Federal House Price Index up 0.3 percent nationwide, 1.6 percent in West
U.S. home prices in July rose 0.3 percent on a seasonally adjusted basis compared with June, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index released yesterday. For the 12 months ending in July, U.S. home prices declined 4.2 percent. The FHFA monthly index is calculated using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.
Just the Facts
Calif. median home price - July 09: $285,480 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region July 09: Santa Barbara So. Coast $885,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region July 09: High Desert $110,650 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 2009: 67 percent (Source: C.A.R.)
Mortgage rates – week ending 9/17/09 30-yr. fixed: 5.04% Fees/points: 0.7% 15-yr. fixed: 4.47% Fees/points: 0.6% 1-yr. adjustable: 4.58% Fees/points: 0.5% (Source: Freddie Mac)
This morning the FED announced its target for the federal funds rate is in the 0 percent to 0.25 percent range.
“Information suggests that economic activity has picked up following its severe downturn,” the Fed said in a prepared statement.
“Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.”
The Fed will purchase $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. This will provide help to mortgage lending and housing markets, and slow the pace of these purchases to allow for a smoother transition.
Applications for mortgage loans slowed down with the summer ending. Adding to this slow down is potential first-time home-buyers wondering if they’ll be able to close fast enough receive the federal home ownership tax credit, which expires Dec. 1, 2009.
According to the Mortgage Bankers Association index, applications declined 8.6 percent last week on a seasonally adjusted basis. The index declined 18.3 percent compared with the previous week and fell 18.7 percent compared with the same week a year ago when the Labor Day holiday fell nearly a week earlier.
Mortgage interest rates were as follows:
- 30-year fixed-rate mortgages increased to 5.08 percent from 5.02 percent.
- 15-year fixed-rate mortgages decreased to 4.41 percent from 4.45 percent.
- 1-year ARMs decreased to 6.61 percent from 6.69 percent.
According to an article in the LA Times, homeowners who find themselves struggling with mortgage payments whether the situation is a short sale, foreclosure, or walking away from their homes, should look at how any of these actions could impact their credit scores.
Vantage Solutions, a scoring company created by the three national credit bureaus, suggested loan modifications may increase a borrowers’ scores, while refinancing mortgages that are upside-down may not have any or very little impact. Short sales on the other hand can trigger large declines in credit scores. Homeowners with an excellent score might see a 120 to 130 point decline after a short sale. Homeowners who walk away and stop making payments can expect their credit scores to dip 140 to 150 points. Those who file bankruptcy can have an average hit of 355-365 point drop.
Consumers who contact their lender early on may have less of an impact to their credit scores. In any of the above cases, if consumers are really having troubles due to the declining market, lenders will probably take this era into consideration when granting mortgage loans.
According to a Goldman Sachs economists this week, the Federal Reserve will probably keep interest rates low to assist with keeping debt low and getting rid of debt. While some think the Fed will probably raise rates, the economists believe rates will be close to zero until the end of 2010 or perhaps even longer. One more year of low interest rates will probably be in the best interest of the economy and help continue to stimulate the housing market, which is still in need of more stimulation.
According to Local Market Monitor on September 9th, a Real Estate forcasting service for Banks and Investors, home prices will decline about 5 % thru 2010. But after that there may be light at the end of the tunnel with price increases in several areas, according to CEO Ingo Wisner.
In the following markets home values are expected to remain level this year but increase in value next year. If you know anyone planning on moving in these areas, they are probably going to want to act soon before home prices increase.
- Baton Rouge, La.
- Buffalo-Niagara Falls, N.Y.
- Dallas-Plano-Irving, Texas
- Fort Worth-Arlington, Texas
- Houston-Sugar Land-Baytown, Texas
- Little Rock-North Little Rock-Conway, Ark.
- Omaha-Council Bluffs, Neb.-Iowa
- Pittsburgh, Pa.
- San Antonio, Texas
- Syracuse, N.Y.
Below are the 10 largest markets where prices are expected to continue to decline through 2010. It looks like the Bay Area is still going to suffer with declining prices for a bit longer.
- Fresno, Calif.
- Las Vegas-Paradise, Nev.
- Miami-Miami Beach-Kendall, Fla.
- Orlando-Kissimmee, Fla.
- Phoenix-Mesa-Scottsdale, Ariz.
- Portland-Vancouver-Beaverton, Ore.-Wash.
- San Jose-Sunnyvale-Santa Clara, Calif.
- Stockton, Calif.
- Tacoma, Wash.
- Tucson, Ariz.
A few days ago HUD announced the first release of frequently asked questions (FAQs) concerning implementation of the new Real Estate Settlement Procedures Act (RESPA) rule. For the 1st time consumers will be able to use the Good Faith Estimate to compare loan offers more clearly when shopping for a loan. This will hopefully save consumers in fees to close their loans. Information such as when the GFE should be delivered, how often, and FAQs can be found on the HUD website. On January 1, 2010 the new regulations will take effect.
Some Facts
Here are the latest statistics from C.A.R for the California Real Estate Market:
- Existing, single-family home sales increased 12 percent in July to a seasonally adjusted rate of 553,910 on an annualized basis.
- The statewide median price of an existing single-family home increased 3.9 percent in July to $285,480, compared with June 2009.
- Home sales increased 12 percent in July in California compared with the same period a year ago, while the median price of an existing home declined 19.6 percent
- The median price of an existing, single-family detached home in California during July 2009 was $285,480, a 19.6 percent decrease from the revised $355,000 median for July 2008. The July 2009 median price rose 3.9 percent compared with June’s $274,740 median price.
- Statewide, the 10 cities with the highest median home prices in California during July 2009 were: Los Altos, $1,425,500; Palo Alto, $1,363,000; Saratoga, $1,350,000; Newport Beach, $1,300,000; Manhattan Beach, $1,257,500; Burlingame, $1,250,000; Palos Verdes Estates, $1,132,000; Los Gatos, $1,085,000; Cupertino, $952,000; and Rancho Palos Verdes $945,000.
- Mortgage rates were down :
30-year fixed-rate mortgages decreased to 5.02 percent from 5.15 percent.
15-year fixed-rate mortgages decreased to 4.45 percent from 4.57 percent.
1-year ARMs decreased to 6.69 percent from 6.71 percent.
- As rates went down application volume increased, mostly due to refinances, which increase 22.5%, the biggest gain since March and purchases gained 9.5%, the largest increase since April.
