Westside LA Real Estate Advice: After getting the keys to their new homes, many first-time home buyers are excited about finally having the opportunity to personalize and furnish their new house. From coffee tables to lamps to lawnmowers, many previous renters leap into homeownership quickly realizing they need to do a lot of shopping to truly make their house a home.

“Whether you’ve been living in an apartment with roommates or at your parents’ house, many first-time home buyers do not think about all the items they need – and want – when moving into a house,” said Janice Jones, national vice president of merchandising for Centex. “With a little advance planning and budgeting, you won’t break the bank to make your new home a reflection of your personal style and showcase your pride of homeownership.”

A typical home buyer spends $7,400 on average on their home, with more than half of that spent in the first year after purchase, according to the National Association of Home Builders.

While many first-time home buyers may not have accounted for this level of spending, Jones offers advice on what types of items to purchase to not only properly maintain and live in the home, but also more importantly, items that help new homeowners feel like their house is a place to call home.

Furnishings
Many first-time home buyers no longer want their parents’ hand-me downs or their childhood bedroom set. From sofas to dining room sets to mattresses, many first-time home buyers take the opportunity to upgrade their furniture when moving into their new home. According to an NAHB study, furnishings take the biggest chunk of the budget, with home buyers spending about $5,300 on furnishings during the first year after buying a home. The biggest ticket item for all households is bedroom furnishings, including mattresses, followed by sofas.

Window coverings and linens
The median square footage of homes bought by first-time buyers is 1,500. So, you can only imagine the number of windows that need to be covered to ensure privacy and security in a home. According to Jones, many home buyers don’t account for this in their budget. Additionally, with the ability to now paint and decorate each room, new homeowners find that they want to purchase new bedroom and bathroom linens.

Garden tools
Since a first-time home buyer is likely to move into their home from an apartment, unless you plan on hiring a gardener, you’ll need to purchase a few basic gardening tools, including a lawnmower, garden hose, sprinkler and a shovel (for winter weather).

Flat screen TV
Let’s face it: many home buyers shop for their new home while taking into a consideration how a new, large, flat-screen television set will be situated in their new living space. So, it’s not a surprise that a hot item on the list is purchasing an entertainment system.

However, you’ll also need the basic appliances in your new home: a refrigerator, stove, and a washer/dryer. While many existing homes usually come with appliances, a home buyer needs to take inventory as to whether or not they will need to purchase these big ticket items before they purchase their new bedroom set.

Basic tool kit
Every home needs a well-stocked tool box. Many home improvement stores have sets you can purchase, but make sure it includes a hammer, screw drivers, pliers, wrenches, a tape measure and a staple gun.

“My biggest piece of advice for new home buyers is to be creative and tackle this room by room,” said Jones. “For example, after outfitting your home with the necessary items—like appliances and window coverings—move on to the kitchen and family room spaces. This area is the heart of your home where everyone gathers.

“Look for great values on the items you need that will be utilized most. Take your time and get the feel of how you want to use each space for both function and enjoyment. This strategy allows homeowners to stage their purchases and add new furnishings as the budget allows. Decorating your new home should be fun and a reflection of your personal style.”

Source: RISMedia

Westside LA Real Estate Advice: The number of Americans who own homes fell in the second quarter of the year to the lowest level since 1999, said a government survey released Tuesday.

The Census Bureau said the home ownership rate fell to 66.9% in the second quarter of 2010, down half a percentage point from the previous year. The home ownership rate was 67.1% in the first quarter of the year.

In the second quarter rates were highest in the Midwest, where 70.8% of people are homeowners, and lowest in the West, where 61.4% of people own.

Rates in the South and West were lower than a year ago, while the Northeast and Midwest stayed the same.

Vacancies: The vacancy rate in non-rental units also fell in the second quarter, to 2.5%. Meanwhile, the vacancy rate in rental homes stayed steady at 10.6%.

Almost 86% of U.S. homes were occupied in the second quarter, with owner-occupied housing comprising 57.3% of all housing units. Renter-occupied homes were 28.3% of all units.

A separate report released Tuesday, the Case-Shiller index, showed home prices rose 1.3% in May compared with the previous month.

Source: CNNMoney.com

Westside LA Real Estate Advice: Record-Low Interest Rates and a Scary Stock Market Are Prompting Investors To Sink Even More Money Into Their Homes.

The housing crash has left at least 11 million people in the unenviable position of owing more on their homes than they are worth—and many more millions with properties worth far less than they paid for them.

But some might not be as trapped as they think.

Record-low mortgage rates and a new slump in home prices are presenting unusual opportunities in the housing market these days—even for so-called underwater borrowers.

Some intrepid homeowners are intentionally taking a loss on their current house—and writing a big check to retire their old mortgage—in order to buy twice the home for not much more money. Others, eschewing conventional personal-finance advice, are even opting for “cash-in” refinancings, paying thousands of dollars out of pocket to settle old loans—and then taking out new mortgages with lower payments, shorter durations or both.

Katie Everett, a real-estate broker in Denver, says none of her clients kicked in cash when selling their homes last year. This year, “about half are willing to bring money to closing, anywhere from $5,000 to $45,000,” she says.

Are these people crazy to be tying up even more of their cash in their homes, in effect doubling down on what has been a losing bet thus far? After all, any number of variables, from the employment picture to the credit markets, could weigh on housing for years to come.

Yet economists say trading up to new homes or refinancing existing ones can be smart—even if it means plunking down more cash to get out of old mortgages. People living in less-desirable neighborhoods might be able to find better homes in tonier ones that offer better appreciation potential. And with mortgage rates so low, such buyers can keep their monthly payments manageable, even though the new homes are more expensive.

“If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?” says Christopher J. Mayer, a Columbia Business School economist.

The refinancing equation is changing, too. Thanks to rock-bottom interest rates and liberal lending terms for Federal Housing Administration loans, a person who plunks down cash to retire a higher-rate mortgage might be able to reduce his monthly payments, even as he shortens his loan term to 20, 15 or 10 years.

In the past, financial planners typically recommended that homeowners devote as little cash to real estate as possible, and to invest it in the financial markets instead. But with stocks essentially where they were 11 years ago and market volatility seemingly on the rise, people are rethinking that wisdom. Devoting extra cash to repay a mortgage early is among the safest ways to produce an investment return.

“At this point,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, “if they don’t have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to.”

During the fourth quarter of 2009, 33% of refinancings were of the cash-in variety, the highest percentage since Freddie Mac began tracking the characteristics of refinance transactions in 1985. Figures for the second quarter are due next week.

“Historically high percentages of borrowers are paying down their principal when they refinance their mortgages,” says Brad German, a Freddie Mac spokesman.

It helps that interest rates are lower than they have been in decades. The average rate on a 30-year fixed-rate loan was about 4.74% on July 21, according to Bankrate.com. That is down from 5.26% in January. Rates on 15-year loans averaged about 4.18%.

The Mortgage Bankers Association said Wednesday that low interest rates sent the volume of mortgage applications 7.6% higher during the week ended July 16. Purchase applications increased for just the second time since the expiration of a temporary federal tax break in May. Refinance applications grew 8.6%, to the highest level since May 2009.

The attractive terms are spurring people like Scott Ayler, 35 years old, into action. He and his wife, Jaclyn, 33, recently decided to trade up to a larger home in their native Denver, despite taking a loss on their current house. In 2004, they paid $234,000 for a three-bedroom, 2½-bath house builtthat same year in Green Valley Ranch, a subdivision that has among the highest foreclosure rates in the city and lacks upscale amenities. They are in contract to sell the home for about $204,000.

Their new home, built this year, cost about $323,000, comes with four bedrooms and three baths, and sits on a corner lot overlooking a reservoir. The house, which was initially listed at $379,000, is in Denver’s desirable Cherry Creek area, known for excellent schools, plentiful amenities and few foreclosures.

With $195,000 remaining on their original 6.625%, 30-year fixed-rate loan, the Aylers estimate their total paper loss will be around $45,000. They are putting down only $11,500 on the new house. But because the new FHA loan carries a 4.5% rate, their monthly payment will rise by only $290 a month.

They say they expect better price appreciation in their new home. And with a young daughter and plans for another child, they need more space anyway.

“We don’t want to wait for the market to come back,” says Mr. Ayler, general counsel for an energy company. “We wanted a better quality of life now.”

Of course, many homeowners in states like Arizona, Florida and Michigan are seriously underwater, having overpaid for houses now worth as little as half their value at the market’s peak. Making up that yawning gap and scraping up additional cash for a new down payment is beyond their means.

Some of those people are going to extremes by engaging in “strategic defaults,” a highly controversial strategy in which they stop paying their mortgages and go into foreclosure to get out of their obligations. But while cutting losses on a bad housing investment might seem liberating, it can stain a person’s credit report for years.

The vast majority of homeowners remain reluctant to sell their primary residence at a loss, perhaps irrationally so. In a study of seller behavior in condominium transactions in downtown Boston from 1990 to 1997, economists David Genesove of Hebrew University in Jerusalem and Prof. Mayer of Columbia showed that sellers were so “averse to nominal losses” that it affected their behavior. Those who were selling their homes in down markets and faced the possibility of nominal losses kept their homes on the market for much longer than other sellers, in some cases to their detriment.

“Loss aversion is a very, very strong force,” Prof. Mayer says. “People don’t like to sell their homes for less than they paid for it.”

But, he adds: “Why should it matter? If you sell a home for less than you pay for it, you would buy for less, too.”

Others are coming around to that view. In Minneapolis, real-estate agent Jason Walgrave says he recently helped a couple buy a 2,800 square-foot home in nearby Plymouth, Minn., an affluent suburb, for $325,000. To get there, they sold for $175,000 a 1,500 square-foot house for which they had paid $190,000 in 2005. Their existing home is financed with a 7.5% mortgage; they will get 4.5% on the new one.

The couple is bringing $25,000 to the closing table to pay off the old loan and closing costs. “They want to take advantage of the bigger house at a lower price and the lower interest rate,” Mr. Walgrave says. Now, for an extra $390 a month, they are getting almost twice as much house.

Just as old beliefs about selling houses are being upended, the conventional wisdom surrounding refinancing is changing, too. Time was when the only question about a refinance deal was how much money the homeowner could take out of the house. From the 1980s through the mid-2000s, the so-called cash-out refi became an easy way for homeowners to spend beyond their means.

Now, some homeowners are doing the opposite: writing big checks to pay off their old mortgages and taking out new ones with far lower interest rates, shorter repayment terms or both.

Source: Wall Street Journal

Westside LA Real Estate Advice: Treasury Secretary Timothy Geithner said Sunday the government should retain “some type” of federal guarantee to ensure that Americans can easily finance home loans, in what could be the latest salvo between the Obama administration and Republicans over the future role of the public sector in the housing market.

The statement cuts to the heart of one of the most vexing policy questions in Washington: what to do with the costly government-run mortgage giants Fannie Mae and Freddie Mac.

Both companies were taken over by the U.S. in 2008 as they teetered towards collapse. So far, the Treasury has injected $145 billion in taxpayer aid to keep them afloat and that figure could climb in the coming months.

Republicans have said the firms and their distortive role in the housing market need to be addressed immediately. They say that their quasi-government nature allowed them to grow so large they helped fuel the financial crisis.

The Obama administration has said the firms should not return to their original state. But they haven’t gone as far as some Republicans that have hinted at abolishing the functions the companies performed, such as offering mortgage guarantees.

Mr. Geithner promised the administration would “bring fundamental change” and said it wouldn’t “preserve Fannie and Freddie in anything like their current form” during a Sunday appearance on NBC’s “Meet the Press.”

But, he added, “there’s going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so, again, homeowners have the ability to borrow to finance a home even in a very difficult recession.”

The stance illustrates the challenges facing lawmakers as they seek to remake the companies, which own or guarantee more than half of the nation’s $10.2 trillion in mortgages.

For decades, a fuzzy, “implied” guarantee allowed the companies to borrow cheaply because investors assumed—correctly, it turned out—that the government would bail the firms out if they ever floundered. The arrangement allowed Washington to hide the expense of the generous subsidies that lowered borrowing costs for homeowners by making the 30-year fixed-rate mortgage widely available.

The administration has promised to sketch out more details by early next year. Last week, a 90-day public comment period established by the Treasury closed after drawing scores of responses from an array of market participants.

Source: Wall Street Journal

Westside LA Real Estate Advice: Appraisers are welcoming Thursday’s passage of legislation that makes sweeping changes to the nation’s financial regulatory system, saying the bill includes the first modernization of real estate appraisal regulations in more than 20 years.

HR 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, includes appraisal independence requirements and provides grant funding for state oversight and enforcement of those regulations.

The bill creates a new Bureau of Consumer Financial Protection that’s charged — among many things — with drafting new interim final regulations that specifically define acts or practices that violate the bill’s appraisal independence requirements.

The regulations are to be drafted within 90 days of the bill’s signing, superseding the Home Valuation Code of Conduct, rules adopted by Fannie Mae and Freddie Mac in May 2009.

Realtors have complained that the code, which was intended to protect appraisers from coercion by lenders, has resulted in lenders relying more on appraisal management companies (AMCs) that may employ appraisers with little experience in the markets in which they are asked to provide valuations, paying them less than experienced local appraisers.

Fannie and Freddie on June 30 put lenders on notice that they must use appraisers with local experience who can access records on recent sales in markets where they are being asked to provide valuations.

The appraisal independence requirements of HR 4173 provide that AMCs register with state agencies, and stipulate that lenders and AMCs pay “reasonable and customary” fees to appraisers. Violators will be subject to penalties under the Truth in Lending Act.

The new law allows lenders to establish what’s “reasonable and customary” by citing “objective third-party information, such as government agency fee schedules, academic studies, and independent private-sector surveys.” But fee studies can’t include assignments ordered by AMCs.

The Appraisal Institute, a group representing appraisers, says that language will encourage the use of “highly trained and competent appraisers.”

“We encourage AMCs to justify the legitimate services they are providing to lenders by charging for those services, rather than penalizing highly trained and competent appraisers” by offering subpar wages, Appraisal Institute President Leslie Sellers said in a press release.

The banking and lending industry is wary of many of the bill’s other provisions, saying they will create more costs and tighten the availability of credit to consumers.

After the House passed the bill on June 30, the Mortgage Bankers Association issued a statement saying the bill would change mortgage lending, increasing costs and creating new regulatory burdens that would affect consumers and lenders.

Lenders’ concerns about the bill include risk retention provisions for loan originators and the lack of strong federal preemption of state consumer protection laws, preserving the rights of states to pass even stronger measures.

According to one analysis by attorneys at K&L Gates, the bill “essentially mandate(s) that all flavors of mortgage loans besides ‘plain vanilla’ will disappear from the menu.”

For consumers who want something besides staid 30-year fixed-rate loans and other loans viewed as less risky? “Sorry, the government has determined that it may be hazardous to your health,” K&L Gates attorneys Kristie Kully and Lawrence Platt wrote.

Although the lending industry won some concessions in the long fight over financial regulatory reform, “the extent to which makers and holders of non-plain vanilla mortgages are targeted for punishment through enhanced monetary damages, defenses to foreclosure, and risk retention requirements,” came as a surprise, Kully and Platt said.

“Only time will tell whether the mortgage finance industry will assume the risks and expand the menu of mortgage options.”

Commenting on Thursday’s Senate passage of HR 4173 in a 60-39 vote, the American Bankers Association said the group was “very disappointed” with bill, calling it “overloaded with new rules and restrictions on traditional banks that did not cause the financial crisis. The result will be over 5,000 pages of new regulations on traditional banks and years of uncertainty as to what the massive new rules will mean.”

On that point, the National Community Reinvestment Reinvestment Coalition did not disagree.

The proof of the bill’s worth “will come not from what is written in the bill, but how the regulators interpret the bill, write the rules and then enforce them,” said John Taylor, NCRC’s president and CEO, in a statement. The bill leaves “too much to study, and (up to) the discretion of the existing regulators.”

NCRC welcomed beefed-up reporting requirements under the Home Mortgage Disclosure Act that will require lenders to include more details on loan terms and conditions and borrower characteristics to regulators. That information can be used to determine whether lenders are discriminating against minority borrowers or underserving some communities.

The bill also creates a default and foreclosure database that NCRC said will “serve as an early warning system” allowing regulators to take action when data shows a spike in foreclosures

Regulators will also have access to a database of individual loan records for homeowners participating in the Home Affordable Modification Program (HAMP) program, which NCRC said will increase industry accountability for loan modifications.

The National Association of Realtors largely stayed on the sidelines of the battle over financial reform, after lawmakers made it clear last year that the Consumer Financial Protection Agency they envisioned would not have authority over real estate agents and brokers, or other businesses that bill customers after services are provided, such as doctors and lawyers.

Speaking on a panel at Inman News’ Real Estate Connect San Francisco Thursday, NAR CEO Dale Stinton said the group was focused on the Obama administration’s next project: determining the fate of Fannie Mae and Freddie Mac, and the future of the secondary mortgage market.

“On the consumer side, we try to pick our fights, and that wasn’t our fight,” Stinton said, noting that the U.S. Chamber of Commerce was an advocate for businesses during the debate.

Stinton said that 25 years ago, a previous NAR CEO made a public appeal for the government to implement spending reductions to tackle the national deficit. NAR “paid the price for 10 years for putting our nose where it didn’t belong,” Stinton said.

Appearing onstage at Connect with Stinton, ForeclosureRadar.com founder and CEO Sean O’Toole said that loose lending standards and mortgage products like pay-option adjustable-rate mortgages with low interest rates artificially inflated home prices during the boom by allowing people to buy more home than they could really afford.

But the root of the problem was the loose lending standards employed by lenders because they were able to pass risk along to secondary market investors — not the loan products themselves, O’Toole said.

“I’m not sure subprime lending isn’t OK … we’re going to lose a lot of good products that could expand homeownership, ” O’Toole said.

“I think all of these products could be on the market” if lenders were partners with borrowers in a home, sharing the risk. One way to do that would be to bar deficiency judgements against borrowers who default on their mortgage, O’Toole said.

The American Land Title Association was pleased that the HR 4173 does not place title insurance under the jurisdiction of the Bureau of Consumer Financial Protection, as originally proposed by the Obama administration.

The bill does create a new Federal Insurance Office within the Treasury Department, which will have the authority to determine when state insurance regulations are inconsistent with international agreements relating to prudential measures for insurance or reinsurance, ALTA said.

Source: California Association of Realtors

Westside LA Real Estate Advice: Mortgage rates fell in the past week, with the average rates on 30- and 15-year fixed-rate mortgages further extending record lows, according to Freddie Mac’s weekly survey.

Rates have been at or near record lows as the Treasury market has rallied amid stock-market volatility, pushing yields lower. Mortgage rates generally track Treasury yields.

The decline over the past few weeks also “echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors,” said Freddie Chief Economist Frank Nothaft.

The 30-year fixed-rate mortgage averaged 4.56% for the week ended Thursday, down from the prior week’s 4.57% average and 5.2% a year ago. Rates on 15-year fixed-rate mortgages were 4.03%, down from 4.06% and 4.68%, respectively.

Both the 30- and 15-year mortgage rates are at the lowest point since Freddie started tracking them, 1971 and 1991, respectively.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.79%, lower than the prior week’s 3.85% and 4.74% a year earlier. One-year Treasury-indexed ARMs hit a fresh low of 3.7%, down from 3.74% and 4.77%, respectively. That loan type has been followed by Freddie since 1984.

To obtain the rates, the five-year fixed-rate mortgages required payment of an average 0.6 point and the others required an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Source: Wall Street Journal

Westside LA Real Estate Advice: The number of California homes pushed into the formal foreclosure process between April and June dropped for the fifth consecutive quarter to the lowest level in three years. The declines were greatest in the most affordable areas, where foreclosure activity continues to fall from extremely high levels over the past two years, a real estate information service reported.

A total of 70,051 Notices of Default (”NODs”) were filed at county recorder offices during the April-to-June period. That was down 13.6 percent from 81,054 for the prior quarter, and down 43.8 percent from 124,562 in second-quarter 2009, according to San Diego-based MDA DataQuick.

Last quarter’s total was the lowest since second-quarter 2007, when 53,943 NODs were recorded. The peak was in first-quarter 2009 when 135,431 homeowners received foreclosure notices.

“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales. Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves under water, which is a significant factor in letting a home go,” said John Walsh, DataQuick president.

While mortgage defaults spread from lower-cost sub-markets up into more expensive neighborhoods over the last year, that trend appears to be leveling off. The most affordable zip codes in the state, representing 25 percent of the total housing stock, accounted for 40.1 percent of all default activity last quarter, down from 40.9 percent the prior quarter and down from 44.9 percent a year ago.

California’s mid and high-end markets tended to see smaller quarter-to-quarter and year-over-year declines in mortgage defaults last quarter. For example, zip codes statewide with median sale prices of $8000,000-plus collectively saw mortgage defaults drop 11.3 percent from the prior quarter and 30.4 percent from a year ago. At the other end of the price spectrum, zips with sub-$300,000 medians saw defaults fall 13.4 percent from the prior quarter and drop 46.2 percent from a year ago.

However, the concentration of defaults remained much higher in the less expensive areas: Zips with sub-$300,000 medians collectively saw 10.6 default notices filed for every 1,000 homes last quarter, compared with 2.9 per 1,000 homes in zips with $800,000-plus medians.

Although the number of default notices filed on homes with $800,000-plus mortgages is down from last quarter and a year ago, those high-end defaults now represent a greater percentage of all defaults because NODs have dropped more steeply in lower-cost areas. Last quarter 6.1 percent of the default notices filed in 15 of the state’s priciest coastal counties, from San Diego to Marin, were on homes with $800,000- plus mortgages. That’s up from 5.9 percent the prior quarter and 5.7 percent a year ago, to the highest level since the foreclosure crisis began nearly five years ago.

On primary mortgages, California homeowners were a median five months behind on their payments when the lender filed the NOD. The borrowers owed a median $15,008 in back payments on a median $325,567 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $4,187 on a median $65,740 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

While many of the loans that went into default during second quarter 2010 were originated in early 2007, the median origination month for last quarter’s defaulted loans was August 2006, one month ahead of July 2006 for the prior four quarters.

The lenders that originated the most loans that went into default last quarter were World Savings (2,982), Washington Mutual (2,547), Countrywide (2,532), Wells Fargo (2,177) and Bank of America (1,049). These were also the most active lenders in the second half of 2006, and so far their default rates on loans in that period are well below 10 percent.

Smaller subprime lenders had far higher default rates for loans originated during that period: ResMAE Mortgage, Ownit Mortgage, Master Financial, First NLC Financial Services and Fieldstone Mortgage all had default rates of more than 65 percent of their originated loans. These and most other subprime lenders are long gone.

Most of the loans made in 2006 are owned and/or serviced by institutions other than those that made the loans. The servicers pursuing the highest number of defaults last quarter were ReconTrust Co, Cal-Western Reconveyance and NDEx West.

San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 70,051 default notices were filed last quarter, they involved 68,734 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit). Multiple default recordings on the same home are trending down, DataQuick reported.

Mortgages were least likely to go into default in San Francisco, Marin, and San Mateo counties, following the historic norm. The probability was highest in Madera, Sutter and Merced counties.

The number of Trustees Deeds (TDs) recorded, which reflect the number of houses or condo units lost at the end of the foreclosure process, totaled 47,669 during the second quarter. That was up 11.2 percent from 42,857 for the prior quarter, and up 4.4 percent from 45,667 for second-quarter 2009. The all-time peak was 79,511 in third- quarter 2008.

In the last real estate cycle, TDs peaked at 15,418 in third- quarter 1996. The state’s all-time low was 637 in the second quarter of 2005, MDA DataQuick reported.

There are 8.5 million houses and condos in California.

Collectively, some of California’s most expensive zip codes saw a relatively large increase in the number of homes foreclosed on last quarter. For example, the 92 zip codes that had $800,000-plus median sale prices in the first half of this year saw the number of homes foreclosed on jump 33.6 percent quarter-to-quarter, and jump 65.7 percent from a year earlier. Last quarter’s foreclosure total in these high-end areas was at its highest level since lender repossessions began their steep ascent four years ago.

Still, the concentration of foreclosures in these zips with $800,000-plus median sale prices was relatively low last quarter – 1.2 foreclosures per 1,000 homes. That compares with 5.6 foreclosures per 1,000 homes across all zip codes statewide last quarter, and 9.9 foreclosures per 1,000 homes in zips with median sale prices below $200,000. The latter areas – places hit hardest by foreclosures in recent years – collectively saw foreclosures rise 10.4 percent from the prior quarter but fall 4.5 percent from a year ago.

On average, homes foreclosed on last quarter took 9.1 months to wind their way through the formal foreclosure process, beginning with an NOD. That’s up from 7.5 months for the prior quarter and 6.4 months a year ago. The increase could reflect, among other things, lender backlogs and extra time needed to pursue possible loan modifications and short sales.

Of all the homes foreclosed on statewide during a two-year period ending in March this year, 85.7 percent had been resold on the open market as of the end of last month. A year ago the figure was 83.5 percent. It cannot be determined from public records how many of the unsold foreclosed properties are currently for sale, not for sale or have been made rentals (and therefore should not be expected to sell anytime soon).

Foreclosure resales accounted for 36.0 percent of all California resale activity last quarter. It was down from a revised 42.5 percent the prior quarter, and down from 49.9 percent a year ago. The peak was 57.8 percent in first-quarter 2009. Foreclosure resales varied significantly by county last quarter, from 9.5 percent in San Francisco to 61.7 percent in Imperial.

At formal foreclosure auctions held last quarter, an estimated 25.5 percent of foreclosed properties were bought by investors or others who don’t appear to be lender or government entities. That was up from 24.6 percent the previous quarter and 17.9 percent a year ago, DataQuick reported.

Source: DQNews.com

Westside LA Real Estate Advice: An estimated 43,964 new and resale houses and condos were sold statewide last month. That was up 7.3 percent from 40,965 in May, and down 0.5 percent from 44,167 for June 2009. California sales for the month of June have varied from a low of 35,202 in 2008 to a peak of 76,669 in 2004, while the average is 50,405. MDA DataQuick’s statistics go back to 1988.

The median price paid for a home last month was $270,000, down 2.9 percent from $278,000 in May, and up 9.8 percent from $246,000 for June a year ago. The year-over-year increase was the eighth in a row, following 27 months of year-over-year decline. The bottom of the current cycle was $221,000 in April 2009, the peak was at $484,000 in early 2007.

Of the existing homes sold last month, 34.7 percent were properties that had been foreclosed on during the past year. That was down from a revised 35.4 percent in May and down from 45.6 percent in June a year ago. The all-time high was in February 2009 at 58.5 percent.

The typical mortgage payment that home buyers committed themselves to paying last month was $1,125. That was down from $1,183 in May, and the same as June 2009. Adjusted for inflation, last month’s mortgage payment was 48.0 percent below the spring 1989 peak of the prior real estate cycle. It was 57.8 percent below the current cycle’s peak in June 2006.

MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Indicators of market distress continue to move in different directions. Foreclosure activity has declined somewhat but remains high by historical standards. Financing with multiple mortgages is low, down payment sizes are stable, cash and non-owner occupied buying is above average, MDA DataQuick reported.

Source: DQNews.com

Westside LA Real Estate Advice: Southern California’s housing market continued its slow crawl toward normalcy in June as sales volume rose and the median price slipped back a notch from May, but remained 13 percent higher than a year ago. Red-hot, fire-sale deals continued to give way to mere bargains in the lower- cost inland markets where first-time buyers and investors have competed fiercely, a real estate information service reported.

A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for June 2009, according to MDA DataQuick of San Diego.

The sales count was the highest since July last year when 24,104 homes were sold. It was the strongest month of June since 2006 when 31,602 homes sold. The average June since 1988 has had 28,086 sales.

“The market was wildly out of kilter a year ago, now it’s just somewhat out of kilter. We’re still seeing lots of bargain hunting, and we’re not seeing much discretionary buying. The single-biggest issue is still mortgage financing. Rates may be at record lows, but that doesn’t mean much if the lender won’t qualify you,” said John Walsh, MDA DataQuick president.

“Still, more money was spent last month buying homes in Southern California than in the past two years, and more money was loaned. The tax credits had something to do with that, though it’s not clear exactly how much. With the impact of the credits fading fast, the next few months will tell us a lot.”

The median price paid for a Southland home was $300,000 last month. That was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000 for June 2009. The low point of the current cycle was $247,000 in April 2009, the high point was $505,000 in mid 2007. The median’s peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

Foreclosure resales accounted for 33.0 percent of the resale market last month, down from 33.9 percent in May, and down from 45.3 percent a year ago. The all-time high was February 2009 at 56.7 percent, DataQuick reported.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 39.0 percent of all mortgages used to purchase homes in June.

Last month 20.8 percent of all sales were for $500,000 or more, compared with 22.2 percent in May and 19.3 percent a year ago. Zip codes in the top one-third of the Southland housing market, based on historical prices, accounted for 29.6 percent of existing single-family house sales last month, down from 31.0 percent in May but up from 27.8 percent a year ago. Over the last decade those high-end areas have contributed a monthly average of 33.3 percent of regional sales. Their contribution to overall sales hit a low of 21.0 percent in January 2009.

High-end sales would be stronger, and the overall market recovery more robust, if adjustable-rate mortgages (ARMs) and “jumbo” loans were more available. Both have become much more difficult to obtain since the August 2007 credit crisis.

While 43.9 percent of all Southland purchase mortgages since 2000 have been ARMs, it was 6.6 percent last month, up from 6.5 percent in May and up from 2.7 percent in June last year.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 17.3 percent of last month’s purchase lending, up from 17.2 percent in May and from 14.9 percent in June 2009. Before the credit crisis, jumbos accounted for 40 percent of the market.

Absentee buyers – mostly investors and some second-home purchasers – bought 19.7 percent of the homes sold in June, paying a median of $220,000. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 23.5 percent of June sales, paying a median $213,000. In February this year cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.1 percent.

The “flipping” of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a six-month period was 3.4 percent, while a year ago it was 1.9 percent. Last month it varied from as little as 3.0 percent in Orange and San Diego counties to as much as 3.8 percent in Los Angeles County.

MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,251 last month, down from $1,293 for May, and up from $1,193 for June a year ago. Adjusted for inflation, current payments are 44.3 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 54.4 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is lower than peak levels reached over the last two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above- average, MDA DataQuick reported.

Source: DQNews.com

Westside LA Real Estate Advice: A look at the various scenarios and what might work best for you.

For those who can qualify, it’s one of the best times to get a mortgage.

Last week, rates for 30-year fixed-rate loans dropped to 4.57 percent, the lowest level on records dating back to 1971, Freddie Mac said.

And for some who missed out on the government’s homebuying tax credit, the rates may more than make up for that lost $8,000.

“A tax credit is immediate gratification,” said Leonard Baron, a professor of finance at San Diego State University, “but long-term, with rates this low, you can get much more value.”

But which loan is right for you? The mortgage game has changed since the housing bust and more rules have been and are being added. One factor is for sure now: Your credit score should be at least 620 or you’ll have a hard time finding a loan. What varies is how much you have for a downpayment.

Buyer No. 1: You have a 20-percent downpayment and expect to retire in the house.

Take out a 30-year fixed-rate loan, the most popular type of mortgage. The interest rate stays the same over the life of the loan and right now, that rate is at historical lows.

“This loan is for someone interested in stability and security,” said John Stearns, mortgage banker at American Fidelity Mortgage Services Inc. in Mequon, Wisc.

Buyer No. 2: You have a 20-percent downpayment, but plan to move into another home down the road.

Consider a five-, seven- or 10-year adjustable-rate loan, which has a fixed rate for a set period and then adjusts higher after that time. These loans carry a lower initial interest rate than the 30-year fixed-rate, so you save money over the fixed-rate period. After the fixed-rate period ends, borrowers typically refinance into another loan to avoid the adjustable rate.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent this week. That was the lowest on Freddie Mac’s records, which date back to January 2005.

ARMs got a bad rap during the housing bust because most people who took out two- or three-year ARMs got caught with an unaffordable payment when their rates reset. They couldn’t refinance into a fixed-rate loan because home prices had tanked and credit tightened up.

That risk still exists, but starting in September, lenders will have to evaluate whether borrowers can make payments after the rate reset on adjustable-rate loans backed by Fannie Mae.

Buyer No. 3: You have at least a 20-percent downpayment for a house worth more than $729,500.

You need a so-called jumbo loan which is not backed by Fannie Mae and Freddie Mac. That means any lender who makes a mortgage above that amount will have to keep the loan on its books.

To compensate for that risk, lenders charge higher interest rates than a conventional mortgage. The average rate for a 30-year fixed-rate jumbo loan fell to 5.48 percent this week, the lowest level ever in Bankrate.com’s survey.

Buyer No. 4: You have more than a 20-percent downpayment.

Depending on how much you’re putting down, you might consider a 20-year fixed-rate mortgage. Rates are sometimes, but not always, lower than a 30-year fixed-rate by about a quarter-point. However, because the loan term is shorter on the 20-year loan, the monthly payment will be higher than a 30-year mortgage.

For example, the monthly payment for a 20-year fixed-rate loan for $300,000 is $1,898. It’s only $1,565 a month if the loan is 30 years. But over the life of the loan, you’ll save about $108,000 in interest.

“Most people are interested in a lower monthly payment,” Stearns said.

Buyer No. 5: You have less than a 20-percent downpayment.

Consider a mortgage insured by the Federal Housing Administration, or FHA. A borrower needs to put down only 3.5 percent of the purchase price.

After the housing market slumped, the FHA became the major source of funding for first-time homebuyers. It insured about 24 percent of new loans in the first quarter, according to Inside Mortgage Finance, a trade publication.

Or, consider a mortgage loan that isn’t backed by the FHA, which only requires 5 percent down. However, you will pay mortgage insurance each month, which can add an extra $25 to $50 to your monthly payment depending on your credit score. Private mortgage insurance protects a lender against losses when a borrower defaults. If you have very good credit, this option may be cheaper.

Buyer No. 6: You have a gift downpayment.

While one in five first-time homebuyers used a gift from a relative or friend for a downpayment last year, there are some rules to navigate.

Gift money can be used for a downpayment on a conventional loan only after the borrowers use their own money to make the 5-percent minimum. Gift money can pay for closing costs or prepaid expenses like property taxes and insurance that are put into an escrow account. Banks typically check two months’ worth of bank statements for unusually odd deposits that could be considered gifts. However, if the gift was deposited six months before, a bank might not notice.

However, FHA mortgages allow borrowers to use a gift to make the 3.5-percent minimum downpayment. The gift must be documented in writing and the lender may ask for proof of deposit.

Buyer No. 7: You don’t have a downpayment.

Your options are limited.

If you are a veteran or the surviving spouse of one, consider a mortgage backed by the Department of Veteran Affairs. These loans offer 100 percent financing without private mortgage insurance at competitive mortgage rates.

If the home you’re buying is in a rural area as defined by the U.S. Department of Agriculture, you may qualify for a USDA home loan, which offers 100 percent financing without adding on private mortgage insurance. The USDA aims to help lower-income households get home loans at reasonable rates.

Source: Associated Press