DreamTeam-Jo Cel Perez & Hector Gamez

· Existing, single-family home sales increased 1 percent in October to a seasonally adjusted rate of 562,400 units on an annualized basis.

· The statewide median price of an existing single-family home increased 0.3 percent in October to $297,500, compared with September 2009.

· C.A.R.’s Unsold Inventory Index fell to 4 months in October, compared with 6.1 months in October 2008.

. The median number of days it took to sell a single-family home was 34.1 days in October 2009, compared with 45.5 days (revised) for the same period a year ago.

. Statewide, the 10 cities with the highest median home prices in California during October 2009 were: Palo Alto, $1,639,550; Los Altos, $1,592,550; Manhattan Beach, $1,037,500; Cupertino, $1,030,000; Newport Beach, $935,000; Los Gatos, $920,000; Rancho Palos Verdes, $900,000; Santa Barbara, $897,500; Lafayette, $867,500; and Santa Monica, $786,000.

October 2009 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted

Median Prices By Region – Current Month vs. Year Ago

 Source: CALIFORNIA ASSOCIATION OF REALTORS^®

. Thirty-year fixed-mortgage interest rates averaged 4.95 percent during October 2009, compared with 6.20 percent in October 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.55 percent in October 2009, compared with 5.21 percent in October 2008.

First-time Homebuyers

• Tax credit up to $8,000
• Deadline extended until April 30, 2010. Plus, if a contract is signed before May 1, 2010 there will be 60 days to close on the home.
• Buyers that have not owned a home in the last 3 years.
• Purchases in 2010 can be claimed on 2009 tax return.
• Income limits increased to $125,000 on a single return and $225,000 on a joint return, up from $75,000 & $150,000.

Step-up Buyers

• Tax credit up to $6,500
• Purchases between December 1, 2009 and May 1, 2010. The same opportunity to close within 60 days applies.
• Buyers that have owned the same home for 5 consecutive of the last 8 years.
• Purchases in 2010 can be claimed on 2009 tax return.

Income limits are also $125,000 on a single return and $225,000 on a joint return. 

The National Association of Realtors’ V.P. Ron Phipps stated one of the most important ways for consumers to see a bright future in terms of the economy is for Congress to extend the $8000 home-buyers tax credit. The tax credit has already made an impact as home sales have increased an estimated 5.1 million for the year. Housing inventory has slowed down helping to stabilize house prices. Since the momentum takes awhile, there’s not a better time to build on that by the extension of the tax credit through next year.

The present tax credit is set to expire on November 30th. Those who are in contract now may not be able to take advantage of the credit and close by that time. A few other things that Philips is pushing for is to make the FHA, Fannie Mae and Freddie Mac limits permanent that were established for this year, keep the governments continued involvement in the secondary mortgage market, discuss the Home Valuation Code of Conduct’s side effects that are slowing down sales, and give incentives and uniform procedures for short-sales.

Making the current FHA loan limits permanent would ensure liquidity in the housing market and make mortgages more affordable for qualified buyers at a time when the market is showing signs of a fragile recovery, the NATIONAL ASSOCIATION OF REALTORS® testified to the House Subcommittee on Housing and Community Opportunity today.

Current FHA loan limits are as high as $729,750 in high cost areas, and are set to expire at the end of the year and revert to lower amounts, greatly hindering the housing recovery process.

“NAR strongly supports making FHA loan limits permanent,” said Boyd Campbell, an NAR spokesperson and managing partner-associate broker of Century 21 in Lanham, Md. He urged the subcommittee to quickly consider legislation that would do that—H.R. 2483, introduced by committee members U.S. Reps. Brad Sherman (D-Calif.) and Gary Miller (R-Calif.).

“FHA is more important than ever to homebuyers in the present market. In the wake of the collapsing private mortgage market, FHA has played a critical role in removing inventory from the market and stabilizing home prices,” he said. Present FHA housing market share is approaching 25 percent, significantly up from 3 percent two years ago.

NAR said that FHA has performed remarkably well through the housing crisis, compared to Fannie and Freddie, because FHA has never strayed from the sound underwriting and appropriate appraisals that have traditionally backed up their loans.

FHA is taking timely steps to protect taxpayers: implementing credit policy changes to enhance risk management; hiring a chief risk officer for the first time in the agency’s history; and shifting responsibility for mortgage brokers away from taxpayers to the lenders who use mortgage brokers.

Such changes would help give consumers more affordable choices when purchasing a home, would help strengthen our communities, and would reduce inventory and stabilize home prices, Campbell said.

In addition to the above enhancements, NAR recommended that FHA make these specific changes to condominium purchases:

• Eliminate the owner-occupancy requirement, or at least amend rules so all bank-owned properties are not counted in the occupancy ratio;
• Increase or temporarily suspend the 30 percent limit on total units in a condominium project that may have an FHA mortgage;
• Reduce or eliminate the requirement that at least 50 percent of the units in the condominium be sold prior to FHA’s endorsement; and
• Reconsider the elimination of the Spot Loan Approval Process, which allows certain borrowers to use FHA to purchase a condominium in a project that is not FHA approved.

Source: NAR

Tougher Federal Housing Administration standards and low investor interest in the Housing Tax Credit program has stalled construction of affordable housing according to an article from Jamie Hopkins of the Baltimore Sun. It’s still difficult to get potential home-buyers financing.
“This is a national tragedy,” said Judith A. Kennedy, president and chief executive of the National Association of Affordable Housing Lenders.

Community development leaders and Affordable Housing partners have been lobbying Congress to change tax rules. At one time everyone was able to qualify for a loan whether they qualified or not and now the consumers in the middle are the one’s being turned down and the most affected.

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.

If you’ve been looking for a home in the Silicon Valley lately, chances are you competing with several other potential home-buyers on the same property. Sounds almost like a few years ago during the dot.com era. But this time, instead of the higher priced properties being snatched up, it’s the lower valued properties that a drawing the attention.

It’s great that the low prices are attracting buyers, but it’s also becoming frustrating when a lot of investors are snatching up the properties with higher-priced offers and paying cash.

A lot of bank-owned or short sale homes are pulling 20 to 30 offers. Most of these homes are in the San Jose area. Homes in the more expensive areas like Los Gatos and Saratoga are not getting as much traffic, but still get multiple offers.

Even though overall prices are starting to stabilize, we are not in a normal market yet. Buyers will have to be patient. It may take 6 to 8 months to get the property your looking for. Our team was able to get a home for one buyer after the initial counter-offer, but it was the 5th or 6th property we had made an offer on. With other clients we weren’t as successful because even though we overbidded, we were passed up because of non-cash offers.

According to the National Association of Realtors, Pending home sales are up for the fifth consecutive month, and it’s been six years since a streak like this. Based on the figures from the Pending Home Sales Index, signed contracts rose 3.6 percent to 94.6 in May. In June of 2008 the figure was 88.7 percent. Some factors that are contributing to the gain are low mortgage interest rates, affordable home prices, and buyers who’ve been waiting for something to change.

Here are the regional figures from the Pending Home Sales Index:

• Northeast: rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago.
• Midwest: increased 0.8 percent to 89.9 and is 11.6 percent above June 2008.
• South: jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago.
• West: rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.

A few weeks ago I was mentioning how the rates consumers pay are tied to their credit scores and tips on how they can improve them. Well now in light of the recent stimulus package, both Fannie and Freddie are planning large fee increases by toughening their credit score and down-payment rules on April 1, 2009.  

If a buyer is purchasing a duplex, the buyer could be charged a 1 percent add-on to their interest rate. Lenders will be if their not already factoring in these higher fees. Now buyers with down payments of less than 25 percent will be charged a three-quarter point add-on penalty, no matter how high their credit score is.

Those who would like to refinance and take cash out could be charged three points depending on the amount of equity they have.

Source: Washington Writers Group, Kenneth R. Harney (02/15/2009)