California Association of REALTORS®

Welcome to C.A.R.’s Market Matters, your weekly market response guide. 

  C.A.R. Mortgage Update

This week’s C.A.R. Mortgage Update contains new details on the Obama administration’s foreclosure-prevention plan; and information about Fannie and Freddie purchasing jumbo loans; online FICO help for troubled borrowers; mortgage defaults; mortgage rates; mortgage payment protection programs; and mortgage modifications.

U.S. expanding foreclosure prevention plan
The Obama administration yesterday announced additional efforts to stem foreclosures by offering lenders and homeowners incentives to cut payments on second mortgages, write down balances on first mortgages that are underwater, and repay loans in a timely fashion.  The U.S. Treasury Dept. also wants lenders and their customer-service agents to agree to modify both first and second mortgages as part of a comprehensive solution.

Details of the foreclosure prevention plan include:

• Decreasing second-mortgage interest rates to as low as 1 percent for five years for some borrowers.
• Reviving a Federal Housing Administration effort to persuade lenders to reduce loan balances so that borrowers again have equity in their homes.
• Funding from the program will come from a previously authorized $50 billion allocation from the $700-billion Treasury Dept. rescue fund established by Congress last year.
• The plan would provide cash incentives to both loan officers and borrowers for successful second-mortgage modifications.  A loan officer would receive $500 upfront, plus $250 annually for up to three years as long as the loan remains current.  Borrowers who make payments on time will receive $250 a year for up to five years.

To read the full story, please click here:
http://www.latimes.com/business/la-fi-hud29-
2009apr29,0,504513.story

Rates on bigger mortgages finally should come down
Fannie Mae and Freddie Mac recently issued loan underwriting criteria and will start buying loans of up to $729,750 from lenders on May 4, which some industry analysts believe will result in lower rates.

This week, Wells Fargo started offering conforming loans of up to $729,750, and Bank of America will begin offering them by mid-May

Historically, rates on loans higher than $417,000 – often referred to as jumbo conforming loans -- are one-fourth to one-third of a percentage point higher than rates on $417,000 or lower loans..  By Fannie Mae and Freddie Mac agreeing to guarantee loans of up to $729,750, rates on jumbo conforming loans likely will be comparable to the rates offered on loans of $417,000 and lower.

To read the full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a
/2009/04/23/BUEL1777HH.DTL&type=realestate

To view additional articles about mortgages, which also may be of interest to clients in the market for a new home loan, please visit the following:

Credit scoring agency offers online help to homeowners facing trouble
To view the full story, please click here:
http://www.sacbee.com/business/story/1
806107.html

Mortgage defaults rise but homeowners stay put
To read the full story, please click here:
http://www.latimes.com/business/la-fi-foreclose
23-2009apr23,0,7383726.story

Mortgage rates move lower
To read the full story, please click here:
http://online.wsj.com/article/SB124054653644
152165.html 

As unemployment grows, mortgage payment protection programs gain popularity
To read the full story, please click here:
http://www.latimes.com/classified/realestate/news/
la-fi-harney26-2009apr26,0,4657817.story

A reality check on mortgage modification
To read the full story, please click here:
http://www.nytimes.com/2009/04/26/business/
26gret.html?ref=realestate

Inland foreclosures surge in March after law’s delay expires
To read the full story, please click here:
http://www.pe.com/business/local/stories/PE_
Biz_S_realtytrac16.3eb7399.html

Mortgage applications fall
please click here:
http://money.cnn.com/2009/04/29/real_estate
/mortgage_applications.reut/index.htm?postver
sion=2009042907 

   The Wall Street Journal

Bidding wars are emerging on foreclosures
Real estate industry experts are reporting that favorable home prices in many parts of the country, including California, have ignited bidding wars as first-time buyers compete with investors for many of the same foreclosed properties.

MAKING SENSE OF THE STORY FOR CONSUMERS

• While the inventory of homes for sale still outpaces demand in many areas, inventory is shrinking and some middle class neighborhoods are running into shortages of moderately priced homes. C.A.R.’s Unsold Inventory Index (UII) stood at 5 months in March in California, compared with 12.2 months in March 2008.

 

• Although home prices in most areas of the country are still lower than a year ago, the Federal Housing Finance Agency (FHFA) reported last week that home prices nationwide rose a seasonally adjusted 0.7 percent in February from January, led by gains on the West Coast.  While this is a positive sign for the market, it could mean that the window of opportunity for first-time home buyers is narrowing.

• Many economists and housing analysts predict that the most hard-hit areas of the country, such as Sacramento and San Diego, will be among the first to recover.  According to an executive with Lyon Real Estate, if sales of foreclosed homes in Sacramento maintain its current pace, the supply will be exhausted in about one month.  For non foreclosures, the executive at Lyon Real Estate speculates that the inventory will be exhausted in about eight months.

• It is important to note that many banks and sellers favor all-cash bids or offers from buyers who seem certain to qualify for financing.  In some cases, sellers may choose the offer least likely to fall through rather than the highest bid.

• In some instances, buyers should make offers that are at or above the asking price of a home.  If the home is extremely desirable or in a neighborhood that previously was out of many buyers’ price ranges, putting in an offer slightly higher than the asking price may help to seal the deal.

To read the full story, please click here:
http://online.wsj.com/article/SB12404461
2611045827.html

   BusinessWeek

Home prices edge upward?
Although it’s too early to say the market has bottomed out, there are some indicators that prices may be stabilizing.

MAKING SENSE OF THE STORY FOR CONSUMERS

• The median price for existing, single-family homes rose 2.2 percent in March in California, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  March marked the first month since August 2007 that the state’s median sales price rose in month-to-month comparisons.  According to the C.A.R. sales and price report, the median price of existing, single-family homes stood at $253,040 in March.

• Sales in California have soared in recent months, with existing, single-family home sales increasing 63.8 percent in March to a seasonally adjusted rate of 522,980 on an annualized basis. 
  

To read the full story, please click here:
http://www.businessweek.com/lifestyle/conten
t/apr2009/bw20090423_974367.htm

In Other News…

  MSNBC

New home sales data show encouraging signs

To read the full story, please click here:
http://www.msnbc.msn.com/id/30386322

   Daily Finance

Is housing hitting bottom?

To read the full story, please click here:
http://www.dailyfinance.com/2009/04/24/is-
housing-hitting-bottom/

  Press Enterprise

Patience, tax perks pay off for first-time Inland home buyers

To read the full story, please click here:
http://www.pe.com/business/local/stories/PE_
Biz_S_firsttimers26.30b072e.html

  CNN

Home prices edge up in February

To read the full story, please click here:
http://money.cnn.com/2009/04/22/real_estate/
home_prices.reut/index.htm?postversion=200
9042211

  The Wall Street Journal

Fewer in U.S. move as economy falters

To read the full story, please click here:
http://online.wsj.com/article/SB1240424345
48044425.html

  CNN

Consumer confidence gets a boost

To read the full story, please click here:
http://money.cnn.com/2009/04/28/news/econo
my/consumer_confidence_April.reut/index.htm
?postversion=2009042810

  CNN

Home prices down, but rate of loss eases

To read the full story, please click here:
http://money.cnn.com/2009/04/28/real_estate/
February_home_prices/index.htm?postversion
=2009042810

  The Wall Street Journal

More homes in California are selling

To read the full story, please click here:
http://online.wsj.com/article/SB12408790518
5761701.html

Market Snapshot

Market Snapshot offers REALTORS® information about the current market and provides consumer-friendly charts and graphs.  Market Snapshot is formatted in Microsoft Word, enabling members to customize it with their photo, contact information, and other useful information.  Market Snapshot can be found on C.A.R.’s Web site at www.car.org/economics/marketsnapshot. 

This month’s Market Snapshot features:

• Bay Area First-Quarter Housing Market Report:  Home sales in the Bay Area increased 33.9 percent year-to-year during the first quarter.  The median price for the Bay Area decreased 42.7 percent year-to-year to $401,980 during the first quarter.

• Central Valley First-Quarter Housing Market Report:  Home sales in the Central Valley increased 121.9 percent in Fresno County; 119.5 percent in Kern County; 168.5 percent in Merced County; and 80.9 percent in Sacramento County, in year-to-year comparisons.  Counties in the Central Valley had year-to year price decreases ranging from 49.8 percent in Merced to 34.5 percent in Sacramento during the first quarter.

• Southern California First-Quarter Housing Market Report: Home sales in Southern California increased 95.8 percent on a year-to-year basis during the first quarter, while the median price decreased 39 percent to $259,000.

To read the complete version of Market Snapshot that you can share with your clients, please click here:
www.car.org/economics/marketsnapshot

Questions? Comments? 
Contact  MarketMatters@car.org .