December 2003 = 2.3 months
December 2004 = 1.7 months
December 2005 = 4.3 months
December 2006 = 4.4 months
Estimated December 2007 = 12.1 months
C.A.R. Reports entry-level housing affordability at 24% in California, unchanged from the same period a year ago, according to C.A.R.'s First-time Buyer Housing Affordability Index (FTB-HAI) released Nov. 29. (It was 14% in November of 2005.)
Interest rates on long-term mortgages hit 2-year low, averaging 6.10% for the week ending Nov. 29, down from 6.2% the prior week, and 6.14% a year ago, according to Freddie Mac's Primary Mortgage Market Survey®. Rates have not been lower since they averaged 6.03% in October 2005.
NAR Supports Administration efforts on rate freeze as important step in protecting homeowners. The dream of homeownership should not turn into a family’s worst nightmare,” said NAR President Richard Gaylord, a broker in Long Beach, Calif. “As the leading advocate for housing issues, NAR has been working with Congress and the administration to protect homeowners who may be facing foreclosure as the result of predatory lending practices and as the interest rates on many subprime loans reset.
The loan modification program introduced by President Bush and U.S. Treasury Secretary Henry Paulson is a good first step in helping deserving families keep their homes.
Here is what is happening in our local Santa Cruz County market:
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November Monthly Statistical Highlights for Single Family Homes:
* Inventory up 9.1% compared to November 2006, but decreased 2.4% from October 2007
* Sales down 47.8% compared to November 2006, and down 20% from October 2007
* Days on the market increased to 110, month prior 106, one year ago 105, two years ago 52
* Median home price decreased from the prior month to $740,000, and increased 2.2% from November 2006
* Sales price vs.listing price ratio decreased slightly to 96.55% from October
* Month's worth of inventory County wide equals 12, compared to 6 in November 2006 and 5 months in November 2005
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(These statistics are believed to be accurate but not guaranteed)
Wednesday, December 12, 2007
Thursday, November 29, 2007
No change for conforming loan limits in 2008
The Office of Federal Housing Enterprise Oversight (OFHEO) announced Tuesday it will keep conforming loan limits at current levels of $417,000 for single-family mortgages in 2008, and also hinted it could lower the limits in 2009 if home prices continue to decline.
The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.
"At more than $568,000, the median price of a home in California is more than 2.5 times the U.S. median of $221,000, yet California is not recognized by OFHEO as a high-cost state," said C.A.R. President William E. Brown. "California still has the third highest home price in the nation, compared with Hawaii at seventh, and Alaska, which ranks 39th in terms of median home price. Yet Alaska, Hawaii, Guam, and the U.S. Virgin Islands are recognized by OFHEO as high-cost areas."
"Now is the time for the U.S. Senate to pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac loan limits and to modernize FHA loan programs," Brown said. "This critical legislation is a key step to allowing families in California an opportunity to climb the first rung of the homeownership ladder."
The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.
"At more than $568,000, the median price of a home in California is more than 2.5 times the U.S. median of $221,000, yet California is not recognized by OFHEO as a high-cost state," said C.A.R. President William E. Brown. "California still has the third highest home price in the nation, compared with Hawaii at seventh, and Alaska, which ranks 39th in terms of median home price. Yet Alaska, Hawaii, Guam, and the U.S. Virgin Islands are recognized by OFHEO as high-cost areas."
"Now is the time for the U.S. Senate to pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac loan limits and to modernize FHA loan programs," Brown said. "This critical legislation is a key step to allowing families in California an opportunity to climb the first rung of the homeownership ladder."
Friday, November 23, 2007
Survey shows Americans believe buying a home still a good financial decision
LAS VEGAS, NV -(November 14, 2007) Americans remain convinced that buying a home is a good long-term investment. That’s just one of the findings from the 2007 National Housing Pulse Survey, released during the annual REALTORS® Conference & Expo.
The survey measures how affordable housing issues affect consumers. This year’s results show that nearly nine out of 10 consumers believe that buying a home is a good financial decision. Fifty-nine percent of respondents also agree that now is a good time to buy a home; that number is even higher (64 percent) in areas of recent home price declines.
This year’s survey shows that Americans are more concerned about obtaining a mortgage and having enough money for down payment and closing costs than they have been in five years of polling. Nearly six in 10 respondents believe it’s difficult for people in their area to obtain a fair and affordable mortgage. More than eight in 10 say having enough money for down payment and closing costs are obstacles for home buyers in their area, up 17 percent from 2005. Sixty-three percent also think the mortgage approval process is an obstacle, up 13 percent since 2005.
When it comes to challenges facing the mortgage market, Americans are split on the need for more federal government oversight. Forty-seven percent believe the federal government should take a more active role, while 45 percent believe oversight is the private sector’s responsibility.
The lack of affordable housing continues to be a greater concern than jobs, crime, terrorism or the environment. Nearly seven in 10 survey respondents are concerned about the cost of housing in their area. In the short term, more than half of survey respondents believe home sales and values in their neighborhood will remain about the same in the next three months. Only one-fourth of those surveyed believe sales and values will continue to decrease, while about 10 percent believe they will rise.
The survey measures how affordable housing issues affect consumers. This year’s results show that nearly nine out of 10 consumers believe that buying a home is a good financial decision. Fifty-nine percent of respondents also agree that now is a good time to buy a home; that number is even higher (64 percent) in areas of recent home price declines.
This year’s survey shows that Americans are more concerned about obtaining a mortgage and having enough money for down payment and closing costs than they have been in five years of polling. Nearly six in 10 respondents believe it’s difficult for people in their area to obtain a fair and affordable mortgage. More than eight in 10 say having enough money for down payment and closing costs are obstacles for home buyers in their area, up 17 percent from 2005. Sixty-three percent also think the mortgage approval process is an obstacle, up 13 percent since 2005.
When it comes to challenges facing the mortgage market, Americans are split on the need for more federal government oversight. Forty-seven percent believe the federal government should take a more active role, while 45 percent believe oversight is the private sector’s responsibility.
The lack of affordable housing continues to be a greater concern than jobs, crime, terrorism or the environment. Nearly seven in 10 survey respondents are concerned about the cost of housing in their area. In the short term, more than half of survey respondents believe home sales and values in their neighborhood will remain about the same in the next three months. Only one-fourth of those surveyed believe sales and values will continue to decrease, while about 10 percent believe they will rise.
Friday, November 9, 2007
Santa Cruz County Real Estate Report for November 2007
STILL EXPECTING MORE CHANGES....
As one might expect, nothing much has changed in the last 30 days. The market is still suffering from the sub-prime debacle and buyers still believe prices are going to continue to drop. In addition, there has been so much tightening in the mortgage industry that many are not able to qualify to buy and this depletes the viewing audience. According to a survey conducted by the Federal Reserve, 41% of banks say they have tightened their lending practices, compared with 15% when last surveyed in July. That's why I am advising all my sellers that there just isn't as many people out there looking, which makes the selling period longer.
I thought you might be interested in some stats I ran on comparisons of price ranges over the past three years. If you look at the table below you will see that days on the market have doubled on homes priced in the $500,000 price range but it is just the opposite if the price is in the $1M range. In addition, the original listing price vs. the selling price tripled in the $500,000 range but is 10 times as high when over $1M. What does this tell us? I would welcome your opinions........
Looking at some price variances over the past three years:
# of Sales DOM OLP vs SP
2005 $500,000 13 56 <2.3%>
2005 $1M 18 110 <0.6%>
2005 All 165 55 <2.8%>
2006 $500,000 9 121 <5.7%>
2006 $1M 25 112 <8.0%>
2006 All 133 96 <12.2%>
2007 $500,000 13 130 <6.7%>
2007 $1M 19 61 <7.3%>
2007 All 105 106 <8.1%>
Sub Prime Bill Amendment: The House Financial Services Committee approved legislation Tuesday addressing the subprime mortgage crisis. The measure, H.R. 3915, sponsored by House Financial Services Chairman Barney Frank, calls for the establishment of minimum standards for home loans nationwide, and holds mortgage lenders more accountable for ensuring borrowers' ability to afford a loan. Among other things, the bill would require lenders to document all borrowers' ability to repay loans at offer and, if adjustable, once rates rise to market levels.
C.A.R. Reports sales decrease 38.9% for September in California compared with the same period a year ago, while the median price of an existing home fell 4.7%. 'While it is typical for the median price to dip seasonally as we move from August to September, this decline -- which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years -- was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark,' said C.A.R. President Colleen Badagliacco.
'California's sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans -- those above the conforming loan limit of $417,000,' she said. 'This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing.
Keep an eye on commercial real estate markets in metros that position themselves as 24-hour cities with a global pathway to international markets, says the Urban Land Institute (ULI) in a rating of the top commercial real estate markets for 2008. The hottest commercial real estate market in the country? New York City, where vacancies are in the mid-single digits and rents have skyrocketed. ULI dubs the Big Apple, "America’s 24-hour city."
Seattle, where a concentration of mixed use development draws residents to new downtown neighborhoods, is another standout. A strong and highly diversified economy resulting from a large number of corporate headquarters and the city’s position as an important hub on Asian commerce routes contribute to its top ranking on the commercial markets to watch.
Other top commercial markets to watch, according to ULI, are:
Washington, D. C. "The government never stops and the ever churning Washington real estate market cushions against abrupt downturns," concludes the report.
**Los Angeles. Office markets in Orange Country might be softening but ULI says those in West LA have never been stronger. LA/Long Beach remains the nation’s top port
**San Francisco. A resurgence of technology business is propelling the market in this city. View space commands over $1,000 a square foot.
**Boston. Investors are keeping a close eye on this market, says ULI, even though new industries recycle office spaces left vacant by recent corporate headquarters departures
**San Diego. “A leading indicator for a market correction,” says ULI.
Denver. A retooled downtown has created what ULI calls an “urban burb,” a hip and exciting urban core in the midst of a sprawling suburban area connected to downtown via light rail.
**Smaller markets to watch include: San Jose, Calif.; Honolulu, Hawaii; Austin, Texas; Raleigh-Durham and Charlotte, N.C.; Portland, Ore.; Sacramento, Calif.; Las Vegas, N.V.; Orlando and Tampa, Fla; Salt Lake City, Utah, Jacksonville, Fla.; Nashville, Tenn.; and Minneapolis, Minn.
Here is what is happening in our local Santa Cruz County market:
----------------------------------------------------------------------
October Monthly Statistical Highlights for Single Family Homes:
* Inventory up 4.3% compared to October 2006, but decreased 5.5% from September 2007
* Sales down 21.1% compared to October 2006, but up 22.1% from September 2007
* Days on the market increased ! to 106, month prior 98, one year ago 77
* Median home price increased from the prior month to $710,000, and decreased 5.1% from October 2006
* Sales price vs.listing price ratio increased to 96.67% from September
* Month's worth of inventory County wide equals 11, compared to 9 in October 2006 and 5 months in 2005
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
As one might expect, nothing much has changed in the last 30 days. The market is still suffering from the sub-prime debacle and buyers still believe prices are going to continue to drop. In addition, there has been so much tightening in the mortgage industry that many are not able to qualify to buy and this depletes the viewing audience. According to a survey conducted by the Federal Reserve, 41% of banks say they have tightened their lending practices, compared with 15% when last surveyed in July. That's why I am advising all my sellers that there just isn't as many people out there looking, which makes the selling period longer.
I thought you might be interested in some stats I ran on comparisons of price ranges over the past three years. If you look at the table below you will see that days on the market have doubled on homes priced in the $500,000 price range but it is just the opposite if the price is in the $1M range. In addition, the original listing price vs. the selling price tripled in the $500,000 range but is 10 times as high when over $1M. What does this tell us? I would welcome your opinions........
Looking at some price variances over the past three years:
# of Sales DOM OLP vs SP
2005 $500,000 13 56 <2.3%>
2005 $1M 18 110 <0.6%>
2005 All 165 55 <2.8%>
2006 $500,000 9 121 <5.7%>
2006 $1M 25 112 <8.0%>
2006 All 133 96 <12.2%>
2007 $500,000 13 130 <6.7%>
2007 $1M 19 61 <7.3%>
2007 All 105 106 <8.1%>
Sub Prime Bill Amendment: The House Financial Services Committee approved legislation Tuesday addressing the subprime mortgage crisis. The measure, H.R. 3915, sponsored by House Financial Services Chairman Barney Frank, calls for the establishment of minimum standards for home loans nationwide, and holds mortgage lenders more accountable for ensuring borrowers' ability to afford a loan. Among other things, the bill would require lenders to document all borrowers' ability to repay loans at offer and, if adjustable, once rates rise to market levels.
C.A.R. Reports sales decrease 38.9% for September in California compared with the same period a year ago, while the median price of an existing home fell 4.7%. 'While it is typical for the median price to dip seasonally as we move from August to September, this decline -- which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years -- was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark,' said C.A.R. President Colleen Badagliacco.
'California's sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans -- those above the conforming loan limit of $417,000,' she said. 'This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing.
Keep an eye on commercial real estate markets in metros that position themselves as 24-hour cities with a global pathway to international markets, says the Urban Land Institute (ULI) in a rating of the top commercial real estate markets for 2008. The hottest commercial real estate market in the country? New York City, where vacancies are in the mid-single digits and rents have skyrocketed. ULI dubs the Big Apple, "America’s 24-hour city."
Seattle, where a concentration of mixed use development draws residents to new downtown neighborhoods, is another standout. A strong and highly diversified economy resulting from a large number of corporate headquarters and the city’s position as an important hub on Asian commerce routes contribute to its top ranking on the commercial markets to watch.
Other top commercial markets to watch, according to ULI, are:
Washington, D. C. "The government never stops and the ever churning Washington real estate market cushions against abrupt downturns," concludes the report.
**Los Angeles. Office markets in Orange Country might be softening but ULI says those in West LA have never been stronger. LA/Long Beach remains the nation’s top port
**San Francisco. A resurgence of technology business is propelling the market in this city. View space commands over $1,000 a square foot.
**Boston. Investors are keeping a close eye on this market, says ULI, even though new industries recycle office spaces left vacant by recent corporate headquarters departures
**San Diego. “A leading indicator for a market correction,” says ULI.
Denver. A retooled downtown has created what ULI calls an “urban burb,” a hip and exciting urban core in the midst of a sprawling suburban area connected to downtown via light rail.
**Smaller markets to watch include: San Jose, Calif.; Honolulu, Hawaii; Austin, Texas; Raleigh-Durham and Charlotte, N.C.; Portland, Ore.; Sacramento, Calif.; Las Vegas, N.V.; Orlando and Tampa, Fla; Salt Lake City, Utah, Jacksonville, Fla.; Nashville, Tenn.; and Minneapolis, Minn.
Here is what is happening in our local Santa Cruz County market:
----------------------------------------------------------------------
October Monthly Statistical Highlights for Single Family Homes:
* Inventory up 4.3% compared to October 2006, but decreased 5.5% from September 2007
* Sales down 21.1% compared to October 2006, but up 22.1% from September 2007
* Days on the market increased ! to 106, month prior 98, one year ago 77
* Median home price increased from the prior month to $710,000, and decreased 5.1% from October 2006
* Sales price vs.listing price ratio increased to 96.67% from September
* Month's worth of inventory County wide equals 11, compared to 9 in October 2006 and 5 months in 2005
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Wednesday, October 31, 2007
Economy in Focus
Beneath Market Punditry, Underlying Strength
by Robert Freedman
With some 5 percent of subprime mortgage borrowers facing trouble and global investors wondering if prime mortgages remain a smart investment, these are indeed challenging times for real estate.
In one of the most unsettling headlines of all, Robert Shiller of Yale University and one of the developers of the widely tracked S&P Case-Shiller Home Price Indices, has said mortgage troubles are only beginning and that some home prices could fall 50 percent in the next few years.
Dire predictions like that do more than grab the attention of the media; they can shake consumer confidence and help make such predictions self-fulfilling as home buyers stay on the sidelines, pressuring sellers to lower prices—in effect fueling a downward spiral.
But the prognosis is considerably different than the scare scenario forecasters would have us believe, says Lawrence Yun, NAR vice president of research. In this interview with REALTOR® Magazine, Yun puts the state of the economy into perspective, explaining just how contained the subprime problem is and why the trend lines are already contradicting many of the predictions of woe.
REALTOR® Magazine:No doubt the general media tend to play up negative market news like continuing soft home sales. Is there truth in these market concerns?
Yun: It’s all a matter of perspective. Home sales do continue to be soft. We’re predicting existing-home sales to be down 7 percent year-over-year at the end of 2007, but that’s coming off a five-year boom. We’re forecasting a sales level near what we had in 2002, a very good year, and a level that’s far closer to normal than what we’ve been seeing over the past four years.
At the same time, price appreciation is holding up better than media reports would have us believe. In data we collected this fall, two-thirds of markets reported positive price growth in the third quarter, up from half of all markets in the second quarter. In markets where prices continue to be down, the declines are minimal, 1 percent to 2 percent. Only a very few markets are seeing declines higher than 5 percent.
To read the rest of this article click here.
by Robert Freedman
With some 5 percent of subprime mortgage borrowers facing trouble and global investors wondering if prime mortgages remain a smart investment, these are indeed challenging times for real estate.
In one of the most unsettling headlines of all, Robert Shiller of Yale University and one of the developers of the widely tracked S&P Case-Shiller Home Price Indices, has said mortgage troubles are only beginning and that some home prices could fall 50 percent in the next few years.
Dire predictions like that do more than grab the attention of the media; they can shake consumer confidence and help make such predictions self-fulfilling as home buyers stay on the sidelines, pressuring sellers to lower prices—in effect fueling a downward spiral.
But the prognosis is considerably different than the scare scenario forecasters would have us believe, says Lawrence Yun, NAR vice president of research. In this interview with REALTOR® Magazine, Yun puts the state of the economy into perspective, explaining just how contained the subprime problem is and why the trend lines are already contradicting many of the predictions of woe.
REALTOR® Magazine:No doubt the general media tend to play up negative market news like continuing soft home sales. Is there truth in these market concerns?
Yun: It’s all a matter of perspective. Home sales do continue to be soft. We’re predicting existing-home sales to be down 7 percent year-over-year at the end of 2007, but that’s coming off a five-year boom. We’re forecasting a sales level near what we had in 2002, a very good year, and a level that’s far closer to normal than what we’ve been seeing over the past four years.
At the same time, price appreciation is holding up better than media reports would have us believe. In data we collected this fall, two-thirds of markets reported positive price growth in the third quarter, up from half of all markets in the second quarter. In markets where prices continue to be down, the declines are minimal, 1 percent to 2 percent. Only a very few markets are seeing declines higher than 5 percent.
To read the rest of this article click here.
Friday, October 26, 2007
C.A.R. Reports sales decrease of 38.9% in September
Home sales decreased 38.9 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 4.7 percent, C.A.R. reported today.
"While it is typical for the median price to dip seasonally as we move from August to September, this decline -- which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years -- was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark," said C.A.R. President Colleen Badagliacco.
"California's sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans -- those above the conforming loan limit of $417,000," she said. "This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing."
"While it is typical for the median price to dip seasonally as we move from August to September, this decline -- which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years -- was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark," said C.A.R. President Colleen Badagliacco.
"California's sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans -- those above the conforming loan limit of $417,000," she said. "This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing."
Wednesday, October 24, 2007
Realtor groups pitch in to assist wildfire victims
Realtor groups pitch in to assist wildfire victims, evacuees
Half a million people displaced by Southern California fires
By Glenn Roberts Jr., Inman News
Realtor trade groups and individual members have worked to assist residents displaced by several major wildfires ripping across Southern California.
Mike Mercurio, executive vice president for the San Diego Association of Realtors, said the group has been working with the San Diego mayor's office, the county, and an apartment association to quickly locate rental property for victims and other evacuees. Meanwhile, Mercurio himself was forced to evacuate his home and has been staying at a hotel.
The group sent an e-mail to its 12,000 members this week asking for assistance in identifying available rental properties, Mercurio said.
Also, the statewide California Association of Realtors trade group announced that it is offering grants of $1,000 to $5,000 for Realtor members and associated staff. And the statewide group seeks contributions to a disaster relief fund.
To contribute to the fund, make checks payable to California Community Foundation and write "C.A.R. Disaster Relief Fund" on the memo line. Checks can be sent to: California Community Foundation, 445 S. Figueroa St., #3400, Los Angeles, CA 90071-1638. Contributions can also be made online at the following Web site: http://www.calfund.org/8/giving/calrealtorsrelief.php.
Mercurio was among a group of more than 500,000 Southern Californians this week who've evacuated their homes to escape wildfire danger. The fires raging in the region have so far caused two deaths from burns, four deaths during the evacuation, and an estimated $1 billion or more in damage to San Diego County alone, according to reports. The fires, which range from north of Santa Barbara to the Mexico border, have collectively destroyed about 1,500 homes and scorched about 665 square miles.
Half a million people displaced by Southern California fires
By Glenn Roberts Jr., Inman News
Realtor trade groups and individual members have worked to assist residents displaced by several major wildfires ripping across Southern California.
Mike Mercurio, executive vice president for the San Diego Association of Realtors, said the group has been working with the San Diego mayor's office, the county, and an apartment association to quickly locate rental property for victims and other evacuees. Meanwhile, Mercurio himself was forced to evacuate his home and has been staying at a hotel.
The group sent an e-mail to its 12,000 members this week asking for assistance in identifying available rental properties, Mercurio said.
Also, the statewide California Association of Realtors trade group announced that it is offering grants of $1,000 to $5,000 for Realtor members and associated staff. And the statewide group seeks contributions to a disaster relief fund.
To contribute to the fund, make checks payable to California Community Foundation and write "C.A.R. Disaster Relief Fund" on the memo line. Checks can be sent to: California Community Foundation, 445 S. Figueroa St., #3400, Los Angeles, CA 90071-1638. Contributions can also be made online at the following Web site: http://www.calfund.org/8/giving/calrealtorsrelief.php.
Mercurio was among a group of more than 500,000 Southern Californians this week who've evacuated their homes to escape wildfire danger. The fires raging in the region have so far caused two deaths from burns, four deaths during the evacuation, and an estimated $1 billion or more in damage to San Diego County alone, according to reports. The fires, which range from north of Santa Barbara to the Mexico border, have collectively destroyed about 1,500 homes and scorched about 665 square miles.
Thursday, October 11, 2007
C.A.R.'S 2008 California Housing Market Forecast
Home prices throughout most of California will post modest declines next year while sales of existing homes will stabilize from the precipitous decrease experienced in 2007, according to C.A.R.'s "2008 California Housing Market Forecast" released today.
The forecast was presented on October 10th during the CALIFORNIA REALTOR® EXPO 2007, running from Oct. 9-11 at the Anaheim Convention Center in Anaheim, Calif. The median home price in California will decline 4 percent to $553,000 in 2008 compared with a projected median of $576,000 this year, while sales for 2008 are projected to decrease 9 percent to 334,500 units, compared with 367,500 units (projected) in 2007.
"Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year," said C.A.R. President Colleen Badagliacco. "Now is not the time for homeowners to test the waters, only serious sellers should put their homes on the market in what will continue to be a challenging sales environment."
The forecast was presented on October 10th during the CALIFORNIA REALTOR® EXPO 2007, running from Oct. 9-11 at the Anaheim Convention Center in Anaheim, Calif. The median home price in California will decline 4 percent to $553,000 in 2008 compared with a projected median of $576,000 this year, while sales for 2008 are projected to decrease 9 percent to 334,500 units, compared with 367,500 units (projected) in 2007.
"Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year," said C.A.R. President Colleen Badagliacco. "Now is not the time for homeowners to test the waters, only serious sellers should put their homes on the market in what will continue to be a challenging sales environment."
Tuesday, October 9, 2007
Santa Cruz County Real Estate Report for October 2007
ANALIZING, COMPARING, DECIPHERING, AND GUESSTIMATING........
Big changes happened in our Santa Cruz County market for September, but to me they are just a continuation of the cycle over the past 6 or 7 years. Since that time, our local real estate market has been on a roller coaster ride. In 2001, the number of sales dropped over 26% from the year prior when we had 23.5% appreciation. Sales have continued to decline every year until 2004 when once again we had double digit appreciation and sales were higher than in the prior 25 years. Then as you know everyone jumped on that bandwagon and 2005 had still greater appreciation but with 20% fewer sales. So the inventory goes up and down but the average sales price is 64% higher today than it was in the year 2000.
Looking at the individual niche markets since January 2007:
*Aptos had 192 sales, average sales price $1,008,324, 103 days on market, 11 months of inventory.
*Capitola had 33 sales, average sales price $931,075, 103 days on market, 9 months of inventory.
*San Lorenzo Valley had 202 sales, average sales price of $556,413, 101 days on market, 19 months of inventory.
*Santa Cruz had 340 sales, average sales price of $920,713, 81 days on market, 10 months of inventory.
*Scotts Valley had 136 sales, average sales price of $938,137, 99 days on market, 11 months of inventory.
*Watsonville had 93 sales, average sales price of $635,777, 105 days on market, 48 months of inventory.
Housing slump could reset itself: This is from the Sep. 25th Wall St. Journal: “One dismal milestone may soon move into the housing market’s rearview mirror, potentially giving rise to hopes for a rebound soon. Homeowners owning $31.8 billion in sub prime adjustable-rate mortgages began paying higher interest rates this month, according to Moody’s Economy.com. That is the highest amount of sub prime ARM’s due to reset over a one-month period in this housing cycle. By December, resetting sub prime ARM's are forecast to drop to $25.2 billion. By the end of 2008, they will have fallen to $3.6 billion, because lenders have largely stopped making such loans to borrowers with spotty credit histories. The tsunami of interest-rate resets has been a big factor in the jump in defaults ruling credit markets this year. Optimists might argue that a record supply of homes for sale, combined with a peak in ARM resets, means the housing market is near a bottom.”
Forecasts say area economy will do better than 'sluggish' state in 2008: California will manage to avoid sliding into a recession even as the credit crunch and housing meltdown take their toll on jobs and growth. A number of economists and studies predict the state will squeak by with sluggish growth and revive toward the end of 2009, while the nation's economy endures what one forecast called a 'near-recession experience.' At the same time, Silicon Valley and the Bay Area are performing better than the state or nation because of rising global demand for high-tech products. 'The Bay Area economy is actually the bright spot in California,' said Ryan Ratcliff, an economist with the University of California-Los Angeles Anderson Forecast, which released a report recently.
Here is what is happening in our local Santa Cruz County market:
----------------------------------------------------------------------
September Monthly Statistical Highlights for Single Family Homes:
* Inventory down slightly 1.25% compared to September 2006, and decreased 1.6% from August 2007
* Sales down 42.8% compared to September 2006, and substantially down 43.3% from August 2007
* Days on the market increased to 90, month prior 73, one year ago 77
* Median home price decreased from the prior month to $699,000, and decreased 6.58% from September 2006
* Sales price vs.listing price ratio decreased to 95.99% from August
* Month's worth of inventory County wide equals 16, compared to 9 in September 2006 and 4 months in 2005
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Big changes happened in our Santa Cruz County market for September, but to me they are just a continuation of the cycle over the past 6 or 7 years. Since that time, our local real estate market has been on a roller coaster ride. In 2001, the number of sales dropped over 26% from the year prior when we had 23.5% appreciation. Sales have continued to decline every year until 2004 when once again we had double digit appreciation and sales were higher than in the prior 25 years. Then as you know everyone jumped on that bandwagon and 2005 had still greater appreciation but with 20% fewer sales. So the inventory goes up and down but the average sales price is 64% higher today than it was in the year 2000.
Looking at the individual niche markets since January 2007:
*Aptos had 192 sales, average sales price $1,008,324, 103 days on market, 11 months of inventory.
*Capitola had 33 sales, average sales price $931,075, 103 days on market, 9 months of inventory.
*San Lorenzo Valley had 202 sales, average sales price of $556,413, 101 days on market, 19 months of inventory.
*Santa Cruz had 340 sales, average sales price of $920,713, 81 days on market, 10 months of inventory.
*Scotts Valley had 136 sales, average sales price of $938,137, 99 days on market, 11 months of inventory.
*Watsonville had 93 sales, average sales price of $635,777, 105 days on market, 48 months of inventory.
Housing slump could reset itself: This is from the Sep. 25th Wall St. Journal: “One dismal milestone may soon move into the housing market’s rearview mirror, potentially giving rise to hopes for a rebound soon. Homeowners owning $31.8 billion in sub prime adjustable-rate mortgages began paying higher interest rates this month, according to Moody’s Economy.com. That is the highest amount of sub prime ARM’s due to reset over a one-month period in this housing cycle. By December, resetting sub prime ARM's are forecast to drop to $25.2 billion. By the end of 2008, they will have fallen to $3.6 billion, because lenders have largely stopped making such loans to borrowers with spotty credit histories. The tsunami of interest-rate resets has been a big factor in the jump in defaults ruling credit markets this year. Optimists might argue that a record supply of homes for sale, combined with a peak in ARM resets, means the housing market is near a bottom.”
Forecasts say area economy will do better than 'sluggish' state in 2008: California will manage to avoid sliding into a recession even as the credit crunch and housing meltdown take their toll on jobs and growth. A number of economists and studies predict the state will squeak by with sluggish growth and revive toward the end of 2009, while the nation's economy endures what one forecast called a 'near-recession experience.' At the same time, Silicon Valley and the Bay Area are performing better than the state or nation because of rising global demand for high-tech products. 'The Bay Area economy is actually the bright spot in California,' said Ryan Ratcliff, an economist with the University of California-Los Angeles Anderson Forecast, which released a report recently.
Here is what is happening in our local Santa Cruz County market:
----------------------------------------------------------------------
September Monthly Statistical Highlights for Single Family Homes:
* Inventory down slightly 1.25% compared to September 2006, and decreased 1.6% from August 2007
* Sales down 42.8% compared to September 2006, and substantially down 43.3% from August 2007
* Days on the market increased to 90, month prior 73, one year ago 77
* Median home price decreased from the prior month to $699,000, and decreased 6.58% from September 2006
* Sales price vs.listing price ratio decreased to 95.99% from August
* Month's worth of inventory County wide equals 16, compared to 9 in September 2006 and 4 months in 2005
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Friday, October 5, 2007
Forecasts say area economy will do better than 'sluggish' state in 2008
California will manage to avoid sliding into a recession even as the credit crunch and housing meltdown take their toll on jobs and growth. A number of economists and studies predict the state will squeak by with sluggish growth and revive toward the end of 2009, while the nation's economy endures what one forecast called a "near-recession experience." At the same time, Silicon Valley and the Bay Area are performing better than the state or nation because of rising global demand for high-tech products. "The Bay Area economy is actually the bright spot in California," said Ryan Ratcliff, an economist with the University of California-Los Angeles Anderson Forecast, which released a report recently.
The collapse of the subprime loan market unfolded with dizzying speed over the summer. Mortgage defaults and foreclosures soared as borrowers found themselves unable to make payments on adjustable-rate loans, major lenders announced layoffs and stopped making many loans, and the housing industry experienced a decline in sales and in prices in some markets. The question has been whether increasing mortgage-interest rates will shrink consumer spending and slow the economy even further. So far, the impact has been relatively small, according to the UCLA forecast and one released by the University of the Pacific Business Forecasting Center.
"The consumer continues to spend," said Sean M. Snaith, who helped prepare the University of the Pacific's California and Metro report, which foresees a decline in housing prices through 2008 that "will not remotely resemble a bursting bubble."
UCLA's Anderson Forecast on the California economy also found "little evidence that mortgage defaults have led to wider financial distress for consumers." Defaults on home loans will peak in the first half of next year, the UCLA study said. Real estate markets will continue to be a drag on California growth for at least a year to come. But the economy should return to more or less normal levels of growth in 2009. UCLA's economists are predicting "sluggish" growth but "no recession" in California, though they added that "the difference between the two is getting smaller all the time."
Nationally, UCLA foresees 1 percent growth in the national economy for the next two quarters, with spending on consumer goods shrinking some. Silicon Valley and the Bay Area are outperforming the state and nation in terms of job growth, said Stephen Levy of the Center for Continuing Study of the California.
----------------------
San Jose Mercury News Reporter, Pete Carey
September 12, 2007
The collapse of the subprime loan market unfolded with dizzying speed over the summer. Mortgage defaults and foreclosures soared as borrowers found themselves unable to make payments on adjustable-rate loans, major lenders announced layoffs and stopped making many loans, and the housing industry experienced a decline in sales and in prices in some markets. The question has been whether increasing mortgage-interest rates will shrink consumer spending and slow the economy even further. So far, the impact has been relatively small, according to the UCLA forecast and one released by the University of the Pacific Business Forecasting Center.
"The consumer continues to spend," said Sean M. Snaith, who helped prepare the University of the Pacific's California and Metro report, which foresees a decline in housing prices through 2008 that "will not remotely resemble a bursting bubble."
UCLA's Anderson Forecast on the California economy also found "little evidence that mortgage defaults have led to wider financial distress for consumers." Defaults on home loans will peak in the first half of next year, the UCLA study said. Real estate markets will continue to be a drag on California growth for at least a year to come. But the economy should return to more or less normal levels of growth in 2009. UCLA's economists are predicting "sluggish" growth but "no recession" in California, though they added that "the difference between the two is getting smaller all the time."
Nationally, UCLA foresees 1 percent growth in the national economy for the next two quarters, with spending on consumer goods shrinking some. Silicon Valley and the Bay Area are outperforming the state and nation in terms of job growth, said Stephen Levy of the Center for Continuing Study of the California.
----------------------
San Jose Mercury News Reporter, Pete Carey
September 12, 2007
Monday, September 24, 2007
IRS Web Section for Homeowners who Lose Homes
Special Web Section Unveiled for Homeowners Who Lose Homes; Foreclosure Tax Relief Available to Many (IR-2007-159, Sept. 17, 2007)
WASHINGTON — The Internal Revenue Service unveiled a special new section today on IRS.gov for people who have lost their homes due to foreclosure. The IRS also reassured homeowners that, although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.
The new section of IRS.gov includes a variety of information, including a worksheet designed to help borrowers determine whether any of the foreclosure-related relief provisions apply to them. For those taxpayers who find they owe additional tax, it also includes a form they can use to request a payment agreement with the IRS. . In some cases, eligible taxpayers may qualify to settle their tax debt for less than the full amount due using an offer-in-compromise.
The IRS urges struggling homeowners to consider their options carefully before giving up their homes through foreclosure. For more information visit the Internal Revenue Service website at www.irs.gov.
WASHINGTON — The Internal Revenue Service unveiled a special new section today on IRS.gov for people who have lost their homes due to foreclosure. The IRS also reassured homeowners that, although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.
The new section of IRS.gov includes a variety of information, including a worksheet designed to help borrowers determine whether any of the foreclosure-related relief provisions apply to them. For those taxpayers who find they owe additional tax, it also includes a form they can use to request a payment agreement with the IRS. . In some cases, eligible taxpayers may qualify to settle their tax debt for less than the full amount due using an offer-in-compromise.
The IRS urges struggling homeowners to consider their options carefully before giving up their homes through foreclosure. For more information visit the Internal Revenue Service website at www.irs.gov.
Friday, September 21, 2007
Credit Score Changes Ahead
For years, people have added the names of their relatives to their credit cards as a way to help boost their own credit score and establish a credit history. That practice is coming to a halt.
Once the change goes into effect, buyers will no longer get any value out of being an authorized user on someone else's credit card.
Young people trying to establish or re-establish credit may have to depend on secured credit cards or other non-prime credit products to establish credit.
It is quite possible that your credit scores could go down significantly because of this change.
If you are getting married soon and were planning to close credit card accounts and be added as an authorized user on your spouse's credit card, it is a good idea to rethink that move.
If you are married where one spouse does not have any credit cards on which they are the primary cardholder or a joint cardholder, they may need to open one or two in their own name now.
Women, more than men, will be negatively impacted because they are more likely to be added as an authorized user.
Fair Isaac developed the FICO credit-scoring system used by the nation's three credit-scoring agencies. One agency is expected to start using the new system this month, and the two other agencies are expected to start using it by the middle of next year.
Once the change goes into effect, buyers will no longer get any value out of being an authorized user on someone else's credit card.
Young people trying to establish or re-establish credit may have to depend on secured credit cards or other non-prime credit products to establish credit.
It is quite possible that your credit scores could go down significantly because of this change.
If you are getting married soon and were planning to close credit card accounts and be added as an authorized user on your spouse's credit card, it is a good idea to rethink that move.
If you are married where one spouse does not have any credit cards on which they are the primary cardholder or a joint cardholder, they may need to open one or two in their own name now.
Women, more than men, will be negatively impacted because they are more likely to be added as an authorized user.
Fair Isaac developed the FICO credit-scoring system used by the nation's three credit-scoring agencies. One agency is expected to start using the new system this month, and the two other agencies are expected to start using it by the middle of next year.
Tuesday, September 18, 2007
FED Lowers Federal Funds Rate
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.
Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.
Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.
Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.
Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.
Monday, September 17, 2007
Financial Tips for Home Owners in Santa Cruz
There is no better time than the present for homeowners to examine the situation that they are in today. Whether you are selling your home or not you should review the details of your present mortgage(s). I have found that many homeowners do not have a clear idea of the specifics of their own mortgages.
Here are some of the questions you should be asking yourself: What is my rate and when will it be changing? What will my payments increase to when my rate changes? If your loan has an ‘interest-only’ minimum payment period, when will that period come to an end and what will my payments increase to at that point? Do I have a pre-payment penalty and, if so, how much is it and when does it phase out?
Those who have an adjustable rate mortgage with the potential for negative amortization need to have a clear understanding of its terms and pay special attention to upcoming payment changes. If your mortgage balance has been increasing because you have just been making the minimum payment, when will your loan recast and what will your payments increase to at that point? If in doubt of exactly what your note says, seek the advice of a seasoned mortgage professional to help you understand your current mortgage.
Today, more than ever, homeowners who are planning on selling their homes need to be realistic about their timeframe for moving. The combination of a record number of homes listed for sale and a tightening of lender’s underwriting guidelines is slowing home sales and forcing sellers to make some tough decisions.
Sellers must clearly understand the fine print in their mortgages. Those who need to sell because their payments are going to be adjusting beyond the affordability range cannot afford the luxury of waiting until a buyer comes along to give them the price that their home was worth last year or the year before, when property values were stronger. Sellers are well advised to put the importance of protecting their credit over protecting their equity because if they fail to sell their homes in time both their credit and equity could suffer. The government is not likely to come up with a bail-out program in time for homeowners who are in trouble now.
Besides being practical about the asking price (and ‘staging’ their home), sellers can help themselves by offering to pay up to 6 percent of the sales price in buyer’s closing costs. This can be an effective way of permanently lowering the buyers’ interest rate and their payments. Sellers can also offer to loan their buyers money by providing a second mortgage. For example, a buyer with 10 percent down may obtain an 80 percent conventional mortgage and combine it with a 10 percent mortgage from the seller. This kind of arrangement will work in certain situations and can make it easier for buyers to buy their home.
The good news is that rates are good, homes are selling and there are plenty of qualified buyers who want to live in Santa Cruz County who are looking for good
deals.
------------------
Presented on behalf of Brent Dunton
Certified Mortgage Planner, Santa Cruz Home Finance
Here are some of the questions you should be asking yourself: What is my rate and when will it be changing? What will my payments increase to when my rate changes? If your loan has an ‘interest-only’ minimum payment period, when will that period come to an end and what will my payments increase to at that point? Do I have a pre-payment penalty and, if so, how much is it and when does it phase out?
Those who have an adjustable rate mortgage with the potential for negative amortization need to have a clear understanding of its terms and pay special attention to upcoming payment changes. If your mortgage balance has been increasing because you have just been making the minimum payment, when will your loan recast and what will your payments increase to at that point? If in doubt of exactly what your note says, seek the advice of a seasoned mortgage professional to help you understand your current mortgage.
Today, more than ever, homeowners who are planning on selling their homes need to be realistic about their timeframe for moving. The combination of a record number of homes listed for sale and a tightening of lender’s underwriting guidelines is slowing home sales and forcing sellers to make some tough decisions.
Sellers must clearly understand the fine print in their mortgages. Those who need to sell because their payments are going to be adjusting beyond the affordability range cannot afford the luxury of waiting until a buyer comes along to give them the price that their home was worth last year or the year before, when property values were stronger. Sellers are well advised to put the importance of protecting their credit over protecting their equity because if they fail to sell their homes in time both their credit and equity could suffer. The government is not likely to come up with a bail-out program in time for homeowners who are in trouble now.
Besides being practical about the asking price (and ‘staging’ their home), sellers can help themselves by offering to pay up to 6 percent of the sales price in buyer’s closing costs. This can be an effective way of permanently lowering the buyers’ interest rate and their payments. Sellers can also offer to loan their buyers money by providing a second mortgage. For example, a buyer with 10 percent down may obtain an 80 percent conventional mortgage and combine it with a 10 percent mortgage from the seller. This kind of arrangement will work in certain situations and can make it easier for buyers to buy their home.
The good news is that rates are good, homes are selling and there are plenty of qualified buyers who want to live in Santa Cruz County who are looking for good
deals.
------------------
Presented on behalf of Brent Dunton
Certified Mortgage Planner, Santa Cruz Home Finance
Wednesday, September 12, 2007
Lowering your tax bill
Newspapers in California are presenting daily dire and foreboding updates about foreclosures and short sales. Yes, Dorothy and Toto, this doesn’t look like California anymore. Many homeowners are facing Notice of Defaults and Trustee Sales and these are major problems for everyone involved. However, there is another aspect of the market worth discussing for homeowners with equity in their properties.
As more Short Sales are recorded and more REO properties are sold by the lenders, comparable prices will be dropping below the prices paid for the properties in the near past. Statisticians and pundits keep saying, "The median prices haven’t dropped much from one year ago." Try telling that to someone who paid $600,000 for a home eighteen months ago and now finds comparable homes in their tract selling for $500,000. However, there might be a small rainbow in the storm for some.
Do you have any ideas for people who have purchased recently in an area where prices have dropped? How about recommending to them that they request a lowering of their Property Tax Assessment and temporarily lowering their tax bill?
The best sources for information on this subject is your Local County Assessor. I was so fortunate recently to have a comprehensive interview with Greg Smith, the legendary Assessor, County Recorder and County Clerk of San Diego County who has served his County in different capacities since 1977. Following are excerpts from that session.
Q. If prices have recently fallen in an area, what are a taxpayer’s options?
A. There are two methods of reassessments. One is an Informal Request for Review and if no agreement can be reached, then a Formal Appeal can be filed.
Q. What are the time factors for these options?
A. In San Diego County, the Informal Reviews must be filed between January 1st and June 1st, and Formal Assessment Appeals must be filed between July 2nd and November 30th. Be advised that other Counties have different deadlines.
Q. What is the policy of your office on these appeals?
A. Our goal is to appraise the property at its current fair market value prior to completing our annual assessment roll. If the taxpayer disagrees with this value, they must file an Assessment Appeal within the above mentioned dates. After an Assessment Appeal is filed, our office reviews all the information provided by the taxpayer and attempts to reach an agreed upon value with the taxpayer. Very few of the appeals in our County go to a formal hearing before our Assessment Appeals Board.
Q. What is the cost of the filing?
A. There is no cost to file an assessment appeal.
Q. Who might consider filing either an Informal Review or Formal Appeal?
A. Anyone who has recently purchased a property where the comparable resale prices in the area have dropped, or anyone who feels that the current assessed value of their home is higher than the current market value of their home.
Q. What is Proposition 8?
A. It seems that everyone knows about Proposition 13. Another important State Law (Proposition 8) states, “If the current market value of your property falls below the assessed or taxable value as shown on your tax bill, the Assessor’s Office is required to temporarily lower the assessment.” You can get a copy of an “Application for Review of Assessment Form” by calling the Clerk’s office at 619 531 5777. It is a simple form where the taxpayer indicates their opinion of value and provides supporting documentation such as sales of comparable properties, or a recent appraisal.
Q. What does the phrase “temporarily” mean?
A. In times of dropping real estate prices, a taxpayer’s property tax assessment must be lowered according to Proposition 8 if the current market value is less than the assessed value as shown on the tax bill. Each year the taxpayer’s assessment will be reviewed until such time that the previously assessed value, plus the compounded annual 2% Consumer Price Index (CPI) factor, as required by Proposition 13, has been fully restored. As the market “turns around” and values increase, the assessment of the property will also be increased. Under no circumstances, however, can this increase in value exceed the original assessed value (plus the annual 2% CPI factor). Once the previous value is fully restored, the annual increase is then limited to the 2% CPI factor as required by Proposition 13. Therefore, taxpayers never lose their Proposition 13 rights under Proposition 8.
Q. Does a taxpayer need an attorney or consultant to do this appeal?
A. No. Many taxpayers file their own appeals successfully. In fact, our office is required by State law to keep a list of recent home sales for the last two years. Other supporting data can easily be obtained from an appraiser or local realtor.
Q. I heard a rumor about an Orange County lawsuit on this subject.
A. Someone filed a lawsuit claiming that lowered assessments could not be raised by more than 2% per year. This lawsuit was not successful. Under Proposition 8, the temporary reduction must be reviewed each year, and the property must be valued at the current market value. The maximum 2% annual CPI factor does not apply to properties temporarily lowered under Proposition 8 when their indexed base year values are being reinstated.
Q. We have been talking about homes. Can a mobile home owner file a Review Request?
A. Yes.
Q. Any final thoughts?
A. I believe Proposition 8 is very fair. Proposition 8 allows the Assessor’s Office to provide, temporarily, necessary relief to owners whose property values have declined, while still retaining the ability to review and increase those values when market conditions improve.
My final thoughts after this discussion. First, I want to thank Greg Smith and Dave Butler of the San Diego Assessor’s Office for their patience and taking the time to educate me. By the way, if you ever get the chance to attend a Greg Smith seminar, run, don’t walk to the session. I’ve had the pleasure of hearing him many times and he makes his bureaucratic subject interesting and his humorous delivery is exemplary. Also, it has been an added pleasure to have his ever-charming wife as a student at my seminars.
While it is too late to ask for an Informal Review, people can still file a Formal Appeal. Real estate professionals should recommend immediately that friends, associates, clients, etc. who recently purchased property evaluate their current property assessments and consider an appeal. For example, Orange County and some other Counties have a September 17th deadline for filing a Formal Appeal this year so residents in those counties must move fast.
Any tax reduction under Proposition 8 is temporary but temporary means you can save real dollars for a specific period of time, and I strongly believe that is better than doing nothing. Who knows in the overall scheme of things when prices will swing upward again? Do something now; your friendly local Assessors are waiting to hear from you.
----------------
With permission of Duane Gomer
Duane Gomer Inc, Duane Gomer Inc.
23312 Madero Suite J
Mission Viejo, CA 92691
As more Short Sales are recorded and more REO properties are sold by the lenders, comparable prices will be dropping below the prices paid for the properties in the near past. Statisticians and pundits keep saying, "The median prices haven’t dropped much from one year ago." Try telling that to someone who paid $600,000 for a home eighteen months ago and now finds comparable homes in their tract selling for $500,000. However, there might be a small rainbow in the storm for some.
Do you have any ideas for people who have purchased recently in an area where prices have dropped? How about recommending to them that they request a lowering of their Property Tax Assessment and temporarily lowering their tax bill?
The best sources for information on this subject is your Local County Assessor. I was so fortunate recently to have a comprehensive interview with Greg Smith, the legendary Assessor, County Recorder and County Clerk of San Diego County who has served his County in different capacities since 1977. Following are excerpts from that session.
Q. If prices have recently fallen in an area, what are a taxpayer’s options?
A. There are two methods of reassessments. One is an Informal Request for Review and if no agreement can be reached, then a Formal Appeal can be filed.
Q. What are the time factors for these options?
A. In San Diego County, the Informal Reviews must be filed between January 1st and June 1st, and Formal Assessment Appeals must be filed between July 2nd and November 30th. Be advised that other Counties have different deadlines.
Q. What is the policy of your office on these appeals?
A. Our goal is to appraise the property at its current fair market value prior to completing our annual assessment roll. If the taxpayer disagrees with this value, they must file an Assessment Appeal within the above mentioned dates. After an Assessment Appeal is filed, our office reviews all the information provided by the taxpayer and attempts to reach an agreed upon value with the taxpayer. Very few of the appeals in our County go to a formal hearing before our Assessment Appeals Board.
Q. What is the cost of the filing?
A. There is no cost to file an assessment appeal.
Q. Who might consider filing either an Informal Review or Formal Appeal?
A. Anyone who has recently purchased a property where the comparable resale prices in the area have dropped, or anyone who feels that the current assessed value of their home is higher than the current market value of their home.
Q. What is Proposition 8?
A. It seems that everyone knows about Proposition 13. Another important State Law (Proposition 8) states, “If the current market value of your property falls below the assessed or taxable value as shown on your tax bill, the Assessor’s Office is required to temporarily lower the assessment.” You can get a copy of an “Application for Review of Assessment Form” by calling the Clerk’s office at 619 531 5777. It is a simple form where the taxpayer indicates their opinion of value and provides supporting documentation such as sales of comparable properties, or a recent appraisal.
Q. What does the phrase “temporarily” mean?
A. In times of dropping real estate prices, a taxpayer’s property tax assessment must be lowered according to Proposition 8 if the current market value is less than the assessed value as shown on the tax bill. Each year the taxpayer’s assessment will be reviewed until such time that the previously assessed value, plus the compounded annual 2% Consumer Price Index (CPI) factor, as required by Proposition 13, has been fully restored. As the market “turns around” and values increase, the assessment of the property will also be increased. Under no circumstances, however, can this increase in value exceed the original assessed value (plus the annual 2% CPI factor). Once the previous value is fully restored, the annual increase is then limited to the 2% CPI factor as required by Proposition 13. Therefore, taxpayers never lose their Proposition 13 rights under Proposition 8.
Q. Does a taxpayer need an attorney or consultant to do this appeal?
A. No. Many taxpayers file their own appeals successfully. In fact, our office is required by State law to keep a list of recent home sales for the last two years. Other supporting data can easily be obtained from an appraiser or local realtor.
Q. I heard a rumor about an Orange County lawsuit on this subject.
A. Someone filed a lawsuit claiming that lowered assessments could not be raised by more than 2% per year. This lawsuit was not successful. Under Proposition 8, the temporary reduction must be reviewed each year, and the property must be valued at the current market value. The maximum 2% annual CPI factor does not apply to properties temporarily lowered under Proposition 8 when their indexed base year values are being reinstated.
Q. We have been talking about homes. Can a mobile home owner file a Review Request?
A. Yes.
Q. Any final thoughts?
A. I believe Proposition 8 is very fair. Proposition 8 allows the Assessor’s Office to provide, temporarily, necessary relief to owners whose property values have declined, while still retaining the ability to review and increase those values when market conditions improve.
My final thoughts after this discussion. First, I want to thank Greg Smith and Dave Butler of the San Diego Assessor’s Office for their patience and taking the time to educate me. By the way, if you ever get the chance to attend a Greg Smith seminar, run, don’t walk to the session. I’ve had the pleasure of hearing him many times and he makes his bureaucratic subject interesting and his humorous delivery is exemplary. Also, it has been an added pleasure to have his ever-charming wife as a student at my seminars.
While it is too late to ask for an Informal Review, people can still file a Formal Appeal. Real estate professionals should recommend immediately that friends, associates, clients, etc. who recently purchased property evaluate their current property assessments and consider an appeal. For example, Orange County and some other Counties have a September 17th deadline for filing a Formal Appeal this year so residents in those counties must move fast.
Any tax reduction under Proposition 8 is temporary but temporary means you can save real dollars for a specific period of time, and I strongly believe that is better than doing nothing. Who knows in the overall scheme of things when prices will swing upward again? Do something now; your friendly local Assessors are waiting to hear from you.
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With permission of Duane Gomer
Duane Gomer Inc, Duane Gomer Inc.
23312 Madero Suite J
Mission Viejo, CA 92691
Friday, September 7, 2007
Santa Cruz County Real Estate Report for September 2007
HEADING TOWARDS THE END OF THE PRIME SELLING SEASON.........
Fortunately or unfortunately (depending on how you look at it), I see the local real estate market holding it's own. Sure the media is all doom and gloom, but the numbers don't lie. I believe most of what has been happening in the last few months is directly related to the mortgage industry blues. Some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment. Most problems are primarily with jumbo loans, but there are no serious problems for the majority of buyers who qualify for conventional financing. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.
Let's do a comparison of August from 2005 to 2006 to present. The total sales volume was down 21.9% from 2005 to 2006 and the same percentage for 2006 compared to today. But, the median price and the average sales price dropped only 2.1% from 2005 to 2006 and has increased 4.4% since 2006. Correct me if I am wrong in my thinking but I think prices are basically holding.
The percentage of households that could afford to buy an entry-level home in California stood at 24% in the second quarter of 2007, compared with 23% for the same period a year ago. This First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. At 45%, the High Desert region was the most affordable in the state, followed by the Sacramento region at 44%. Santa Barbara was the least affordable region in the state at 12%, followed by the Monterey region at 17%. No records were available for Santa Cruz.
The rate of mortgage loans entering the foreclosure process during the second quarter broke a new record nationally, the Mortgage Bankers Association said on 9/6/07. The rate of loans entering the foreclosure process hit a record 65%, compared with 58% during the previous quarter and 43% during the second quarter of 2006.
In releasing the results of its latest delinquency survey, the MBA said the record rate of loans entering the foreclosure process was driven by data from four states where investors and speculators were particularly active during the boom: California, Florida, Nevada and Arizona. These states have more than a third of the nation's subprime adjustable-rate mortgages (ARMs) and foreclosure starts on subprime ARMs, and are also responsible for most of the nationwide increase in foreclosures, the MBA said.
C.A.R. urges swift passage of GSE and conforming loan limit reform bill, calling for increases in loan limits to match median home prices in California and other high-cost areas and the creation of a new regulator to oversee Government Sponsored Enterprises (GSEs), such as Fannie Mae and Freddie Mac.
Vigorous support helped push the measure, HR 1427, through the House in May, but it has since stalled in the Senate. The bill would raise the current maximum size of a conforming mortgage loan from $417,000 to a capped amount at 150 percent of the national limit or $625,500, allowing low- and moderate-income home buyers in high-cost areas better access to low-cost, low-rate fixed mortgages.
C.A.R. President Colleen Badagliacco was recently quoted in a 'San Jose Mercury News' story on the issue, saying that a loan of $417,000 'may buy a mansion in Des Moines but it doesn't buy anything in San Jose.'
Here is what is happening in our local Santa Cruz County market, for other areas please give me a call.
----------------------------------------------------------------------
August Monthly Statistical Highlights for Single Family Homes:
* Inventory down 4.4% compared to August 2006, and slightly down 0.5% from July 2007
* Sales down 25.1% compared to August 2006, but only down 2.8% from July 2007
* Days on the market decreased to 73, month prior 88, last August at 81
* Median home price decreased just slightly from the prior month to $798,400, but increased 4.4% from August 2006
* Sales price vs.listing price ratio increased to 97.79% from July
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
We are still looking at over 9 months of inventory on single family homes, which continues to make it a buyers market. There are some great opportunities for those looking for a primary residence, second home, or an investment property. If you know of anyone thinking of selling or looking to buy in the next 30-60 days, I would love to help them.
I hope you enjoy my monthly newsletter. Let me know if there are other facets of the market you would like information about.
Fortunately or unfortunately (depending on how you look at it), I see the local real estate market holding it's own. Sure the media is all doom and gloom, but the numbers don't lie. I believe most of what has been happening in the last few months is directly related to the mortgage industry blues. Some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment. Most problems are primarily with jumbo loans, but there are no serious problems for the majority of buyers who qualify for conventional financing. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.
Let's do a comparison of August from 2005 to 2006 to present. The total sales volume was down 21.9% from 2005 to 2006 and the same percentage for 2006 compared to today. But, the median price and the average sales price dropped only 2.1% from 2005 to 2006 and has increased 4.4% since 2006. Correct me if I am wrong in my thinking but I think prices are basically holding.
The percentage of households that could afford to buy an entry-level home in California stood at 24% in the second quarter of 2007, compared with 23% for the same period a year ago. This First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. At 45%, the High Desert region was the most affordable in the state, followed by the Sacramento region at 44%. Santa Barbara was the least affordable region in the state at 12%, followed by the Monterey region at 17%. No records were available for Santa Cruz.
The rate of mortgage loans entering the foreclosure process during the second quarter broke a new record nationally, the Mortgage Bankers Association said on 9/6/07. The rate of loans entering the foreclosure process hit a record 65%, compared with 58% during the previous quarter and 43% during the second quarter of 2006.
In releasing the results of its latest delinquency survey, the MBA said the record rate of loans entering the foreclosure process was driven by data from four states where investors and speculators were particularly active during the boom: California, Florida, Nevada and Arizona. These states have more than a third of the nation's subprime adjustable-rate mortgages (ARMs) and foreclosure starts on subprime ARMs, and are also responsible for most of the nationwide increase in foreclosures, the MBA said.
C.A.R. urges swift passage of GSE and conforming loan limit reform bill, calling for increases in loan limits to match median home prices in California and other high-cost areas and the creation of a new regulator to oversee Government Sponsored Enterprises (GSEs), such as Fannie Mae and Freddie Mac.
Vigorous support helped push the measure, HR 1427, through the House in May, but it has since stalled in the Senate. The bill would raise the current maximum size of a conforming mortgage loan from $417,000 to a capped amount at 150 percent of the national limit or $625,500, allowing low- and moderate-income home buyers in high-cost areas better access to low-cost, low-rate fixed mortgages.
C.A.R. President Colleen Badagliacco was recently quoted in a 'San Jose Mercury News' story on the issue, saying that a loan of $417,000 'may buy a mansion in Des Moines but it doesn't buy anything in San Jose.'
Here is what is happening in our local Santa Cruz County market, for other areas please give me a call.
----------------------------------------------------------------------
August Monthly Statistical Highlights for Single Family Homes:
* Inventory down 4.4% compared to August 2006, and slightly down 0.5% from July 2007
* Sales down 25.1% compared to August 2006, but only down 2.8% from July 2007
* Days on the market decreased to 73, month prior 88, last August at 81
* Median home price decreased just slightly from the prior month to $798,400, but increased 4.4% from August 2006
* Sales price vs.listing price ratio increased to 97.79% from July
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
We are still looking at over 9 months of inventory on single family homes, which continues to make it a buyers market. There are some great opportunities for those looking for a primary residence, second home, or an investment property. If you know of anyone thinking of selling or looking to buy in the next 30-60 days, I would love to help them.
I hope you enjoy my monthly newsletter. Let me know if there are other facets of the market you would like information about.
Payroll report suggests FED to begin easing monetary policy
This morning’s payroll report gives the Fed the cover it needs to begin easing monetary policy in a serious way, using the biggest guns in its arsenal. Any lingering fears on inflation are now firmly in the rearview mirror and the Fed’s objective to maintain economic growth is paramount. The bad news is the Fed now appears somewhat behind the curve as often happens in times of economic transition. There is now a real danger of recession, and some analysts will worry that one is now unavoidable, or even that we are in one already. We do not yet go that far. A recession is still avoidable in my opinion, but the Fed will need to act promptly and with authority to right this sinking ship.
Bulls may latch on to the fact that the unemployment rate held steady at 4.6 percent, but the household survey showed an even bigger drop in employment in August, down 316,000 jobs, so that shred of comfort is a statistical myth.
In the near-term expect economic and financial volatility is going to get ugly. A major slowdown in growth is not yet priced into equities; expect major cuts in analyst earnings estimates for the third and fourth quarters of this year. The Fed now has the evidence it needs to cut the Fed funds target rate at least 25 basis points in September. The Fed funds futures market is now placing higher odds on a 50 basis point cut. While the payroll data is just one data point for the Fed to consider, it is one that carries the most weight in the Fed’s eyes.
Scott Anderson, Ph.D., Senior Economist, Wells Fargo Bank
Bulls may latch on to the fact that the unemployment rate held steady at 4.6 percent, but the household survey showed an even bigger drop in employment in August, down 316,000 jobs, so that shred of comfort is a statistical myth.
In the near-term expect economic and financial volatility is going to get ugly. A major slowdown in growth is not yet priced into equities; expect major cuts in analyst earnings estimates for the third and fourth quarters of this year. The Fed now has the evidence it needs to cut the Fed funds target rate at least 25 basis points in September. The Fed funds futures market is now placing higher odds on a 50 basis point cut. While the payroll data is just one data point for the Fed to consider, it is one that carries the most weight in the Fed’s eyes.
Scott Anderson, Ph.D., Senior Economist, Wells Fargo Bank
Thursday, September 6, 2007
Pending Home Sales Index Falls Largely on Mortgage Tightening
Pending home sales, a forward-looking indicator, shows existing-home sales are likely to decline in coming months as mortgage disruptions work their way through the housing market, according to the National Association of Realtors®. The Pending Home Sales Index, based on contracts signed in July, fell 12.2% in July and was 16.1% lower than July 2006.
Lawrence Yun, NAR senior economist, said abnormal factors are clouding the horizon. “It’s difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment,” he said.
“These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.
“If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later,” Yun said. The PHSI in the South was 15.2% below a year ago. In the Northeast, the index is 10% lower than July 2006. In the Midwest it dropped 13.1% and in the West, the index fell 20.8%.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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By permission of Walter Molony, Realtor.org
Lawrence Yun, NAR senior economist, said abnormal factors are clouding the horizon. “It’s difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment,” he said.
“These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.
“If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later,” Yun said. The PHSI in the South was 15.2% below a year ago. In the Northeast, the index is 10% lower than July 2006. In the Midwest it dropped 13.1% and in the West, the index fell 20.8%.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
------------
By permission of Walter Molony, Realtor.org
Avoiding Foreclosure
Few things are as devastating as losing your home. Sadly, it's not always inevitable. In many cases the foreclosure could've been avoided with some outside help. Be aware of some of the hidden difficulties that will arise if foreclosure occurs.
Finding a new home. Don't believe that it will be better to let the foreclosure happen, because after you lose the home, you will still need to find a new place to live. All too often, the price paid in rent will be almost as high if not higher than the current mortgage payment. Remember: The owner of the property needs to make his mortgage payment, too, so he's going to charge a rental payment that's higher than his mortgage costs.
Deficiency judgment. It's not uncommon that the sale of the home is insufficient to cover the remainder of the mortgage. When the property has been damaged, or market values have dropped, you may end up with a bill in the tens of thousands for the difference.
Despite what many people think, most lending institutions are not anxious to foreclose. It's a last-ditch effort to recover their money and minimize their losses, and it's an incredible hassle. Most lenders would rather avoid it, if possible. There are multiple sources for help that you should be aware of, and most lenders will be happy to hear that you are going to try to keep the home rather than just await a foreclosure.
Housing Counseling Agency. The US Department of Housing and Urban Development maintains a list of HUD-approved counseling agencies. Call (800) 569-4287 to find the agency nearest them.
FHA-Insurance fund. FHA borrowers may qualify to have HUD make a one-time payment to bring the mortgage current. See www.hud.gov/foreclosure for more information on the requirements to qualify.
Different mortgage program. Talk to a loan officer about the possibility of refinancing the mortgage to a more affordable program.
Special Forbearance. Many borrowers can qualify for a new payment structure if you've had an increase in the cost-of-living, such as unexpected medical expenses, or a decrease in wages. This payment structure will allow you to repay the lender in a given time frame.
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Compliments of the Business Booster Collection and
Wendy Taylor, Financial Stragegies, Capitola
Finding a new home. Don't believe that it will be better to let the foreclosure happen, because after you lose the home, you will still need to find a new place to live. All too often, the price paid in rent will be almost as high if not higher than the current mortgage payment. Remember: The owner of the property needs to make his mortgage payment, too, so he's going to charge a rental payment that's higher than his mortgage costs.
Deficiency judgment. It's not uncommon that the sale of the home is insufficient to cover the remainder of the mortgage. When the property has been damaged, or market values have dropped, you may end up with a bill in the tens of thousands for the difference.
Despite what many people think, most lending institutions are not anxious to foreclose. It's a last-ditch effort to recover their money and minimize their losses, and it's an incredible hassle. Most lenders would rather avoid it, if possible. There are multiple sources for help that you should be aware of, and most lenders will be happy to hear that you are going to try to keep the home rather than just await a foreclosure.
Housing Counseling Agency. The US Department of Housing and Urban Development maintains a list of HUD-approved counseling agencies. Call (800) 569-4287 to find the agency nearest them.
FHA-Insurance fund. FHA borrowers may qualify to have HUD make a one-time payment to bring the mortgage current. See www.hud.gov/foreclosure for more information on the requirements to qualify.
Different mortgage program. Talk to a loan officer about the possibility of refinancing the mortgage to a more affordable program.
Special Forbearance. Many borrowers can qualify for a new payment structure if you've had an increase in the cost-of-living, such as unexpected medical expenses, or a decrease in wages. This payment structure will allow you to repay the lender in a given time frame.
-----------------
Compliments of the Business Booster Collection and
Wendy Taylor, Financial Stragegies, Capitola
Sunday, September 2, 2007
Don't put all the blame on mortgage brokers
There has been a lot of finger pointing at the mortgage broker community during the past few months. Everyone from borrowers to members of Congress seem to be trying to pin the blame for the nation's current mortgage mess on mortgage brokers.
The boom years of 2001-2005 saw unprecedented growth in mortgage volume. This growth created a huge demand for employment in the mortgage industry and this environment allowed and even encouraged widespread unprofessional behavior by some in the mortgage industry.
Some of this behavior was the result of neophytes flooding into the industry, but I believe that most of it was due to greed, which resulted in fraudulent transactions. There are numerous examples that have come to my attention where borrowers paid tens of thousands of dollars in unwarranted closing costs to mortgage originators, who took outrageous advantage of unsuspecting consumers just to fatten their own wallets.
Sure, one can shake fingers at those mortgage originators but most of us cannot and should not be grouped into that category. We have all heard stories about unscrupulous attorneys, accountants and doctors, too. There are bad apples in every batch. Given the fact that the majority of loans are originated by mortgage companies makes mortgage brokers an easy target for finger pointers.
When a borrower goes to a bank to inquire about financing, he only will have access to that bank's loan programs at that bank's rates. For a borrower to satisfy himself that he is getting the best loan for his needs, he will have to go from bank to bank and compare all of the options. It may be that the bank's loan officer can function as a broker also but he sure is not going to be able to refer the borrower to a loan program that is available at another bank.
Mortgage brokers have access to hundreds of loan programs through their relationships with dozens of banks and mortgage companies. As a result, a professional and ethical mortgage broker should be able to arrange a mortgage for his client that is right for his needs and one that is competitively priced. With that in mind, it is no surprise that mortgage companies are doing the bulk of the business.
On a more global scale, as I wrote in this column at the beginning of the summer, it is not fair to single out the mortgage industry as the fall guy in trying to explain the subprime crises and the fall in home prices across the nation [although Santa Cruz has escaped most of this]. As I mentioned in that column, the consumer has to accept some of the blame for not being responsible about spending and saving money and reading the loan disclosures and documents.
Peter Boutell is a mortgage consultant with Santa Cruz Home Finance, 1535 Seabright Ave., Santa Cruz, CA 95062. Archived columns are available at www.peterboutell.com.
The boom years of 2001-2005 saw unprecedented growth in mortgage volume. This growth created a huge demand for employment in the mortgage industry and this environment allowed and even encouraged widespread unprofessional behavior by some in the mortgage industry.
Some of this behavior was the result of neophytes flooding into the industry, but I believe that most of it was due to greed, which resulted in fraudulent transactions. There are numerous examples that have come to my attention where borrowers paid tens of thousands of dollars in unwarranted closing costs to mortgage originators, who took outrageous advantage of unsuspecting consumers just to fatten their own wallets.
Sure, one can shake fingers at those mortgage originators but most of us cannot and should not be grouped into that category. We have all heard stories about unscrupulous attorneys, accountants and doctors, too. There are bad apples in every batch. Given the fact that the majority of loans are originated by mortgage companies makes mortgage brokers an easy target for finger pointers.
When a borrower goes to a bank to inquire about financing, he only will have access to that bank's loan programs at that bank's rates. For a borrower to satisfy himself that he is getting the best loan for his needs, he will have to go from bank to bank and compare all of the options. It may be that the bank's loan officer can function as a broker also but he sure is not going to be able to refer the borrower to a loan program that is available at another bank.
Mortgage brokers have access to hundreds of loan programs through their relationships with dozens of banks and mortgage companies. As a result, a professional and ethical mortgage broker should be able to arrange a mortgage for his client that is right for his needs and one that is competitively priced. With that in mind, it is no surprise that mortgage companies are doing the bulk of the business.
On a more global scale, as I wrote in this column at the beginning of the summer, it is not fair to single out the mortgage industry as the fall guy in trying to explain the subprime crises and the fall in home prices across the nation [although Santa Cruz has escaped most of this]. As I mentioned in that column, the consumer has to accept some of the blame for not being responsible about spending and saving money and reading the loan disclosures and documents.
Peter Boutell is a mortgage consultant with Santa Cruz Home Finance, 1535 Seabright Ave., Santa Cruz, CA 95062. Archived columns are available at www.peterboutell.com.
Saturday, September 1, 2007
FED to weigh markets turmoil
The Federal Reserve won't bail investors out of their bad decisions but will act if recent market turmoil threatens economic growth, Chairman Ben Bernanke said Friday.
Mr. Bernanke's much-anticipated speech solidified investor expectations the Fed will cut its target for the federal-funds rate -- charged on overnight loans between banks -- from 5.25% when policy makers meet Sept. 18. Markets see some probability the rate will drop to 4.75% but several economists said a drop to 5% is more likely, accompanied by a statement suggesting more cuts could come. Those expectations helped boost stocks. Read the full speech at this link
Excerpted from Greg at IP
Mr. Bernanke's much-anticipated speech solidified investor expectations the Fed will cut its target for the federal-funds rate -- charged on overnight loans between banks -- from 5.25% when policy makers meet Sept. 18. Markets see some probability the rate will drop to 4.75% but several economists said a drop to 5% is more likely, accompanied by a statement suggesting more cuts could come. Those expectations helped boost stocks. Read the full speech at this link
Excerpted from Greg at IP
Wednesday, August 29, 2007
Entry-Level housing affordability at 24% in California
The percentage of households that could afford to buy an entry-level home in California stood at 24 percent in the second quarter of 2007, compared with 23 percent for the same period a year ago, according to a report released today by C.A.R.
C.A.R.'s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
At 45 percent, the High Desert region was the most affordable in the state, followed by the Sacramento region at 44 percent. Santa Barbara was the least affordable region in the state at 12 percent, followed by the Monterey region at 17 percent.
C.A.R.'s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
At 45 percent, the High Desert region was the most affordable in the state, followed by the Sacramento region at 44 percent. Santa Barbara was the least affordable region in the state at 12 percent, followed by the Monterey region at 17 percent.
Saturday, August 18, 2007
FED discount window cut
The Federal Reserve has taken significant action in the last few weeks due to the credit crunch. And now they've made an unexpected move by cutting the discount window rate – which is great news.
Market movement
To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: Borrowers who want to take out non-conforming loans have fewer, more expensive options.
Many media outlets have incorrectly added fuel to the fire by stating that mortgage lending has stopped altogether and that borrowers can't get a loan without a 20% down-payment. This is not true.
Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.
What did the Fed do?
Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.
How exactly does this provide stability? Here's an example: Imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you know you will eventually be reimbursed by your insurance company, you still need the cash now. So do you sell off stocks to get the cash, or tap into an equity line of credit? Most likely, you draw from that line of credit rather than liquidating a long-term investment.
This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.
It's important to note that the discount rate is different than the Fed Funds Rate, which directly impacts interest rates that you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact mortgage rates.
Market movement
To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: Borrowers who want to take out non-conforming loans have fewer, more expensive options.
Many media outlets have incorrectly added fuel to the fire by stating that mortgage lending has stopped altogether and that borrowers can't get a loan without a 20% down-payment. This is not true.
Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.
What did the Fed do?
Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.
How exactly does this provide stability? Here's an example: Imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you know you will eventually be reimbursed by your insurance company, you still need the cash now. So do you sell off stocks to get the cash, or tap into an equity line of credit? Most likely, you draw from that line of credit rather than liquidating a long-term investment.
This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.
It's important to note that the discount rate is different than the Fed Funds Rate, which directly impacts interest rates that you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact mortgage rates.
Friday, August 10, 2007
Credit Crisis Cripples Markets
Just last week, American Home Mortgage and its wholesale counterpart, American Brokers Conduit, became the latest casualties of the credit crisis. Last year, this company closed over $58 billion in home loans. Despite being, by all accounts, a well-run business, market conditions forced them to file for bankruptcy, leaving nearly $800 million in loans unable to close. Tens of thousands of borrowers have now been left without financing as a result of companies like this going under.
Clearly, with over 100 national lenders having now closed shop in the last eight months, this is no longer simply a subprime lending issue. The credit market is experiencing unprecedented turmoil that, according to Mike Perry, CEO of Indymac Bancorp, is "broader and more serious than past disruptions."
What does this mean to the real estate market?
* Sellers can no longer be reluctant to accept offers or reduce prices. Tightening credit and diminishing mortgage products will continue to reduce the pool of qualified buyers. This, along with the increase in national inventories, means now is not the time to hold out for the "best" price possible.
* Buyers with credit issues or who have difficulty providing required documentation can no longer sit on the fence. If market conditions change, buyers who qualify for a loan today may not qualify a few weeks from now for the same exact loan. Just this week, many lenders have stopped offering no-Doc loans, and some lenders have even pulled back on all forms of stated loans. As market conditions continue to change, a buyer's pre-approval status can disappear even more quickly, delaying or spoiling the deal.
* Subprime and Alt-A refi candidates, especially those with ARMs scheduled to reset over the next 12 months, need to act now - even those with a pre-payment penalty. ARMs borrowers struggling with monthly payments now might be shocked to know that monthly payments can double in some cases once an ARM resets.
Clearly, with over 100 national lenders having now closed shop in the last eight months, this is no longer simply a subprime lending issue. The credit market is experiencing unprecedented turmoil that, according to Mike Perry, CEO of Indymac Bancorp, is "broader and more serious than past disruptions."
What does this mean to the real estate market?
* Sellers can no longer be reluctant to accept offers or reduce prices. Tightening credit and diminishing mortgage products will continue to reduce the pool of qualified buyers. This, along with the increase in national inventories, means now is not the time to hold out for the "best" price possible.
* Buyers with credit issues or who have difficulty providing required documentation can no longer sit on the fence. If market conditions change, buyers who qualify for a loan today may not qualify a few weeks from now for the same exact loan. Just this week, many lenders have stopped offering no-Doc loans, and some lenders have even pulled back on all forms of stated loans. As market conditions continue to change, a buyer's pre-approval status can disappear even more quickly, delaying or spoiling the deal.
* Subprime and Alt-A refi candidates, especially those with ARMs scheduled to reset over the next 12 months, need to act now - even those with a pre-payment penalty. ARMs borrowers struggling with monthly payments now might be shocked to know that monthly payments can double in some cases once an ARM resets.
Tuesday, August 7, 2007
My Santa Cruz County Real Estate Report/August 2007
Just a short month after I last reported the appreciation numbers, we are still hanging in there. And being the eternal optimist that I am, the inventory has actually declined from last week, and compared to this same period last year has dropped 2.4%. Cause for celebration, of course not, but signs that the market may be leveling off here in our area. On the other side of the coin, pending sales were down 5.4% from last week and 11.4% from the same period last year.
Is it because of all the news relating to the mortgage market, maybe so. I hear that buyers are experiencing some changes in qualifying as well as rates being hirer. Also some skepticism exists regarding what is actually going to happen and whether lenders will still be in business going forward. An industry that had become conditioned to rules that allowed most anyone to get a loan now must turn customers away.
Survey finds half would be uncomfortable buying a home in the coming months.More than half of consumers believe problems in the sub prime mortgage market will affect the market overall, and that the government should pass legislation to help sub prime borrowers avoid foreclosure, according to an Experian-Gallup poll. The Experian-Gallup Personal Credit Index survey showed about half of consumers would be uncomfortable making a major purchase like a home or car in the next three months. About 52 percent of those surveyed expected the average price of homes in their area to increase over the next year, and another 29 percent believe prices will remain about the same. Only 18 percent said they expect prices in their area will decrease. The survey was conducted in April, May and June, before the latest turmoil in the secondary market for mortgage loans prompted many lenders to further tighten underwriting standards and eliminate the use of some risky loans altogether.
Median home prices expected to fall this year, rebound in 2008 according to NAR (National Association of Realtors).New single-family home sales are forecasted to fall 18.9 percent and single-family housing starts to plummet 23 percent this year from 2006 levels. The median price of new homes is expected to fall 2.3 percent this year, with the median existing-home price falling 1.2 percent compared to 2006, the group also reported. This latest forecast represents some changing expectations compared to previous forecasts. 'More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year,' stated Lawrence Yun, NAR senior economist. 'Mortgage disruptions will hold back sales over the short term,' Yun stated, and he expects a 'modest upturn ... for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.'
What’s New on the Green SceneThe latest environmentally friendly home features aren’t just good for the planet — they look great and are a huge draw for conscientious buyers, too. “Interest in being green has moved across the country — it’s no longer just for wacky Californians,” says Matt Golden, who founded Sustainable Spaces Inc. in San Francisco three years ago. There are plenty of reasons why focusing on the environment has become so popular lately. Home builders, retailers, and product manufacturers are seeking to satisfy consumers’ appetites for anything green, offering everything from eco-friendly condos to water-saving toilets. Heard of any of these:
Timber framing
Copper roofs
Windows that beat the heat
Rainwater holding tanks
Chemical-free lighting
Green toilets
Solar Induction cook tops
Geothermal heating and cooling
Attic heat blocker
Reclaimed wood countertops
Nontoxic paint
Formaldehyde-free insulation
Smart irrigation systems
Green furniture
Here is what is happening in our local Santa Cruz County market, for other areas please give me a call.
----------------------------------------------------------------------
July Monthly Statistical Highlights for Single Family Homes:
* Inventory down 3.3% compared to July 2006, with an increase of 1.7% from June 2007
* Sales up 2.2% compared to July 2006, but a decrease of 11.5% from June 2007
* Days on the market decreased to 88, month prior 91, last July at 57
* Median home price increased to $799,000, and increased 2.7% from June 2006
* Sales price vs.listing price ratio increased to 96.86%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Is it because of all the news relating to the mortgage market, maybe so. I hear that buyers are experiencing some changes in qualifying as well as rates being hirer. Also some skepticism exists regarding what is actually going to happen and whether lenders will still be in business going forward. An industry that had become conditioned to rules that allowed most anyone to get a loan now must turn customers away.
Survey finds half would be uncomfortable buying a home in the coming months.More than half of consumers believe problems in the sub prime mortgage market will affect the market overall, and that the government should pass legislation to help sub prime borrowers avoid foreclosure, according to an Experian-Gallup poll. The Experian-Gallup Personal Credit Index survey showed about half of consumers would be uncomfortable making a major purchase like a home or car in the next three months. About 52 percent of those surveyed expected the average price of homes in their area to increase over the next year, and another 29 percent believe prices will remain about the same. Only 18 percent said they expect prices in their area will decrease. The survey was conducted in April, May and June, before the latest turmoil in the secondary market for mortgage loans prompted many lenders to further tighten underwriting standards and eliminate the use of some risky loans altogether.
Median home prices expected to fall this year, rebound in 2008 according to NAR (National Association of Realtors).New single-family home sales are forecasted to fall 18.9 percent and single-family housing starts to plummet 23 percent this year from 2006 levels. The median price of new homes is expected to fall 2.3 percent this year, with the median existing-home price falling 1.2 percent compared to 2006, the group also reported. This latest forecast represents some changing expectations compared to previous forecasts. 'More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year,' stated Lawrence Yun, NAR senior economist. 'Mortgage disruptions will hold back sales over the short term,' Yun stated, and he expects a 'modest upturn ... for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.'
What’s New on the Green SceneThe latest environmentally friendly home features aren’t just good for the planet — they look great and are a huge draw for conscientious buyers, too. “Interest in being green has moved across the country — it’s no longer just for wacky Californians,” says Matt Golden, who founded Sustainable Spaces Inc. in San Francisco three years ago. There are plenty of reasons why focusing on the environment has become so popular lately. Home builders, retailers, and product manufacturers are seeking to satisfy consumers’ appetites for anything green, offering everything from eco-friendly condos to water-saving toilets. Heard of any of these:
Timber framing
Copper roofs
Windows that beat the heat
Rainwater holding tanks
Chemical-free lighting
Green toilets
Solar Induction cook tops
Geothermal heating and cooling
Attic heat blocker
Reclaimed wood countertops
Nontoxic paint
Formaldehyde-free insulation
Smart irrigation systems
Green furniture
Here is what is happening in our local Santa Cruz County market, for other areas please give me a call.
----------------------------------------------------------------------
July Monthly Statistical Highlights for Single Family Homes:
* Inventory down 3.3% compared to July 2006, with an increase of 1.7% from June 2007
* Sales up 2.2% compared to July 2006, but a decrease of 11.5% from June 2007
* Days on the market decreased to 88, month prior 91, last July at 57
* Median home price increased to $799,000, and increased 2.7% from June 2006
* Sales price vs.listing price ratio increased to 96.86%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Thursday, July 19, 2007
Foreclosures fell 7% in June
While foreclosures rates remain substantially higher across the country over 2006 figures, the number of filings of loan defaults, auction sales, and bank repossessions fell by 7 percent in June, according to the U.S. Foreclosure Market Report released July 12 by RealtyTrac®.
A total of 164,644 foreclosures were reported across the country in June, down by 6.53 percent from the previous month, but still up 87 percent over June 2006 figures.
"Foreclosure activity subsided somewhat in June after hitting a 30-month high in May," said James J. Saccacio, chief executive officer for RealtyTrac®. "And the drop in activity was fairly broad, with 33 states reporting month-over-month decreases. Still, the foreclosure rates in most states remained substantially above last year's levels."
Although California reported a 2 percent dip in foreclosure activity from May to June, the state had the second highest foreclosure rate in the country for the month, reporting 38,801 foreclosures, representing one filing for every 315 households, according to the report.
A total of 164,644 foreclosures were reported across the country in June, down by 6.53 percent from the previous month, but still up 87 percent over June 2006 figures.
"Foreclosure activity subsided somewhat in June after hitting a 30-month high in May," said James J. Saccacio, chief executive officer for RealtyTrac®. "And the drop in activity was fairly broad, with 33 states reporting month-over-month decreases. Still, the foreclosure rates in most states remained substantially above last year's levels."
Although California reported a 2 percent dip in foreclosure activity from May to June, the state had the second highest foreclosure rate in the country for the month, reporting 38,801 foreclosures, representing one filing for every 315 households, according to the report.
Saturday, July 7, 2007
My Santa Cruz County Real Estate Report/July 2007
At the end of 2006, the percentage of appreciation in our County amounted to a negative <0.61%>. This had not happened since 1994 when appreciation fell to a negative <3.5%>. So the news this far in 2007 is encouraging. We are up 3.75% through the first six months of the year. Of course we all remember what happened just two short years ago. 'What' you ask...how about up 20.9%!
Once again different areas of the County are experiencing some highs and lows. Watsonville has the highest amount of inventory on single family homes since mid April with 35.8% and the lowest amount of pending with 14.8%. Inventory in the San Lorenzo Valley is 26.2% of the total with Santa Cruz third at 25.7%. On the other hand pending sales on condominiums are down 31%, buy oddly enough the inventory is less than what it was one year ago.
Tighter lending standards continue to impact housing activity. Home sales should remain stable in the months ahead, despite a lack of buyer confidence and the continued impact of tighter lending criteria, NAR today reported. 'Better supervised lending will put housing in a fundamentally healthier state of the long term,' said NAR Senior Economist Lawrence Yun. 'Mortgage purchase applications are trending up, with some of the rise due to buyers reapplying for alternatives to sub prime financing.'
Builder confidence falls to lowest level in 16 years. Concerns about rising interest rates, increased sales cancellations, and sizable inventory levels continue to negatively impact builder confidence, which declined for the fourth consecutive month in June, according to the National Association of Home Builders (NAHB). 'It's clear that the crisis in the sub prime sector has prompted tighter lending standards in much of the mortgage market, and interest rates on prime-quality home mortgages have moved up considerably during the past month along with long-term Treasury rates,' said NAHB Chief Economist David Seiders. 'Home sales most likely will erode somewhat further in the months ahead and improvements in housing starts probably will not be recorded until early next year.
Want to live to 100? Than pack your bags and move to Hawaii, Colorado, or New Mexico — states where residents enjoy the longest lives, according to a new report by Eons Inc., a media company that produces content about “life on the flipside of 50”. Using data from more than 450,000 adults over the age of 50 who shared information in an online longevity calculator, the report ranks all 50 states on a variety of factors related to living a long and healthy life. Here are two of the factors:
A stress-free, optimistic outlook on life can have many longevity benefits.
A modest but steady exercise regimen of at least 30 minutes a day, four days a week, people can add 10 years to their life.
Here is what is happening in our local Santa Cruz county market, for other areas please give me a call.
----------------------------------------------------------------------
June Monthly Statistical Highlights for Single Family Homes:
* Inventory up 16.5% compared to June 2006, with an increase of 9.5% from May 2007
* Sales down 15.7% compared to June 2006, but an increase of 11.5% from May 2007
* Days on the market increased to 91, month prior 89, last June at 57
* Median home price dropped to $757,000, and decreased 0.39% from May 2007
* Sales price vs.listing price ratio decreased to 93.57%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Once again different areas of the County are experiencing some highs and lows. Watsonville has the highest amount of inventory on single family homes since mid April with 35.8% and the lowest amount of pending with 14.8%. Inventory in the San Lorenzo Valley is 26.2% of the total with Santa Cruz third at 25.7%. On the other hand pending sales on condominiums are down 31%, buy oddly enough the inventory is less than what it was one year ago.
Tighter lending standards continue to impact housing activity. Home sales should remain stable in the months ahead, despite a lack of buyer confidence and the continued impact of tighter lending criteria, NAR today reported. 'Better supervised lending will put housing in a fundamentally healthier state of the long term,' said NAR Senior Economist Lawrence Yun. 'Mortgage purchase applications are trending up, with some of the rise due to buyers reapplying for alternatives to sub prime financing.'
Builder confidence falls to lowest level in 16 years. Concerns about rising interest rates, increased sales cancellations, and sizable inventory levels continue to negatively impact builder confidence, which declined for the fourth consecutive month in June, according to the National Association of Home Builders (NAHB). 'It's clear that the crisis in the sub prime sector has prompted tighter lending standards in much of the mortgage market, and interest rates on prime-quality home mortgages have moved up considerably during the past month along with long-term Treasury rates,' said NAHB Chief Economist David Seiders. 'Home sales most likely will erode somewhat further in the months ahead and improvements in housing starts probably will not be recorded until early next year.
Want to live to 100? Than pack your bags and move to Hawaii, Colorado, or New Mexico — states where residents enjoy the longest lives, according to a new report by Eons Inc., a media company that produces content about “life on the flipside of 50”. Using data from more than 450,000 adults over the age of 50 who shared information in an online longevity calculator, the report ranks all 50 states on a variety of factors related to living a long and healthy life. Here are two of the factors:
A stress-free, optimistic outlook on life can have many longevity benefits.
A modest but steady exercise regimen of at least 30 minutes a day, four days a week, people can add 10 years to their life.
Here is what is happening in our local Santa Cruz county market, for other areas please give me a call.
----------------------------------------------------------------------
June Monthly Statistical Highlights for Single Family Homes:
* Inventory up 16.5% compared to June 2006, with an increase of 9.5% from May 2007
* Sales down 15.7% compared to June 2006, but an increase of 11.5% from May 2007
* Days on the market increased to 91, month prior 89, last June at 57
* Median home price dropped to $757,000, and decreased 0.39% from May 2007
* Sales price vs.listing price ratio decreased to 93.57%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Thursday, June 28, 2007
Home prices fall at fastest rate in 16 years
Home prices in 10 major U.S. cities dropped at the fastest pace in 16 years during the 12 months ending in April, according to Standard & Poor’s Case-Shiller home price index released Tuesday.
Home prices in the 10 cities fell 2.7% on a year-over-year basis, the largest decline since September 1991. Meanwhile, prices in 20 cities dropped a record 2.1% year over year. The 10-city index began in 1987. The more comprehensive 20-city index goes back to 2001. Price appreciation has slowed for 17 consecutive months. Nationally, prices have doubled since 2000.
Fourteen of the 20 cities showed falling prices in the past year, led by Detroit (down 9.3%), San Diego (down 6.7%) and Washington (down 5.7%). Seattle had the largest price gains over the past year at 9.6%, while prices are up 7% in Charlotte, North Carolina, and 6.4% in Portland, Oregon.
Miami’s appreciation turned negative in April for the first time in this cycle; prices in Miami, which had risen 25% in the year through April 2006, are now down 1% in the past year.
“No region is immune to weakening price returns,” said Robert Shiller, chief economist for MacroMarkets LLC and the co-creator of the index. Even in regions such as the Pacific Northwest or the Southeast, where prices are still rising, the gains have been slowing.
A glimmer of hope shone in a few cities?Atlanta, Boston, Dallas and Denver?as they recorded price increases and stronger annual rates of return. “A few more months of data will reveal if it is a seasonal issue or the beginnings of a recovery in these markets,” S&P said in a release.
Falling home prices have squeezed many borrowers who have been able to extract equity from their homes or refinance to avoid a sudden increase in mortgage payments as the interest rate on adjustable-rate loans resets.
As a result of falling prices, foreclosures are rising nationally, especially in regions with a weak economy, such as the Midwest, and in Sun Belt areas deemed bubble regions, such as Southern California, Florida, Nevada and Arizona.
The Case-Shiller index is considered a superior gauge of home prices compared to the median sales-price data released by the Commerce Department or the National Association of Realtors, because it tracks multiple sales on the same property and is therefore not influenced by a different mix of homes sold in a period.
Unlike the quarterly price index produced by the Office of Federal Housing Enterprise Oversight, the Case-Shiller index does not include refinancings. And, also unlike the OFHEO index, it includes homes with mortgages larger than the conforming limit of $417,000.
However, the Case-Shiller index is restricted to 20 cities. The OFHEO index is up 4.3% in the past year, while the purchase-only OFHEO index is up 3%.
Case-Shiller Details:
Atlanta: up 0.8% in April, up 2.1% year-on-year
Boston: up 0.6% in April, down 4.5% year-on-year
Charlotte: up 1.2% in April, up 7% year-on-year
Chicago: down 0.7% in April, up 0.2% year-on-year
Cleveland: down 0.2% in April, down 2.8% year-on-year
Dallas: up 1.3% in April, up 2% year-on-year
Denver: up 0.5% in April, down 1.8% year-on-year
Detroit: down 2.5% in April, down 9.3% year-on-year
Las Vegas: down 0.8% in April, down 3% year-on-year
Los Angeles: down 0.5% in April, down 2.6% year-on-year
Miami: down 1.2% in April, down 1% year-on-year
Minneapolis: down 0.5% in April, down 2.9% year-on-year
New York: down 0.2% in April, down 1.5% year-on-year
Phoenix: down 0.8% in April, down 4.5% year-on-year
Portland: up 1% in April, up 6.4% year-on-year
San Diego: down 0.3% in April, down 6.7% year-on-year
San Francisco: up 0.2% in April, down 2.8% year-on-year
Seattle: up 1.3% in April, up 9.6% year-on-year
Tampa: down 1.1% in April, down 5% year-on-year
Washington: down 0.5% in April, down 5.7% year-on-year
10-city composite: down 0.3% in April, down 2.7% year-on-year
20-city composite: down 0.2% in April, down 2.1% year-on-year
Rex Nutting is Washington bureau chief of MarketWatch.
Home prices in the 10 cities fell 2.7% on a year-over-year basis, the largest decline since September 1991. Meanwhile, prices in 20 cities dropped a record 2.1% year over year. The 10-city index began in 1987. The more comprehensive 20-city index goes back to 2001. Price appreciation has slowed for 17 consecutive months. Nationally, prices have doubled since 2000.
Fourteen of the 20 cities showed falling prices in the past year, led by Detroit (down 9.3%), San Diego (down 6.7%) and Washington (down 5.7%). Seattle had the largest price gains over the past year at 9.6%, while prices are up 7% in Charlotte, North Carolina, and 6.4% in Portland, Oregon.
Miami’s appreciation turned negative in April for the first time in this cycle; prices in Miami, which had risen 25% in the year through April 2006, are now down 1% in the past year.
“No region is immune to weakening price returns,” said Robert Shiller, chief economist for MacroMarkets LLC and the co-creator of the index. Even in regions such as the Pacific Northwest or the Southeast, where prices are still rising, the gains have been slowing.
A glimmer of hope shone in a few cities?Atlanta, Boston, Dallas and Denver?as they recorded price increases and stronger annual rates of return. “A few more months of data will reveal if it is a seasonal issue or the beginnings of a recovery in these markets,” S&P said in a release.
Falling home prices have squeezed many borrowers who have been able to extract equity from their homes or refinance to avoid a sudden increase in mortgage payments as the interest rate on adjustable-rate loans resets.
As a result of falling prices, foreclosures are rising nationally, especially in regions with a weak economy, such as the Midwest, and in Sun Belt areas deemed bubble regions, such as Southern California, Florida, Nevada and Arizona.
The Case-Shiller index is considered a superior gauge of home prices compared to the median sales-price data released by the Commerce Department or the National Association of Realtors, because it tracks multiple sales on the same property and is therefore not influenced by a different mix of homes sold in a period.
Unlike the quarterly price index produced by the Office of Federal Housing Enterprise Oversight, the Case-Shiller index does not include refinancings. And, also unlike the OFHEO index, it includes homes with mortgages larger than the conforming limit of $417,000.
However, the Case-Shiller index is restricted to 20 cities. The OFHEO index is up 4.3% in the past year, while the purchase-only OFHEO index is up 3%.
Case-Shiller Details:
Atlanta: up 0.8% in April, up 2.1% year-on-year
Boston: up 0.6% in April, down 4.5% year-on-year
Charlotte: up 1.2% in April, up 7% year-on-year
Chicago: down 0.7% in April, up 0.2% year-on-year
Cleveland: down 0.2% in April, down 2.8% year-on-year
Dallas: up 1.3% in April, up 2% year-on-year
Denver: up 0.5% in April, down 1.8% year-on-year
Detroit: down 2.5% in April, down 9.3% year-on-year
Las Vegas: down 0.8% in April, down 3% year-on-year
Los Angeles: down 0.5% in April, down 2.6% year-on-year
Miami: down 1.2% in April, down 1% year-on-year
Minneapolis: down 0.5% in April, down 2.9% year-on-year
New York: down 0.2% in April, down 1.5% year-on-year
Phoenix: down 0.8% in April, down 4.5% year-on-year
Portland: up 1% in April, up 6.4% year-on-year
San Diego: down 0.3% in April, down 6.7% year-on-year
San Francisco: up 0.2% in April, down 2.8% year-on-year
Seattle: up 1.3% in April, up 9.6% year-on-year
Tampa: down 1.1% in April, down 5% year-on-year
Washington: down 0.5% in April, down 5.7% year-on-year
10-city composite: down 0.3% in April, down 2.7% year-on-year
20-city composite: down 0.2% in April, down 2.1% year-on-year
Rex Nutting is Washington bureau chief of MarketWatch.
Thursday, June 7, 2007
My Santa Cruz County Real Estate Report/June 2007
If you recall from last month, I reported the median price was higher than it had been since November 2005. How does that old saying go? The more things change, the more they stay the same. So here we go again, this month the numbers show a bit of a drop back to $760,000 now mirroring prices of a year ago. In addition, we have over 7 months of inventory which suggests a buyers market. The days on the market have improved and the percentage of listing price vs. selling price increased. A possible sign that we are starting to clear out the older inventory.
Different areas of the County are experiencing some highs and lows. Watsonville has the highest amount of inventory with 26.8%. Santa Cruz follows with 19.1% and the San Lorenzo Valley at 17.8%. As you might expect, the number of sales in these areas shows Santa Cruz at 31.7% and Watsonville with the fewest at only 9.6%.
Tighter lending rules are keeping some buyers out of the market. Mortgage lenders are tightening standards in ways that can make it much more difficult for potential borrowers to get approval for loans. The new standards fall into the following areas, according to Wells Fargo & Co. and other large lenders:
Ability to repay. Buyers are no longer being qualified at the low initial rate. They must qualify for the loan payments at rates equal to what the loan would be if it reset at a higher rate.
Down payment. Lenders want buyers to put some money down, even as little as 5 percent or 10 percent. Loans for 100 percent of the price are very hard to get.
Credit score. Credit scores range from the high 300s to the low 800s. Borrowers with a credit score above 680 are likely to qualify for a reasonable deal. Between 660 and 680, they may qualify, but the deal could be pricey. Potential borrowers with a score of 620 or less need to raise their scores before they can qualify.
Income and income verification. Producing proof that a borrower has a job is key; “stated income” loans are much more difficult to get. Also lenders are unlikely to approve a loan in which the home buyer will spend more than 45 percent of his gross income paying off debt, including paying the mortgage.
At 17 percent, Utah registered the highest rate of residential appreciation in the nation during the first three months of this year compared to the same period in 2006, the U.S. Office of Federal Housing Enterprise Oversight reports. It was the second quarter in a row that Utah weighed in ahead of all other states, according to the agency. On a nationwide scale, the rate of home-price growth for the three months came in at 4.25 percent. (Santa Cruz County is at 2.81%)
Also performing well-above the national norm during the first three months of this year were:
Idaho: 12.27 percent
Montana: 11.68 percent
Wyoming: 11.67 percent
Washington: 11.63 percent
For the sixth consecutive year, President Bush has proclaimed June as National Homeownership month. Nearly 70 percent of Americans currently own homes, and the rate of homeownership among minorities is above 50 percent. In his proclamation, the President stated: 'During National Homeownership Month and throughout the year, I urge citizens to consider homeownership opportunities in their communities, and I applaud American homeowners for helping fuel the economy.'
Here is what is happening in our local Santa Cruz county market, for other areas please give me a call.
----------------------------------------------------------------------
May Monthly Statistical Highlights for Single Family Homes:
* Inventory up 6.4% compared to May 2006, with a slight increase of 4.0% from April 2007
* Sales down 15.7% compared to May 2006, but an increase of 10.3% from April 2007
* Days on the market decreased to 89, month prior 104, last May at 72
* Median home price matched May 2006 at $760,000, and decreased 2.1% from April 2007
* Sales price vs.listing price ratio increased to 97.74%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
Different areas of the County are experiencing some highs and lows. Watsonville has the highest amount of inventory with 26.8%. Santa Cruz follows with 19.1% and the San Lorenzo Valley at 17.8%. As you might expect, the number of sales in these areas shows Santa Cruz at 31.7% and Watsonville with the fewest at only 9.6%.
Tighter lending rules are keeping some buyers out of the market. Mortgage lenders are tightening standards in ways that can make it much more difficult for potential borrowers to get approval for loans. The new standards fall into the following areas, according to Wells Fargo & Co. and other large lenders:
Ability to repay. Buyers are no longer being qualified at the low initial rate. They must qualify for the loan payments at rates equal to what the loan would be if it reset at a higher rate.
Down payment. Lenders want buyers to put some money down, even as little as 5 percent or 10 percent. Loans for 100 percent of the price are very hard to get.
Credit score. Credit scores range from the high 300s to the low 800s. Borrowers with a credit score above 680 are likely to qualify for a reasonable deal. Between 660 and 680, they may qualify, but the deal could be pricey. Potential borrowers with a score of 620 or less need to raise their scores before they can qualify.
Income and income verification. Producing proof that a borrower has a job is key; “stated income” loans are much more difficult to get. Also lenders are unlikely to approve a loan in which the home buyer will spend more than 45 percent of his gross income paying off debt, including paying the mortgage.
At 17 percent, Utah registered the highest rate of residential appreciation in the nation during the first three months of this year compared to the same period in 2006, the U.S. Office of Federal Housing Enterprise Oversight reports. It was the second quarter in a row that Utah weighed in ahead of all other states, according to the agency. On a nationwide scale, the rate of home-price growth for the three months came in at 4.25 percent. (Santa Cruz County is at 2.81%)
Also performing well-above the national norm during the first three months of this year were:
Idaho: 12.27 percent
Montana: 11.68 percent
Wyoming: 11.67 percent
Washington: 11.63 percent
For the sixth consecutive year, President Bush has proclaimed June as National Homeownership month. Nearly 70 percent of Americans currently own homes, and the rate of homeownership among minorities is above 50 percent. In his proclamation, the President stated: 'During National Homeownership Month and throughout the year, I urge citizens to consider homeownership opportunities in their communities, and I applaud American homeowners for helping fuel the economy.'
Here is what is happening in our local Santa Cruz county market, for other areas please give me a call.
----------------------------------------------------------------------
May Monthly Statistical Highlights for Single Family Homes:
* Inventory up 6.4% compared to May 2006, with a slight increase of 4.0% from April 2007
* Sales down 15.7% compared to May 2006, but an increase of 10.3% from April 2007
* Days on the market decreased to 89, month prior 104, last May at 72
* Median home price matched May 2006 at $760,000, and decreased 2.1% from April 2007
* Sales price vs.listing price ratio increased to 97.74%
-----------------------------------------------------------------------
(These statistics are believed to be accurate but not guaranteed)
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