NAR: Pending Home Sales Holding Steady

Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September. It is 1 percent below October 2007 when it was 89.8.

“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” says Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”

Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets; Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas.

By the Region

Here's what the PHSI showed across the country:
South: jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.
Northeast: rose 0.6 percent to 68.1 but is 14.1 percent below October 2007.
Midwest: declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.
West: fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.

The Economic Forecast

New-home sales: for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.

Existing-home sales: looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.

Home prices: “Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun says. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009.

Unemployment rate: is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009.

Inflation: as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.

GDP: Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery.

“Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he says.

Could a Drop in Interest Rates Help?

The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6 percent by the end of 2009, and average 6.2 percent in 2010.

NAR President Charles McMillan says he’s hopeful about considerations by the U.S. Treasury to help the housing market.

“Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan says. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”

Source: NAR

Are Some Owners Purposefully Falling Behind?

Housing experts are growing increasingly alarmed that programs to bail out troubled home owners might have the unintended consequence of encouraging people to miss mortgage payments in order to qualify for easier loan terms.

Such initiatives typically require that borrowers be 60 to 90 days late on payments to get a mortgage reworked.

In an attempt to prevent abuses, lenders are scrutinizing home owners' financial status--by poring over tax records, pay stubs, investment accounts, and bank statements--to determine if they really need a loan modification to avoid foreclosure.

Source: USA Today, Stephanie Armour (12/10/08)

Low Prices, Low Rates Mean Opportunity: 30-Year Rates at Lowest in 4 Years

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.47 percent during the week ended Dec. 11 from 5.53 percent last week and 6.11 percent a year ago.

Some lenders are locking in even lower rates as they build on momentum started when the Federal Reserve announced plans last month to purchase a substantial number of mortgage-backed securities. HSH Associates and Inside Mortgage Finance are reporting interest on 30-year fixed loans at 5.33 percent and 5.09 percent, respectively.

Freddie Mac chief economist Frank Nothaft says mortgage rates also were driven downward by the recession and rising unemployment.

Since housing prices have also fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent, experts say it's possible, with government encouragement, that rates will fall as low as 4.5 percent.

Now is the time for first-time buyers to step up. Here are some things to consider:

* Prices have always softened in the winter. As temperatures fall, bargain hunters will have bigger then usual opportunities.
* New homes are likely to become scarce. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, said he believes that a steep drop-off in inventory of new homes is coming soon, due to a rapid decrease in home builder activity.
* Location, location, location. Buying the best-priced house in a really good neighborhood is still smart.
* Will values go up? You may have to live in a house for 10 years, but over time, buyers will almost certainly make money.

Source: The New York Times, Ron Lieber (12/05/08) and The Washington Post, Dina ElBoghdady (12/12/08)

California Fast Facts, 12/10/2008

Fast Facts

Calif. median home price - October 08: $311,060(Source: C.A.R.)

Calif. highest median home price by C.A.R. region October 08: Santa Barbara So. Coast $860,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region October 08: High Desert $154,660 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Third Quarter 08: 53 percent (Source: C.A.R.)

Mortgage rates - week ending 12/4/08 3
0-yr. fixed: 5.53% Fees/points: 0.7%
15-yr. fixed: 5.33% Fees/points: 0.7%
1-yr. adjustable: 5.02% Fees/points: 0.5%
(Source: Freddie Mac)

Delinquencies Increase, Foreclosure Starts Flat

From the California Association of REALTORS, 12/10/2008

The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.99 percent of all loans outstanding for the third quarter of 2008, up 58 basis points compared with the second quarter of 2008, and up 140 basis points from the same period one year ago, according to the most recent Mortgage Bankers Association's (MBA) National Delinquency Survey.

The percentage of loans in the foreclosure process at the end of the third quarter was 2.97 percent, an increase of 22 basis points compared with the second quarter of 2008 and 128 basis points from one year ago. The percentage of loans on which foreclosure actions were started stood at 1.07 percent in the third quarter, down one basis point from last quarter and up 29 basis points from one year ago.

The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey. The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida. The 30 day delinquency percentage remains below levels seen as recently as 2002. Nevada, Florida, Arizona, California, Michigan, Rhode Island, Illinois, Indiana, and Ohio had rates of foreclosure starts that were above the national average.

"As for what is driving the national numbers, it is still a case of product and location," said Jay Brinkmann, MBA's chief economist. "Prime and subprime ARMs continue to have the highest share of foreclosures and California and Florida have about 54 percent and 41 percent of the prime and subprime ARM foreclosure starts respectively. Until those two markets turn around, they will continue to drive the national numbers."

More than Half of Modified Loans Delinquent within 6 months

From the California Association of REALTORS, 12/10/2008:

New data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months.

"After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent," said U.S. Comptroller of the Currency John C. Dugan. A report scheduled to be published later this month will show continued increasing delinquencies and foreclosures in process for all first-lien mortgages held by the largest national banks and federally-regulated thrifts, Dugan said. However, new foreclosures decreased by 2.6 percent from the second quarter.

The mortgage metrics report covers nearly 35 million loans worth more than $6.1 trillion, or about 60 percent of all first-lien mortgages in the United States. The quarterly reports are unique in that they are not merely surveys, but instead consist of validated, loan level data using standardized definitions for prime, Alt-A, and subprime mortgages, and standardized definitions for loan modifications.

City of Santa Clarita has an online store

From The City of Santa Clarita, via email, 12/10/2008:

The City of Santa Clarita just launched its first online boutique, featuring specialty Santa Clarita-branded items designed to help residents and visitors enjoy the good life in Santa Clarita. SantaClaritaCityStore.com boasts a variety of products in five signature categories, including: live, work, play, events, and nostalgia. Retail offerings on the shopping site range from a custom Santa Clarita hat, a high-end commuter mug, authentic street signs, and a Cutter & Buck golf kit, to a fully-equipped emergency preparedness kit for a family of four and a custom Central Bark Dog Kit.

Visit the new Santa Clarita City Store for holiday shopping and to show your City pride http://www.santaclaritacitystore.com

New Home Sales Nationally Declined in October

While Santa Clarita and San Fernando Valleys showed increase in home sales in October, national data released by the U.S. Department of Commerce show sales of new single-family homes declined 5.3 percent in October to a seasonally adjusted annual rate of 433,000 units.

Regionally, new home sales declined 18 percent in the West and 6 percent in the South in October. Sales in the Northeast increased by 22.6 percent from an unusually low rate the previous month, and sales in the Midwest increased by 6 percent.

Pending Sales in Nationally Fell in November

While Santa Clarita and San Fernando Valleys showed increase in home sales in October, national data released by National Association of REALTORS show pending home sales fell in November compared with a month earlier as credit tightened and economic conditions deteriorated. The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in September, declined 4.6 percent to 89.2 from an upwardly revised reading of 93.5 in August, but is 1.6 percent higher than September 2007, when it stood at 87.8.

The PHSI in the West rose 3.7 percent to 113.6 in September and remains 39.5 percent above a year ago. In the Midwest, the index slipped 0.7 percent to 83.3 and is 3.1 percent below September 2007. The index in the South fell 7.9 percent to 89.0 in September and is 11.3 percent compared with a year ago. In the Northeast, the index dropped 16.8 percent to 66.4 and is 9.4 percent below September 2007.

Unique Homebuying Opportunities Abound

From SRAR:

Unique Homebuying Opportunities Abound

Regardless of market conditions, an opportunity always exists in the residential real estate market. That tried and true maxim is particularly accurate today as aid programs appear that are designed to steady the residential housing market and reopen the doors of home ownership to a wide range or prospective buyers.

Even as some home owners still struggle with the excesses of the past, once-in-a-lifetime opportunities to buy are available now or will soon emerge. No one knows how long these special programs will be available.

Remember, prices are at an all-time low. Interest rates are favorable. Lenders are making loans, albeit at higher qualifying standards. And, while not excessive, the inventory of homes listed for sale offers a wide selection. That inventory contains attractively priced homes being sold through foreclosure proceedings along with many listed for sale by traditional sellers, which often can offer a quicker, easier sale at a more attractive price.

There is ongoing debate as to whether rescue efforts from the nation's capital will prolong or speed the recovery, but several points seem crystal clear:

Recovery is, in fact, underway. More assistance programs are likely to emerge in coming weeks. At some point in the not to distant future, today's buyers' market will fade and a golden opportunity to buy a home and invest for the future will pass.

This is a brief overview of just a few of the many aid programs designed to help first-time and repeat home buyers. A more detailed version of this story aid programs are available at www.srar.com. Contact your Realtor® for details.

• Higher Loan Limits
The higher loan limit of $729,750 - due to be eliminates at the end of December - makes loans more affordable, especially in high-cost housing regions such as California.
• FHA loans are back
FHA loans are back in force and are plentiful. In some instances the down payment required is as low as 3%. More than 20 percent of new loans are expected to have FHA financing.
• Realtors offer $4,000 Grants
First-time home buyers who purchase a home in the San Fernando or Santa Clarita Valleys may be eligible to receive a $4,000 grant to ease the burden of closing costs. The grants are available from the Southland Regional Association of Realtors. For details, write via email to Rubenf@srar.com.
• L.A.City and California Programs
An array of city and state programs are available to help low- to moderate-income buyers into a home. Many programs are aimed at first-time buyers, but repeat buyers are welcome, too, to get assistance with a down payment or closing costs.• The California Housing Finance Agency - CalHFA offers multiple programs to help families purchase a home. Call your Realtor today for details on these and a growing number of homebuying opportunities!

Santa Clarita Valley October Home Sales up 78%

From SRAR:

Driven by the continued presence of foreclosures at extremely favorable resale prices, sales of existing single-family homes during October in the Santa Clarita Valley increased 78.4 percent compared to a year ago, the Southland Regional Association of Realtors reported Tuesday, Nov. 26.

A total of 296 homes changed owners, an increase of 138 transactions from a year ago when sales were inching to their lowest point on record. The record low sales total of 99 sales came in January of this year; the record high of 405 sales was set in June 2005.

Condominium sales also continued their rebound during October, up 111.9 percent from a year.

Eighty-nine condos closed escrow last month compared to 42 in October 2007, which was close to the record low of 31 condo sales of this January.

Resale prices continue to go in the opposite direction of sales. The median price of homes sold last month was $430,000, down 22.5 percent from a year ago. While prices continue to fall, the rate of the fall appears to be slightly slowing and beginning to flatten out.

The condo median price of $241,000 also fell 22.3 percent, a decline of $69,000 from the median of $310,000 reported in October 2007.

Pending escrows – a measure of future resales – suggest the increase in sales activity will continue in the months ahead, although the coming of the holidays may slightly temper sales. The 337 pending escrows at the end of October were up 69.4 percent higher than a year ago.

While the public generally believes that the inventory of homes listed for sale is huge, the reality is that the inventory is modest and has been steadily declining. Discretionary home sellers have been taking their properties off the market, which means current sellers, whether private or bank-owned, are very motivated to close escrow quickly.

There were 1,573 active listings at the end of the month, down 35.6 percent from October 2007. Active listings also declined slightly on a month-to-month basis.

At the current pace of sales, the inventory of homes listed for sale represents a mere 5.3-month supply – precisely where experts believe a balance exists between buyers and sellers.

San Fernando Valley October Home Sales Soar 111%

From SRAR:

Home sales increased 110.5 percent during October throughout the San Fernando Valley, propelled by a 30.5 percent decline in the median price, the Southland Regional Association of Realtors reported on Tuesday, Nov. 25.

A total of 745 single-family homes changed owners, up 391 transactions from the 354 total of October 2007.

Sales also increased 4.5 percent on a month-to-month basis. After hitting a low point during this cycle of a mere 323 sales in January, activity has been steadily gaining momentum, driven by the presence of foreclosed properties offered at steeply discounted prices.

Funk said that while qualifying for a loan is more difficult than during the go-go days, mortgages are in fact available at favorable interest rates, generally at or below 6 percent. Plus, FHA loans now allow housing payments to go as high as 41 percent of a household’s income.

Sales of existing condominiums also are on the rise, although not at quite the pace of homes as buyers who had been priced out of the market are focusing on single-family homes.

A total of 234 condos changed owners last month, up 82.8 percent from a year ago and 10.9 percent ahead of September. It is the highest monthly total since sales hit the low point of this cycle with 105 condo transactions in January.

While sales are rising, prices continue to plummet. The median price of the 745 homes sold last month came in at $410,000, down 30.5 percent from a year ago. However, prices did rise 4.5 percent over September, one of the few month-to-month gains since the bottom fell out of the financial market.

The condo median price of $225,000 was down 40.5 percent from October 2007, a slide that began in July of 2007, gained momentum, but now appears to be slackening.

“Many buyers and sellers still are not realistic when it comes to pricing,” said Jim Link, the Association’s chief executive officer. “Sellers want to list at too high a price while buyers expect price discounts that often make little sense.

“Still, there are people out there who have overcome the uncertainty and see this as great window of opportunity to get into the market before prices stabilize and resume an upward march,” Link said.

Pending escrows – a measure of future sales activity – were up 97.8 percent from a year ago. There were a total of 1,180 open escrows at the end of October compared to the 606 of October 2007.

Despite public perception to the contrary, the inventory of properties for sale is not that large.

There were 5,918 active listings throughout the San Fernando Valley at the end of October. That was down 23.4 percent from a year ago and off 1.5 percent from this September.


At the current pace of sales the inventory represents a 6.0-month supply. Except for the presence of many foreclosed properties, a 6-month supply would represent a balanced market, where neither buyers nor sellers hold a negotiating edge.

By comparison, the inventory held at less than 1-month supply during the boom days of the recent sellers market, while during the economic recession of the early 1990s it hit a record high 23-month supply with the inventory at nearly 15,000 listings.

With many discretionary sellers deciding to wait until the market stabilizes, the inventory has been steadily declining since hitting a high for this cycle of more than 7,700 listings in September 2007.

Best Remodeling for Your Money

From CNN Money, 12/3/08:

As home values shrink, so have the returns on remodeling jobs. The projects below will allow you to recoup the most on your investment.

Project % of cost recouped %-point drop since 2005 Siding replacement 80.7% -15 Minor kitchen remodel 79.5 -19 Window replacement 77.7 -12 Major kitchen remodel 76.0 -9 Bathroom remodel 74.6 -28 Deck addition 73.7 -17 Note: Materials for projects: vinyl (siding); wood (window ); composite (deck)

Source: Remodeling magazines 2008-09 Cost vs. Value Report

After a big run-up, prices on many building materials have begun to drop and should continue to fall over the next few months.

Lawsuit Delays Homeowner Rescue Help

We've been hearing about how disgusted homeowners are with not being able to do anything with their mortgages. Many are even just walking away from their home.

It's not all the bank's fault.

The two hedge funds — Greenwich Financial and Braddock Financial — hold securities backed by mortgages, and they argue that the terms of the underlying loans cannot be changed without their consent.

So they are suing Countrywide/Bank of America (CW). They state that the investor, not the lender will be the ones losing their investment and they are protecting their investors' interests.

CW had been working as part of a settlement with many Attorneys General to help homeowners refinance their mortgages if it meets certain criteria (I believe the criteria is similar to that for Hope for Homeowners, revealed about the same time).

CW had been working to start these restructurings the first week of December, based on my inside sources actively working on this program.


Reference: NY Times (10/23), KNX-AM this week, anonymous Countrywide sources, HousingWire (12/2)

Santa Clarita Number Crunching

From fellow Santa Clarita Realtor and buddy Paul Atkins (per email 11/6/2008):

• Activity (Closed Sales) up 85.7%, September2008 versus 2007
  
• Pending Home Sales up 148.4%, September 2008 versus 2007
  
• Homes on Active status Down 36.3%, September 2008 versus 2007

All the numbers look good for a recovery in SCV!

Current Inventories as of September statistics:

• Stevenson Ranch: 4.6 months inventory
• Valencia: 5.3 months
• Saugus: 4.6 months
• Canyon Country: 5.4 months
• Castaic: 5.6 months
• Newhall: 6.1 months
• Acton/Agua Dulce: 16.8 months
• All of SCV: 5.59 months

Except for Acton/Agua Dulce, short sales or REOs account for between 49-66% of Active Properties on the market, based on September numbers.

Santa Clarita Recognitions

From City of Santa Clarita City Manager Ken Pulskamp, by email dated 11/3:

Once again, the Los Angeles County Economic Development Corporation (LAEDC) named Santa Clarita as a finalist for the most business friendly city in all of Los Angeles County. This year, the LAEDC created two categories for this award to recognize cities with populations of 50,000 and above and those with 50,000 and under. Santa Clarita was selected as part of the population 50,000 and above category through its demonstration of business-friendly practices such as no business license fee or tax, no utility users’ fee, effective communication with the business community, and the Santa Clarita Enterprise Zone. Santa Clarita was selected from among 88 Los Angeles cities for this recognition.

At the annual League of California Cities conference in September, the City of Santa Clarita’s film and tourism programs were recognized for their contributions in economic development with a prestigious Helen Putnam Award of Excellence. This award is given to a handful of California’s 480 cities annually, recognizing outstanding achievements for programs and projects. Santa Clarita’s successes in attracting and supporting the entertainment industry and location filming, in addition to the City’s efforts to attract national and international tourism events were lauded as outstanding by the League.

Obama Will Support Housing, Says NAR

From Daily Real Estate News, 11/7/2008:


President-elect Barack Obama is likely to make a housing market recovery a central part of his economic revival plan.

That was the assessment of NAR leaders, speaking to a packed audience Thursday at the Peabody Hotel during the opening forum of the REALTORS® Conference.

Obama has long made housing a priority, said Illinois Association of REALTORS® CEO Gary Clayton, who knows the president-elect from his days as a state senator. Clayton said with a chuckle that he now regrets not joining Obama’s weekly poker game.

In Illinois, Obama advocated tax credits for property owners and fought to end predatory lending, Clayton said. As a U.S. senator, he’s advocated for a stronger FHA and voted for the NAR-backed economic stimulus bill, which increased loan limits in high-cost areas.

NAR Chief lobbyist Jerry Giovaniello addressed election banter about Obama having a “socialist” agenda. “There’s not much left to socialize,” he joked, referring to the government rescue of Fannie Mae, Freddie Mac, insurance giant AIG, and the entire U.S. banking system. “I think Jiffy Lube may be next,” he said, to uproarious laughter.

Clayton said the real Obama is a “friendly, fun guy. He’s smart, quick, and a good listener but no pushover.” Giovaniello described Obama as “careful and cautious,” someone who will listen to all sides of an issue before making decision.

Besides winning the presidency, Democrats gained seats in both the House and the Senate. Giovaniello told the crowd that didn’t necessarily mean legislators will have an anti-business bent. A substantial number are “Blue Dog Democrats,” he said, who tend to be conservative and business oriented. And many already have sided with REALTORS® on key real estate issues.

“We made our friends before we needed them,” he said, “so thank you for being involved in the REALTOR® party.

It’s Still The Economy

Clearly the state of the economy was on everyone’s minds, and NAR 2009 President Charles McMillan asked Chief Economist Lawrence Yun about his economic outlook.

“We are in a recession,” Yun said. “In the next six months, we may lose up to 1 million jobs. But the good news is, historically housing moves independently from the economy. We are seeing a 20 percent improvement in home sales in states like California, Florida, and Virginia. The economy will not improve without a housing recovery.”

In the meantime, NAR is doing all it can to help REALTORS® through the tough times, McMillan said. Among the free resources at REALTOR.org are daily economic commentaries, an FHA toolkit, and 150 local market reports.

The association also offers a host of money-saving benefits. For more information, visit REALTOR.org/NARHelpsYou.

President-elect Barack Obama is likely to make a housing market recovery a central part of his economic revival plan. That was the assessment of NAR leaders, speaking to a packed audience Thursday at the Peabody Hotel during the opening forum of the REALTORS® Conference.

Obama has long made housing a priority, said Illinois Association of REALTORS® CEO Gary Clayton, who knows the president-elect from his days as a state senator. Clayton said with a chuckle that he now regrets not joining Obama’s weekly poker game.

In Illinois, Obama advocated tax credits for property owners and fought to end predatory lending, Clayton said. As a U.S. senator, he’s advocated for a stronger FHA and voted for the NAR-backed economic stimulus bill, which increased loan limits in high-cost areas.

NAR Chief lobbyist Jerry Giovaniello addressed election banter about Obama having a “socialist” agenda. “There’s not much left to socialize,” he joked, referring to the government rescue of Fannie Mae, Freddie Mac, insurance giant AIG, and the entire U.S. banking system. “I think Jiffy Lube may be next,” he said, to uproarious laughter.

Clayton said the real Obama is a “friendly, fun guy. He’s smart, quick, and a good listener but no pushover.” Giovaniello described Obama as “careful and cautious,” someone who will listen to all sides of an issue before making decision.

Besides winning the presidency, Democrats gained seats in both the House and the Senate. Giovaniello told the crowd that didn’t necessarily mean legislators will have an anti-business bent.

A substantial number are “Blue Dog Democrats,” he said, who tend to be conservative and business oriented. And many already have sided with REALTORS® on key real estate issues.

“We made our friends before we needed them,” he said, “so thank you for being involved in the REALTOR® party.

It’s Still The Economy

Clearly the state of the economy was on everyone’s minds, and NAR 2009 President Charles McMillan asked Chief Economist Lawrence Yun about his economic outlook.

“We are in a recession,” Yun said. “In the next six months, we may lose up to 1 million jobs. But the good news is, historically housing moves independently from the economy. We are seeing a 20 percent improvement in home sales in states like California, Florida, and Virginia. The economy will not improve without a housing recovery.”

In the meantime, NAR is doing all it can to help REALTORS® through the tough times, McMillan said. Among the free resources at REALTOR.org are daily economic commentaries, an FHA toolkit, and 150 local market reports.

The association also offers a host of money-saving benefits. For more information, visit REALTOR.org/NARHelpsYou.

CAR Market Matters, 11/6/08

From the CAR Market Matters Email:

Finding an area with appreciation potential - Some real estate experts believe that home buyers who purchase a house during the current market will gain equity if they stay in the house for at least five years and purchase in a desirable neighborhood. (Chicago Tribune 10/31)

· Neighborhoods with strong employment bases, such as hospitals, universities, and government, tend to be recession-proof. People desire to live near their jobs, so housing that is in close proximity to these types of industries are generally in higher demand than those in other areas.

· High gas prices and roadway congestion have led many people to seek "walkable" communities - neighborhoods that offer both daily needs such as grocery stores and coffee shops to more specialty items like hair salons, all within walking distance. Walkable communities also provide public transportation, which is becoming more desirable to many home buyers and is increasing demand for housing in these areas. One Web site, walkscore.com, calculates the walkability of a community by locating stores, restaurants, schools, parks, and other attractions that are within walking distance. The scores are based on a 100-point scale with 100 points being a "walker's paradise."

· Home buyers who seek a new or nearly-new home should search in areas where the homebuilder is known for honoring warranties and building high-quality homes that are structurally sound. Homes in these areas are more likely to weather well and gain value in the future than homes in areas where the homebuilder is unknown.

· Homes in neighborhoods with sales momentum generally appreciate at a faster pace than areas where sales are flat. Some real estate industry consultants advise clients to pay close attention to the "list to sale" numbers, which reflect the difference between the asking price and the final closing price. Usually, if the gap in list-to-sale numbers is narrow, then the real estate market in that area is improving. (CAR, 11/6)

Meltdown 101: How we'll know we're in a recession - Recent economic reports and many news stories have led some Americans to believe the country is in a recession. Although unemployment is high and incomes have failed to keep pace with inflation, the country is not yet in a recession, which must be declared by the National Bureau of Economic Research (NBER). (Washington Post, 10/31)

· The National Bureau of Economic Research (NBER) is the entity that officially declares the country is in a recession. Founded in 1920, NBER consists of more than 1,000 university professors and researchers who study the economy. The Business Cycle Dating Committee within NBER makes the call on recessions. Often times NBER doesn't declare a recession until after it is over.

· Contrary to popular belief, a recession is not defined as two consecutive quarters of negative gross domestic product growth. NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months. This is usually based on reports such as the gross domestic product - a measure of the value of all goods and services produced within the United States; real income, employment, industrial production, and wholesale and retail trade.

· A recession's start and end dates are based on the high and low points within the nation's "business cycle" - periods of economic growth and contraction. A recession begins when the economy peaks at the top of an expansion period. It continues as the economy contracts until it hits the "trough," the lowest point in the downward cycle. After that, the economy begins to recover. The "peak" date is the beginning of a recession and the "trough" date is its end. The last official recession began in March 2001 and lasted eight months before ending in November 2001. (CAR, 11/6)

'Green' improvements can add to a home's appeal - Many home buyers are seeking 'green' homes to offset their carbon footprints and pocketbooks. Although most green homes are new houses, owners of existing homes for sale can make "green" adjustments to be more competitive in the market. (Los Angeles Times, 11/2)

· C.A.R. recently launched a new Green Web site, "At home with green™," which provides information to consumers and REALTORS® about how to find and sell green homes; how to make green home improvements; and other tactics for greening their homes, offices and lives. To visit "At home with green™," please go to http://green.car.org.

· Consumers can work with their local utility company to conduct an energy audit to determine how green a home is and to get pointers on how to further green the home. Although the changes could be costly and the homeowner likely will not recoup all the money spent making the green upgrades, the home could sell faster with the improvements. Some home buyers may make an offer on the home as is, but might request a credit towards making the green improvements. Often times the credit will be nearly twice the amount that it would have cost had the homeowner made the improvements prior to listing the home.

· Homeowners can make green improvements in their homes by making simple changes, such as replacing regular light bulbs with compact fluorescent bulbs (CFLs), which use only one-fifth the energy of regular bulbs and last almost 12 times longer, or more substantial improvements like replacing appliances with ENERGY STAR-rated ones, which can use as little as one-quarter the energy of older models. (CAR, 11/6)

HUD Guide to Prevent Foreclosure

HUD Guide to Prevent Foreclosure - The guide provides consumers with information such as how to contact a housing counselor; when and how to talk to their lender, how to find foreclosure resources, tips on avoiding foreclosure and foreclosure scams, as well as information for consumers who cannot keep their home. The guide to preventing foreclosure can be accessed by visiting http://www.hud.gov/foreclosure/. (CAR, 11/6)

Pending Sales of Existing Homes in U.S. Fell 4.6% in September

Bloomberg: Pending Sales of Existing Homes in U.S. Fell 4.6% in September
By Shobhana Chandra
11/07/2008
The NATIONAL ASSOCIATION OF REALTORS®’ Pending Home Sales Index declined 4.6 percent to 89.2 in September, a steeper decline than many economists had predicted.

Fast Facts, 11/15/2008

Fast Facts
Calif. median home price - September 08: $316,480(Source: C.A.R.)

Calif. highest median home price by C.A.R. region September 08: Santa Barbara So. Coast $935,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region September 08: High Desert $159,720 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)

Mortgage rates - week ending 10/30/08 30-yr. fixed: 6.46% Fees/points: 0.7% 15-yr. fixed: 6.19% Fees/points: 0.7% 1-yr. adjustable: 5.38% Fees/points: 0.6%(Source: Freddie Mac)

Santa Clarita Valley Home Sales Up

From the Southland Regional Association of REALTORS(R):

A total of 195 single-family homes changed owners throughout the Santa Clarita Valley during September, in increase in activity of 85.7 percent compared to a year ago, the Southland Regional Association of Realtors^® reported.

Twelve months have elapsed since the record low of 105 sales was set in September 2007, but today's market is looking very different.

"Activity is picking up with much of it centered on sales of bank-owned properties that are being sold as a result of foreclosure proceedings," said Doreen Chastain-Shine, president of the Association's Santa Clarita Valley Division. "It's back to basics with lots of hard work to complete the sale of a foreclosure or a property listed for sale by a traditional owner. However, it's clear that we near or at the bottom of this cycle and one-by-one foreclosures are being sold."

Condominium sales also increased 41.3 percent to a total of 89 transactions, the Association reported. Condo sales have been steadily increasing each month since they hit their low point of this cycle in January with 31 transactions.

"Sale of foreclosed properties will continue occupy the market for some time," said Jim Link, the Association's chief executive officer, "but I'm confident that the worst is passed."

The median price of single-family homes sold last month feel 22.6 percent from a year ago to $433,500, a drop of $126,500 from the $560,000 median of September 2007.

The median price has been inching lower since the record high of $643,000 was set in April 2006. Every month this year has seen the median come in under $500,000, but September was the first month to dip below $450,00.

Likewise, the condo median price of $250,000 was down 30.9 percent - a drop of $112,000 from the $362,000 median of September 2007. It was the first time since 2003 that the condo median hit $250,000.

"There are incredible opportunities on the market today and a growing number of buyers are casting a vote of confidence in the local economy," Chastain-Shine said. "Plus, it's likely that programs coming from Washington, D.C., will create even more options, especially for first-time home buyers."

Pending escrows - a measure of future resale activity - were up 148.4 percent at the end of September, suggesting that the market will remain strong for months to come.

Realtors reported a total of 1,588 active listings throughout the Santa Clarita Valley at the end of September, down 36.3 percent from a year ago.

At the current pace of sales, the active inventory represents a 5.6-month supply. Real estate experts believe a balanced market exists - where neither buyer nor seller have an advantage - when the supply hovers between a 5- and 6-months inventory.

San Fernando Valley Home Sales Surge from Last Year's Low Point

From the Southland Regional Association of REALTORS(R):

Driven by foreclosures and homes sold by traditional sellers at favorable prices, sales of existing single-family homes in the San Fernando Valley during September soared a whopping 81.8 percent compared to a year ago, the Southland Regional Association of Realtors^® reported.

A total of 658 homes changed owners last month - 296 sales higher than in September 2007. Home sales have been steadily increasing since a year ago September - which set a record low of 323 sales -with this September posting the fifth consecutive month with the total at 650 sales or higher.

"Recovery of the local housing market is underway," said Mary Funk, president of the Southland Regional Association of Realtors. "Every time a foreclosed home finds a new owner or a buyer expresses confidence by buying a home from a traditional seller, we move a step closer to resolving the housing crisis and returning to some level of normalcy.

"Even as some home owners still struggle with the excesses of the past," Funk said, "once-in-a-lifetime opportunities to buy are available now or will soon emerge. Yes, it's more difficult to get a loan today, yet there are many programs available or emerging that are designed to aid current owners and help prospective buyers get into a home. No one knows how long these favorable conditions will be around."

It is to early to predict whether rescue efforts from the nation's capital will prolong or speed recovery, Funk said.

Funk and Jim Link, the Association's chief executive officers, said they expected foreclosed properties to continue to be dominant factor in the market, yet both expressed confidence that the worst of the fallout from the financial meltdown has passed.

"Recent sales activity and the number of properties that are already in escrow suggest that the market has hit bottom and is bouncing back," Link said. "Buyers want to take advantage of the relatively few properties listed for sale and capture prices that have not been seen in years." Buyers generally have been focusing on unique opportunities to purchase single-family homes, simply because homes that were too expensive two years ago now may be within reach.

Still, condominium sales also increased during September, soaring 36.1 percent to 21 1 transactions - 56 sales higher than a year ago.

September marked the third time in four months that condo sales exceeded the 200-transaction benchmark after stumbling along below 200 for 10 consecutive months with the 105 condo sales of this January being the low point of this cycle.

"There's no doubt that sales are being driven by favorable prices," Funk said. "Plus, a purchase today indicates that buyers realize that housing remains a relatively rare commodity in Southern California, which is expected to add tens of thousands of new residents over the coming years."

The median price of single-family homes sold during September declined 37.1 percent from a year ago to a median of $392,500. It was the first time since 2003 that the median dipped below $400,000.

Likewise, the condo median price of $260,000 dropped 33.3 percent - $1 30,000 lower than a year ago. September marked the fifth consecutive month that the condo median has been below $300,000. Today's median condo price was last seen in 2003 and early 2004.

Pending sales - a measure of future closed escrow activity - increased an incredible 163.1 percent during September. The Association reported a total of 1,305 open escrows at the end of the month. That compares to 496 year ago - one of the lowest tallies in recent years and close to the record low of 385 pending escrows posted in December 1991.

"Generally, people are surprised to learn that there is a relatively limited inventory of properties listed for sale throughout the San Fernando Valley," Link said. "Owners realize that this is not the time to test the market.

"That leaves two types of sellers," Link said, "both of whom are highly motivated: banks holding foreclosed properties and traditional sellers who either must sell due to personal circumstances, such as a work transfer, or owners who have sufficient equity in their current property and understand that whatever the perceived loss in a sale will be more than recaptured when they buy a replacement property."

There were a total of 6,009 properties listed for sale at the end of September, down 22.2 percent from a year ago.

At the current pace of sales, that represents a 6.9-month supply, only slightly on the high end of the 5- to 6-month supply which real estate experts believe indicates a balanced market. The inventory at the current pace of sales was at a 16.2-month supply this January when there were 6,928 properties for sale and a mere 428 total sales.

For comparison, during the housing downturn of the 1990s the inventory soared to a record high of 14,976 in July 1992 and the inventory at the then current pace of sales hit a high of 23.0-months.

NAR Makes Big Push for ‘Four-Point Plan’

From Real Estate Daily News:

Can the federal government afford to pass yet another stimulus measure, this one aimed directly at getting the housing market moving? NATIONAL ASSOCIATION OF REALTORS® leaders say the government can’t afford not to.

The association has crafted a four-point housing recovery plan and is making an all-out push to get it through Congress. At the REALTORS® Conference & Expo in Orlando next week, NAR members will be wearing “I support the four-point plan” buttons to voice their support.

The House That NAR Built

In addition, REALTORS® will have the opportunity to sign a giant model house on the Expo floor emblazoned with the slogan, “We support the NAR housing stimulus plan.”

After the conference, the house will be dismantled, shipped to Washington, D.C., and reconstructed in an as-yet-unnamed spot. It’s a publicity stunt, to be sure, but one that REALTORS® are hoping will get legislators’ attention.

Banks begin receiving cash injections this week as part of the massive $700 billion federal rescue bill, and REALTORS® want that money used for lending to qualified home buyers.

Outrage from Lawmakers

REALTORS® aren’t the only ones concerned about how the banks will use those funds. Senate Banking Committee Chair Christopher Dodd (D-Conn.), who helped fashion the rescue package expressed outrage at a credit-crisis hearing last week, saying: “Those lenders who will be receiving billions of dollars from U.S. taxpayers are considering using those dollars not to make loans, but rather to pursue ’some acquisition opportunities’ and to create a capital ‘cushion’ on which they will comfortably sit while the American consumer and small business person struggles.”

The desire to restart bank lending was core to the government’s goal in passing its rescue bill.

In addition to the provision calling on banks to use the funds for lending, NAR’s four-point plan calls for:

• Expanding the $7,500 first-time home buyer tax credit to all buyers and eliminating that program’s repayment requirement.
• Making permanent the prohibition against banks entering real estate brokerage and management.
• Making permanent the high-cost conforming loan limit of $729,750. That limit has been in effect for less than a year and is scheduled to drop to $625,500 on Jan. 1, 2009. NAR analysts say the higher limit, to be effective, needs more time to work.

— By Robert Freedman

Mortgage Rates Inch Up This Week

From Daily Real Estate News

Freddie Mac reports a jump in the 30-year fixed mortgage rate to 6.46 percent during the week ended Oct. 30 from 6.04 percent the prior week, as long-term mortgages rates moved in line with long-term Treasury bonds.

The 15-year fixed mortgage rate rose as well, climbing to 6.19 percent from 5.72 percent.

Meanwhile, the five-year hybrid adjustable mortgage rate moved up to 6.36 percent from 6.06 percent; and the one-year ARM increased to 5.38 percent from 5.23 percent.
Freddie Mac chief economist Frank Nothaft expects short-term rates to remain low due to the Federal Reserve’s recent cut in the discount and federal-funds rates, and he notes that falling home prices have jump-started residential sales in some markets by making properties more affordable.

Source: The Wall Street Journal (10/31/08)

New Laws Protect Tenants from Foreclosures

From Daily Real Estate News:

Governments are stepping in to protect renters who find themselves evicted when the property they rent is foreclosed.

A new law passed by the California Legislature gives renters a 120-day grace period before they must vacate a foreclosed property.

A city ordinance in Chicago that will take effect Nov. 5 requires that tenants be informed within seven days of the foreclosure filing. The resulting proceeding can take months, so tenants who are informed promptly have plenty of time to find a new home.

The Illinois Mortgage Bankers Association expressed concern about any policy that allows tenants to stay after the foreclosure proceedings begin. They said that tenants in residence could make it difficult for buyers to get financing.

Dustin Hobbs of the California Mortgage Bankers Association says there have been similar restrictions in California for years and banks still lend. “The sky hasn’t fallen here.”

Source: USA Today, Alan Gomez (10/27/08)

Why the Foreclosure Crisis is Hard to Fix

From Daily Real Estate News, October 29, 2008:

The government has thrown billions at the foreclosure crisis, but as Sheila Bair, head of the Federal Deposit Insurance Corp., told the Senate last week, “There has been some progress, but it’s not enough.”

Until the sweeping foreclosure problem is resolved, mortgage system woes will persist.

Here are five reasons why the foreclosure crisis has proven difficult to fix:

1. Falling home prices: More than 23 percent of home owners with a mortgage owe more on their loans than their homes are worth. Lenders won’t give new loans to people with negative equity and that leads to owners walking away, causing the lender to foreclose.

2. Too many investors: More than 30 percent of properties in the foreclosure process are owned by someone who doesn’t live in the property, according to RealtyTrac Inc. Programs that help home owners in trouble are not designed to aid investors.

3. Complex investments: Nearly all mortgages in the last decade have been packaged into securities and sold. Investors in these securities are hesitant to agree to loan modifications because it will mean a significant loss. U.S. Rep. Barney Frank, D-Mass., has accused hedge fund investors of blocking loan modifications. In a letter summoning hedge fund investors to a hearing, he wrote: “For the hedge fund industry, which has flourished for much of the past decade, to take steps so actively in opposition to what is currently in the national economic interest is deeply troubling.”

4. Job losses: Unemployment is the main reason people can’t pay their mortgages. As the unemployment rate has risen above 6 percent, the percentage of mortgage delinquencies caused by job loss has risen to 45 percent.

5. Small modifications don’t work: One third of all subprime loans modified in the third quarter of 2007 were delinquent again within 10 months, according to a Credit Suisse report.

Source: The Associated Press, Alan Zibel (10/27/08)

Survey of Real Estate Articles, Thursday, October 30, 2008

From CAR Market Matters:

Strategies to help you hold on to your house
Although the vast majority of homeowners are not facing foreclosure, many homeowners are making lifestyle adjustments to prevent themselves from falling behind on their financial obligations during the current economic downturn.


· Financial experts recommend that homeowners who are concerned about their ability to continue making their mortgage payments do the following: try to refinance an adjustable rate mortgage into one that is fixed for a set amount of time; create a household budget to help determine the debt-to-income ratio; avoid using credit cards, which can add unnecessary stress when the bill arrives; keep an emergency fund of liquid assets with enough to cover three-to-six months worth of household expenses; and only purchase necessities.

· Additional recommendations from some financial analysts to help homeowners save money and ensure that they can make their mortgage payments include: consolidating debt into a low-interest rate credit card; setting aside an allotted amount of money each month to pay down existing debt; foregoing luxury items such as eating out, shopping out at specialty stores and patronizing professional hair salons; and planning and preparing meals based on sale prices at the grocery store.

To read the full story, please click here;
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/25/HOON13EGDJ.DTL


Mortgage shock? Adjustable rates tied to LIBOR, COFI, other indexes
With approximately 60 percent of outstanding adjustable-rate mortgage (ARM) loans set to the London Inter Bank Offered Rate (LIBOR), nearly 25 percent linked to average yields on certain Treasury securities, and 15 percent set to measures like the Cost of Funds Index (COFI), more homeowners are reacquainting themselves with the type of ARM they have and considering refinancing options such as 30-year, fixed-rate loans.

· It is important that homeowners who have adjustable-rate mortgages (ARMs) are aware of the index to which their mortgage is linked, as this determines the monthly payments. Payments of loans tied to the LIBOR, which is in the interest rate that banks charge each other to borrow money, could increase if the loan resets in November or December because of the recent increase in the index’s rate. Most ARMs are set to the one-month, three-month, or six-month LIBOR. Homeowners who are concerned about possible payment increases should contact their local bank, credit union, or mortgage broker to rewrite their ARM into one with a fixed interest rate, if possible.

· Rates on adjustable-rate mortgages are determined by two factors –the loan’s index (LIBOR, COFI, Treasury) and the lender’s margin. A guideline to help determine the new rate when a loan resets is to add the lender’s margin to the new index. For example, if a homeowner’s ARM resets according to the six-month LIBOR index, which was 3.70 percent as of Oct. 22, and the lender’s margin is 2.5 percent, then the new rate would be 6.20 percent.

· Some mortgage brokers recommend that homeowners who have ARMs and are unaware of to which index their loan is set, should review their loan documents again to determine if they should consider refinancing into a new loan with a fixed rate or possibly one linked to a different index.

To read the full story, please click here:
http://www.mercurynews.com/localnewsheadlines/ci_10830812?source=rss

Housing market rouses locally
According to C.A.R.’s September sales and price report, sales in California soared 96.7 percent and the median price of an existing single-family home decreased 40.9 percent compared with September 2007.

· Statewide sales in September surpassed the 500,000 mark for the first time in more than two years, rising 2.3 percent compared with August, and 96.7 percent from a year ago. The dramatic increase in sales can be attributed to weakness in the market from a year ago with the early onset of the credit crunch. Similar increases in sales occurred in the early 1980s when the market was climbing out of a comparatively steep downturn in sales. The market is expected to register significant year-to-year percentage gains in the coming months as current sales are compared against extremely low numbers that prevailed during the fourth quarter of last year.

· The median price of an existing, single-family detached home in California during September 2008 was $316,480, a 40.9 percent decrease from the revised $535,760 median for September 2007. It is still too early to determine if the statewide median price has begun to stabilize, and recent events in the economy and financial system contributed to the decline in September. The median home price also will continue to face downward pressure from the large share of distressed sales and a dramatic change in the sales mix. A year ago, the under $500,000 price range accounted for 46 percent of sales but shifted to 76 percent as of September.

· C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2008 was 6.5 months, compared with 16 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

· The median number of days it took to sell a single-family home was 46.1 days in September 2008, compared with 56.7 days for the same period a year ago.

To read the full story, please click here:
http://www.sgvtribune.com/rds_search/ci_10810317?IADID=Search-www.sgvtribune.com-www.sgvtribune.com

Home Staging is an Essential Step in Selling a Home

From CAR Market Matters, email October 30, 2008:

Properly staging a home for sale is one of the most essential elements of the selling process. Not only does it help to set a home apart from comparable homes in the area, it also enables buyers to visualize the home’s potential. While staging a home can be something as simple as a fresh coat of paint or something pricier like purchasing new furniture for a room, one essential component that all sellers should utilize is removing clutter. Sellers should work with their REALTOR® to determine the best staging opportunities for a home, including which furniture, household items, and the like should remain in the house, and which ones should be donated or temporarily put into storage.

CAR Fast Facts, October 29, 2008

Fast Facts

Calif. median home price - September 08: $316,480(Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 08: Santa Barbara So. Coast $935,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region September 08: High Desert $159,720 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
Mortgage rates - week ending 10/23/08 30-yr. fixed: 6.04% Fees/points: 0.6% 15-yr. fixed: 5.72% Fees/points: 0.6% 1-yr. adjustable: 5.23% Fees/points: 0.5%(Source: Freddie Mac)

NEW-HOME SALES RISE 2.7 PERCENT IN SEPTEMBER

From CAR Newsline, email dated October 29, 2008:

Sales of newly built single-family homes posted a slight increase in September, rising 2.7 percent to a seasonally adjusted annual rate of 464,000 units, according to a U.S. Dept. of Commerce report released Monday. The report also indicated that builders are making substantial progress depleting the supply of unsold units on the market.

The number of new homes for sale fell to 394,000 units in September, compared with 425,000 units in August. At the current sales pace, there was a 10.4 months' supply of unsold new units on the market, compared with an 11.4 months' supply in August. Conversely, the median number of months that completed new homes have been on the market hit a new record of 9.1 months.

Regionally, sales activity gained 22.7 percent in the West and 0.7 percent in the South in September, but at the same time declined 21.4 percent in the Northeast and 5.8 percent in the Midwest.

LOAN FORBEARANCE AGREEMENTS MUST BE IN WRITING

From CAR Newsline, email dated October 29, 2008:


A lender's agreement to forbear or refrain from foreclosing on a home must be in writing and signed by the lender, even if the borrower has performed on the agreement by making a payment. This was the ruling of the recent appellate court case of Secrest v. Security National Mortgage Loan Trust (2008 WL 4516413). This case serves as a good reminder for REALTORS® and their clients to get loan forbearances, loan modifications, and other agreements with mortgage lenders in writing and signed.

In this case, the borrowers of a home loan defaulted in 2002. In a phone conversation, the bank's loan resolution consultant agreed to enter into a forbearance agreement to refrain from foreclosing if the borrowers paid the arrearage by making an initial payment of $13,422 followed by monthly installments. The loan officer then faxed an unsigned written forbearance agreement to the borrowers. The borrowers noticed errors on the proposed agreement, and at the loan consultant's instructions, they corrected those errors on the document itself, signed it, and returned it to the loan officer along with the $13,422 initial payment. The lender, however, never signed the forbearance agreement. Instead, the lender sold the note and deed of trust, and two years later, the new lender filed a notice of default.

The borrowers in this case filed a lawsuit to stop the foreclosure claiming that, because of the forbearance agreement, the notice of default overstated the amount of the default. The court disagreed. The court noted that, under the statute of frauds, a mortgage loan must be in writing and signed by the party against whom enforcement is sought. Similarly, if an agreement is subject to the statute of frauds, an amendment to that agreement also is subject to the statute of frauds. The court held that, in this case, the forbearance agreement at issue was not enforceable because it was not signed by the lender.

The borrower nevertheless argued that a signed agreement was not required because they partly performed by making the $13,422 initial payment. Again, the court disagreed. The court ruled that the payment of money is not "sufficient part performance to take an oral agreement out of the statute of frauds," because the borrowers paying money under an invalid contract "have legal means to recover that money if they are entitled to its return or have not received credit for it."

COMMERCIAL REAL ESTATE MARKET TO HIT BOTTOM NEXT YEAR

From CAR Newsline, email dated October 29, 2008:

Real estate industry experts expect financial and real estate markets in the United States to bottom in 2009 and then flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows, according to a recent report by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP. Commercial real estate faces its worst year since 1991-1992, with projected losses of 15 percent to 20 percent in real estate values from the mid-2007 peak, according to “Emerging Trends in Real Estate® 2009.”

Financial institutions will continue to be pressured into moving bad loans off balance sheets, using auctions to speed up the process, while investors will be discouraged until the “bloodletting” is over, the report said. When that occurs, cash and low-leverage buyers will be king; surviving banks will impose strict lending guidelines; commercial mortgage-backed securities will revive, but in a more regulated form; and opportunity funds will need new investment models, the report said.

“The industry is facing multiple disconnects,” said ULI Senior Resident Fellow for Real Estate Finance Stephen Blank. “Many property owners are drowning in debt, lenders are not lending, and for many, property income flows are declining. There is an unprecedented avoidance of risk. Only when financing gets restructured will pricing reconcile, giving the industry a point from which to start digging out of this hole.”

Distress in the housing market is benefiting the apartment market, which the report lists as the number-one buy. Moderate-income apartments in core urban markets near mass transit offer the best buy, a trend that carried over from the previous year. The main beneficiaries of the real estate downturn in the U.S. are cash-rich offshore buyers, whom the report predicted will continue to take advantage of the weak dollar, and will buy trophy properties in major 24-hour cities, according to the report.

FED CUTS KEY INTEREST RATE TO 1 PERCENT

From California Association of REALTORS, email October 28, 2008:

The Federal Reserve continued to shave points off the federal funds rate, reducing it by 50 basis points to 1 percent today, the lowest rate in half a century. Analysts characterized the move as another effort to stave off a prolonged downturn in the nation's economy.

"The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures," the Fed said in a prepared statement. "Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

"In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

"Recent policy actions, including today's rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth," the Fed said. "Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

Plan Your Winter! Santa Clarita Events

From the City of Santa Clarita Arts and Events office, via email on October 29, 2008:

Santa Clarita Marathon (November 1-2)
The Santa Clarita Marathon features a full marathon, half marathon, 5K Run/Walk, and Kid K. Strap on those sneakers, and get ready to become one of the 2,500 runners and walkers that enjoy the Santa Clarita paseos and trails on Sunday, November 2. A free pre-race Health and Fitness Expo will kick off marathon activities on Saturday, November 1, located at the Valencia Hyatt. For more information, visit www.scmarathon.org.

Fine Craft Show (November 15-16)
Join us at Old Orchard Park for a relaxed and enjoyable weekend of shopping featuring fine handcrafted items, specialty foods, coffees and jazz music. You will find many one-of-a-kind gifts including intricate and colorful handcrafted jewelry, pottery, woodwork, ceramics, floral arrangements, and much more. For more information, please visit www.santa-clarita.com/crafts.

Veterans Day (November 11)
The Veterans Day Ceremony is held annually on November 11th at the Veterans Memorial in Old Town Newhall. The event is a partnership between the City of Santa Clarita and the Veterans’ Historical Committee, the SCV Chapter 91 Blue Star Moms, Blue Star Moms of the Canyons Chapter 82, Prayer Angels for the Military, and the Knights of Columbus. The Ceremony honors Veterans and individuals serving in the military and their families. For more information, please call (661) 286-4018.

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Upcoming Events

Paint the Town (December 5)
In celebration of the holiday season, and to create a joyful holiday setting in Old Town Newhall, the City of Santa Clarita presents a ‘Holiday Window Painting Contest.’ For more information, please visit www.santa-clarita.com/arts.

Literacy and Arts Festival (December 6)
On Saturday, December 6, celebrate the holidays with the second annual Literacy and Arts Festival, presented by the Santa Clarita Valley Education Foundation and the City of Santa Clarita. For more information, please visit www.scveducationfoundation.org.

Old Town Newhall Holiday Parade (December 6, 2008)
All Santa Clarita Valley children are encouraged to participate by walking in the parade and dressing up according to their family’s holiday traditions. For more information, please visit www.santa-clarita.com/arts.

Disney’s High School Musical: The Ice Tour (December 27)
Celebrate the holidays with the gang from the High School Musical located at the Honda Center in Anaheim. This trip includes transportation by bus and reserved seats in the lower level at the Honda Center. For more information, email trips&tours@santa-clarita.com.

Tournament of Roses Parade 2009 (January 1)
Pasadena’s 120th annual Tournament of Roses Parade, “Hat’s Off to Entertainment” will be making its way down Colorado Boulevard and we have reserved a seat just for you! For more information, email trips&tours@santa-clarita.com.

Glacier Slide Polar Bear Swim (January 1)
Join the official Santa Clarita Polar Bear Club by taking a chilly plunge in the Aquatic Center’s waterslide pool on New Year’s Day. For more information, please contact (661) 250-3766.

Santa Clarita Valley Film Festival (January 8-11)
The 4th Annual SCV Film Festival provides local filmmakers with opportunities to show their work and to come together with an audience to enjoy quality independent films. For more information, please visit www.scvfilmfestival.com.

CAR Update on Ongoing Economic Situation

From an email dated Tuesday, October 28, 2008, from California Association of REALTORS(R) President William E. Brown:

Much has happened since passage of the Emergency Economic Stabilization Act earlier this month.

NAR has urged U.S. Treasury Secretary Paulson to take advantage of the extensive experience of local commercial and residential real estate professionals in the management and disposition of real property as the U.S. Treasury Dept. implements the Troubled Asset Relief Program (TARP) as part of the Emergency Economic Stabilization Act.

Congress has held a number of hearings over the past few weeks looking into multiple factors that contributed to the current financial situation. Last week, Congress heard testimony from Securities and Exchange Commission Chairman Christopher Cox, Federal Reserve Board Chairman Ben Bernanke, former Federal Reserve Board Chairman Alan Greenspan, former U.S. Treasury Secretary John Snow, and other leading players. The hearings are laying the groundwork to inform legislation expected to address regulatory reform of the finance and lending industries as well as safeguards to prevent a recurrence of the current financial crisis. It is our expectation that the legislation will be introduced early next year.

Additional hearings are covering the implementation of a second stimulus package. As the U.S. economy continues to struggle, politicians on both sides of the aisle are feeling pressure from their constituents, creating a strong incentive for Congress to pass meaningful legislation as the national elections near and the country heads into the holiday season. The Senate, House of Representatives and the White House have stated their willingness to work through a lame-duck session to pass a second economic stimulus package prior to the end of the year.

While many ideas have been circulated, few, if any, appear certain to be included in a second stimulus package, according to C.A.R. policy analysts. Some of the ideas under discussion include: An additional round of stimulus checks; extending the temporary loan limit of $729,750 for the Government Sponsored Enterprises (GSE) and Federal Housing Administration (FHA); infrastructure spending; financial aid for states; a temporary increase in block grants; and an extension of unemployment and welfare benefits.

One important factor determining what, if anything, will be done during a lame-duck session is the outcome of the upcoming presidential election. Should the Democrats take the White House and secure a filibuster-proof majority in the Senate, they may choose to wait till after Jan. 20 before proposing or enacting legislation. Should the Republican nominee take the White House, Democrats may feel the Bush administration will be more willing to compromise in order to pass last-minute initiatives prior to leaving office. C.A.R. and NAR will continue to strongly advocate for making permanent the $729,750 loan limit as part of any legislation that is forthcoming.

The Hope For Homeowners (H4H) initiative that was part of the July stimulus package began to be implemented Oct. 1.The H4H program allows troubled homeowners to keep their home, while enabling lenders to receive a Federal Housing Administration (FHA) guarantee on the loans. Under terms of the voluntary program, lenders agree to refinance the existing mortgage at 90 percent of the current appraised value and assume the loss on the remaining balance; the new loan is an FHA guaranteed 30 year, fixed-rate, fully amortized, fully documented loan; and the homeowner must forego a portion of the home’s future appreciation to the FHA when it is sold.

The FHA has posted a list of lenders participating in the HOPE for Homeowners program. When contacting the lenders, the FHA is strongly encouraging consumers to also contact their servicing lender and any subordinate lien holders as their participation is vital in order to refinance into a H4H mortgage. The program is voluntary and servicing lenders may offer different solutions for avoiding foreclosure. The FHA plans to update the list weekly on Fridays. The list is available at http://portal.hud.gov/portal/page?_pageid=73,7605762&_dad=portal&_schema=PORTAL.

New Blog Format

Beginning November 1, I have slightly changed the format for my weekly blogs. The weekly blog has become longer and longer, so I have moved the full story and articles to a sister site, http://changhomes.blogspot.com/.

This blog, which continues to be emailed to all subscribers, will summarize newsworthy housing, economic, and real estate events of the week, and will have links to the full story at the sister site.

During the month of November, I will continue to make improvements to interconnect the blog with distribution methods and the website. As always, I look forward to your comments and feedback. Just send me an email at changhomes@gmail.com. Thank you for your continued interest and support!