California housing market bounces back in February after slow start to year

LOS ANGELES (March 16) – Slowing home price appreciation and improving inventory combined to boost California’s housing market in February as existing home sales and median home prices increased from both the previous month and year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
 
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 368,160 units in February, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.  Sales in February were up 4.7 percent from a revised 351,480 in January and up 2.4 percent from a revised 359,600 in February 2014.  The year-over-year increase was the largest observed since December 2012. The statewide sales figure represents what would be the total number of homes sold during 2015 if sales maintained the February pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

“While February’s statewide improvement in the housing market was moderate, it’s an encouraging sign, nevertheless, as we head into the spring home-buying season,” said C.A.R. President Chris Kutzkey.  “On the supply side, housing inventory improved overall with active listings growing at a faster pace of 5.3 percent when compared to last February.  Regionally, both active listings in Southern California and Central Valley increased moderately from last year, while housing supply declined 10 percent in the Bay Area.”
 
The median price of an existing, single-family detached California home was essentially flat from January’s median price, inching up from $426,660 in January to $428,970 in February. February’s median price was 5.5 percent higher than the revised $406,460 recorded in February 2014.  While the statewide median home price is higher than a year ago, the rate of increase has narrowed significantly since early 2014. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.
“The California housing market regained some traction in February as sales activity improved on a year-over-year basis for the second time in three months,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “At the state level, the market is moving in the right direction as the growth of sales continues its upward trend and home prices start stabilizing.  At the regional level, however, the San Francisco Bay Area continued to be hampered by constrained inventory and low housing affordability.”
Other key facts from C.A.R.’s February 2015 resale housing report include:
• The available supply of existing, single-family detached homes for sale statewide in February was unchanged from the 5 months reported in January. The index was 4.7 months in February 2014.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered typical in a normal market.
• The median number of days it took to sell a single-family home shortened in February, down from a 52.4 days in January to 47 days in February but up from 40.1 days in February 2014.
• According to C.A.R.’s newest housing market indicator measuring sales-to-list price ratio*, properties are again generally selling below the list price, except in the San Francisco Bay Area, where a lack of homes for sale is keeping sales prices in line with original asking prices.  The statewide measure suggests that homes are selling at a median of 97.7 percent of the list price, down slightly from a ratio of 98.2 percent at the same time last year. The Bay Area is the only region where homes are selling above original list prices due to constrained supply with a ratio of 104.2 percent.

• The average California price per square foot** for an existing single-family home was $210 in February 2015, an increase of 2.5 percent from the previous month and a 4.1 percent increase from February 2014.  Price per square foot at the state level has been showing an upward trend since early 2012, and has been rising on a year-over-year basis for 37 consecutive months.  In recent months, however, the growth rate in price per square foot has slowed down significantly as home prices leveled off.  San Francisco County had the highest price per square foot in February at $754/sq. ft., followed by San Mateo ($689/sq. ft.), and Santa Clara ($552/sq. ft.).  The three counties with the lowest price per square foot in February were Siskiyou ($102/sq. ft.), Tehama ($107/sq. ft.), and Madera ($110/sq. ft.).
• Mortgage rates edged up in February, with the 30-year, fixed-mortgage interest rate averaging 3.71 percent, up from 3.67 percent in January but down from 4.3 percent in February 2014, according to Freddie Mac.  Adjustable-mortgage interest rates also rose in February, averaging 2.43 percent, up from 2.38 percent in January but down from 2.54 percent in February 2014.

Good Starts for 2012

Washington, DC, December 29, 2011
Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.
The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who have been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published Re-benchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Author: National Association of Realtors

Low Mortgage Rates to Hang Around Next Year

Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to Freddie Mac’s economic and housing outlook released Wednesday.
The outlook also projects fewer single-family home-loan originations but more multifamily lending in 2012. The rental market is likely to lead growth in the lending industry, though parts of the country will also benefit from increased activity in the single-family home market.

High unemployment and a glut of foreclosed properties have depressed the housing market in recent years, despite extremely low interest rates that have made borrowing more attractive.
“While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” said Frank Nothaft, Freddie Mac’s chief economist. “All told, next year will be another bumpy ride.”

Job growth must accelerate beyond the average monthly payroll gains of 130,000 seen this year through November for the unemployment to decrease significantly. Even then, the mortgage company predicted the unemployment rate will remain above 8% in 2012.
Freddie Mac predicts the U.S. economy will grow by about 2.5% next year.

Military Veterans earn one-year Federal Tax Credit Extension

Military personnel, members of the Foreign Service, and employees of the intelligence community have an extra year, through June 2011, to buy a principal residence in the U.S. and claim the federal tax credit. The deadline for entering a binding contract is April 30, 2011; the deadline to close a purchase is June 30, 2011. The extension applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31,2008, and ending before May 1, 2010. All other home buyers must be under contract by April 30, 2010 and close by June 30, 2010 to qualify for the federal tax credit.

Federal & State Combined Tax Credits$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME Californians have a brief window of opportunity to r

$18,000 IN COMBINED HOME BUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state home buyer tax credits. To take advantage of both tax credits, a first-time home buyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time home buyers may use the same time frames to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time home buyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits as a first-time home buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

Source California Association of Realtors

New rule affects homeowners in foreclosure avoidance program

The new procedure, to be adopted by servicer's by June 1, would require three documents upfront: a formal application including a description of the hardship created by the mortgage; proof of income, which would mean at least two pay stubs or the most recent profit and loss statement for self-employed borrowers; and a form authorizing the IRS to release tax data to the servicer.

If a borrower makes three payments at the modified rate, the modification will automatically be made permanent. The changes should help borrowers better understand the process and their chance of getting a loan modified.

Lenders are being encouraged to cut loan balances to avoid losing even more money on foreclosures. The government should use its control of Fannie Mae and Freddie Mac to start writing down the principle on mortgages owned or insured by them and also request, that the private sector do the same.

The program was designed to provide billions of dollars in subsidies to encourage lenders to forestall foreclosures by reducing mortgage payments to 31% of the borrowers household income.

To obtain the subsidies, servicer's must take a series of steps to reach an affordable payment: reduce the interest rate, extend the loans term to 40 years and suspend payments on part of the amount owed. A permanent reduction of the loan balance is optional.

If the loan owner comes out ahead with a modification, the servicer is required to make it. By documenting the borrowers financial situation before offering a trial modification, servicers can make this calculation upfront and inform borrowers whether they qualify

News Release by Fannie Mae

News Release, Fannie Mae

January 28, 2010

Fannie Mae Announces 3.5 % Seller Assistance on HomePath Properties

Incentive Part of Ongoing Effort to Stabilize Neighborhoods

WASHINGTON, DC - Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 % of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010

"Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help," said Terry Edwards, Executive Vice President of Credit Portfolio Management. "Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home."

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3% down.

Fannie Mae Resource Center
1-800-732-6643