Talking Points Bulletin

The local housing market continues to pick up steam with open houses being quite busy and multiple offers being made on the best properties. An obstacle once again (read 2000-2005) facing buyers’ agents is getting their offer accepted in the face of competition for the home.

Next time I blog, we will have ended the month of June so, at that time, I’ll be able to post “months of inventory” through the complete month. This data is critical because it tell us if we are in a buyer’s market, a neutral market, or a seller’s market.

Much of the rise in interest rates in late May and early June was due to concerns about the government’s enormous accumulation of stimulous debt. Didn’t seem to be a problem with both domestic and foreign investors who showed a strong demand for Treasury purchases last week … which reversed some of the recent rate increases.

Click Here to see all rates as we begin the week of June 29.

You are reading my blog on real estate market trends. Go to my Main Page to search for properties.

Home prices edged up for the first time in nearly two years in May, but it’s not because the mainstream market is improving: it’s because higher-end home have begun to sell and are edging up the median price. The higher end has been nearly frozen for two years.

California’s economic recovery is now expected to begin in the second half of 2009, but we will continue to shed jobs through 2010. Even so, after 21 weeks of increasing job losses, the biggest decrease in job losses in more than seven years took place the week ending June 6.

Mortgage rates decreased sharply last week. The week ended at 5.38% for 30-year-fixed mortgages, down from 5.59% the previous week. Seven weeks earlier the 30-year-fixed was 4.78%, a record low since it has been tracked starting in 1971. Click here to see all rates as we begin the week of June 22.

You are reading my blog on real estate market trends. Go to my Main Page.

One in every 389 U.S. households received a foreclosure filling in May of 2009, but foreclosure fillings fell 6 percent in May from April and was the smallest annual gain since June 2006.

Mortgage rates marched upward last week, fueled by continued optimism that an economic recover will be sooner rather than later. Click here to see all rates as we begin the week of June 15.

Here’s a development that will probably surprise most people: Taking Long Beach as a whole, there is slightly more than 6 months of inventory (explanation of “months of inventory”) on the market, placing Long Beach at the weak end of a buyer’s market. Looking just at the east side of Long Beach (pretty much 90808 and 90815), there is 3.8 months of inventory on the market, placing this area just .8 months of inventory away from being a seller’s market.

The forecasting firm IHS Global Insight reported last week that Los Angeles County home prices are now 6% undervalued. Orange County is 11% undervalued. Calculations are based on home prices, interest rates, area incomes, population density in given markets.

Average rates on 30-year fixed-rate mortgages rose to 5.29% this week from 4.91% a week earlier.It was the highest weekly average in nearly six months and the first time rates were above 5% since the week of March 12. Click here to see all rates as we begin the week of June 8.

It’s almost official: the $8,000 first-time buyer tax credit can soon be used to increase an FHA loan down payment beyond the required 3.5%, and the credit may be applied towards closing costs as well. HUD has approved it, and lenders are working on how to implement it.
Home sales are up 2.9% in April from March 2009. First-time buyers accounted for 40% of sales in April, down from 53% in March. This tells us that there is rising interest in buying among current home owners.

Click here to see all rates as we begin the week of June 1.

Mortgage rates have had a very slight increase in the past week, as we begin to enter the “moving season.” The reasons for the slight increase are signs of the economy turning a corner and the stock market at higher levels. While there is pressure for interest rates to edge up, 5% is still incredibly low and it may be decades before we see anything like it again.

Last week, the Wells Fargo Housing Opportunity Index (HOI) reported that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009. This movement placed housing affordability at the highest level since the HOI was created 18 years ago. Of course, the Los Angeles area remains one of the most expensive in the country.

Click here to see all rates as we began the week of May 26.

Here is some great news for buyers, and few of them know about it: the $8,000 tax credit may, in the near future, be used toward a down payment! The way it will work is that the money is given to the buyer by the lender up front, before the transaction is even complete. Can the market do ANYTHING else to encourage buyers to take advantage of depressed home values and amazingly low interest rates?!?

Last week, more evidence showed that the economy is slowing its downward descent. The biggest risk to send mortgage rates upward is a Fed perception that a near-term economic recovery could begin. The brighter the outlook, the greater the potential for rates to start moving upward.

Click here to see all rates as they began the week of May 16.

Home owners, instead of just home buyers, are finally getting some good news out of the media: the Fed thinks we are about to move out of the recession (see article). home prices have stabilized in our area (see article). and the number of home sales has increased dramatically (see article). These things probably mean we are at the bottom of the housing cycle.

When we take a look at what has happened in the housing market in Long Beach (for example) over the past twelve months, we find that the number of homes for sale has decreased radically while the number of pending/closed sales has increased significantly. I have summarized this reduced supply and increased demand using a chart built from MLS data.

The single most important result of all this data is that buyers who want to take advantage of bottom-of-the-cycle prices and incredible low interest rates are beginning to run out of time.

As of May 7, 30-year fixed was at 4.84%, and the 15-year fixed was at 4.51%.

When Stimulus Bill details are released a $8,000 tax credit to first time buyers will probably be included. Opinion about the effect of the tax credit among real estate professionals is pretty much unanimous: it should push a big wave of buyers off the fence to take advantage of not only the tax credit, but low prices and low interest rates as well.

The housing market led us into the recession, and the government is doing what it can to have housing lead us back out.

Click here to see all mortgage rates as they began the week of February 9.

Interest rates held fairly steady at their low levels last week. Inflation core readings also held steady, calming fears that a deflationary environment could develop.

The inaugral address, with its ringing call for hope, left many people feeling better about things. However, the Dow reacted to a plunge in banking stocks with a sell-off that tumbled the market 330 points.

Click here to see all rates as they began the week of January 19.

Last week revealed a 16-year high unemployment rate, and the bad news sent interest rates downward. Interest rates are likely to continue dropping unless we get some good news, like a massive stimulus package ready and waiting for the new President’s signature.

Click here to see all rates as they began the week of January 12.

The really big news this week is interest rates: 30-year fixed conforming mortgage rates fell to their lowest level in 37 years. With the Fed dropping its short-term rate to between 0% and .25%, and its purchasing of mortgage-backed securites, long-term rates will very likely fall further in the first quarter of 2009.

For home owners, these rates should compel you to refinance. For potential buyers, it’s time to pick a mortgage program and find your new home: you’ll probably come out ahead, even if the median home price continues to slide.

If you know of someone who is ready to take advantage of low prices (see a December 21 LA Times article entitled “Can You Afford It Now?) and low interest rates, please call me with their name and contact information. I’ll take great care of your family and friends.

Click here to see all rates as they began the week of December 22.

The current decline in home values has one very bright spot: combined with relatively low mortgage interest rates, homes have reached their highest level of affordability in four years.

According to the National Association of Home Builders (NAHB), 20% of households in LA County can now afford the median price of a home. Compare this to 2% in 2005. The NAHB relates the cost of paying for a home, based on average home prices and mortgage rates, to the median household income.

While the increased affordability is no doubt fueling the rapid sale of bargain-priced foreclosures, primarily among first-time buyers and investors, it is also creating a lot of pent-up demand that will be experienced in the future.

Interest rates declined last week, with a 1/8% drop nearly across the board. Where all rates began the week of November 21.

The terrible fires of the past few days will probably have the same effect on local residential real estate as they have had in past occurences: reduced inventory and increased demand for housing will probably give values a short-term boost.

On another note, I personally don’t think the government will do much to directly assist homeowners who are facing foreclosure because helping out people in default will encourage others to get a break on their mortgage by going into default … therby raising the default rate. I think the market must settle itself in natural, Darwinian style. When the storm passes, as it always does, we will have a stronger and more affordable real estate market.

Interest rates didn’t change much last week, with the conforming 30-year fixed, jumbo 30-tear fixed, and FHA jumbo 30-year fixed remaining at the same levels. Where all rates began the week of November 17.

Lots and lots of people are taking advantage of dramatically reduced home prices. Last week the September Existing Homes Sales report showed a 5.5% rise over August. The rise in the number of sales is the highest annual rate since August 2007.

As if that upbeat news isn’t enough, the LA Times reported on October 22 that September home sales in California jumped 65% from the same month a year earlier! In all, 40,317 homes changed hands in California this past September.

If you know of anyone who wants to take advantage of the market and get their hands on a bargain, please call me with their contact information. I’ll take excellent care of them.

The FHA Jumbo 30-year fixed rate improved last week by falling 1/4%. Where rates began the week of October 27.

With all of the bank-owned property being snapped up by people seeking bargains, you might wonder where the people who used to live in those houses are going: into rentals, and that demand has pushed rental availability rates to historically low levels. Rents are up more than 3% over last year, and they continue to rise.

People are also frequently asking me if there is any money available for home loans because they hear that credit has frozen. While financial institutions are balking at lending money to each other, there is no shortage of cash available for home loans. The The LA Times addressed the abundance of mortgage money in last Sunday’s paper.

Where rates began the week of October 20.

In the last couple of weeks, stock prices took major plunges and then achieved soaring gains, Treasury bills experienced record gains and then near-record losses, Lehman Brothers went into bankruptcy, Fannie Mae and Freddie Mac were taken over by the government, federal regulators seized Washington Mutual, and the government has almost finalized a $700B infusion into the economy. We definitely have more of a banking problem than a real estate problem.

As bad as the banking problem seems, I believe it is part of the final cleansing process. We need only look at the surge of home sales in California to know that we are close to the end of the current cycle.

The prognosis for Long Beach and surrounding cities during the recovery is very bright. The Douglas Park, with its creation of an estimated 11,000 new jobs and an annual payroll of $1B, is now underway. On top of this, Hollywood investors are purchasing the 1.1-million-square-foot hangar, across the street from Douglas Park, that was formerly used to build jetliners. They will convert it into one of the largest sound studios in the world. Even more jobs, and an even greater need for housing!

These two mammoth business enterprises will begin to enhance demand for housing in about two years, just as the housing market is reaching full recovery. These events will run up home prices considerably.

FHA Jumbo 30-year fixed ticked up another 1/8% last week. Where rates began the week of September 29.

We know that we’ve reached the bottom of the housing market because bank-owned properties are tending to receive multiple offers and are selling like hotcakes. But, because the economy is still searching for its bottom, the Fed is more interested in the economic environment than with inflation. I hope this means a downward glidepath for interest rates during the remainder of the year and into 2009. But it didn’t happen last week.

FHA interest rates ticked upward last week, while conventional rates held steady. Where loan rates will begin the week of September 2.

This is just too wild!! Of course, the media loves to print stories that stir up negative emotion because it sells newspapers, but sometimes they go way overboard in the other direction, too:

Last week the OC Register headlined “Homebuying Slump Ends after 33 Months” just because we saw a 17% increase in the number of sales for Orange County in July. While I certainly think we are at the botom of the market cycle, there is no way sales of a single month show that the bad news is over. We are still 12-18 months away from a return of appreciation.

Interest rates remained steady last week, with FHA Jumbo 30-year fixed dropping at 6.625%. Where loan rates began the week of August 25.