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)