By Roger Showley and Emmet Pierce
UNION-TRIBUNE STAFF WRITERS
12:50 p.m. July 15, 2008
San Diego County housing prices dropped a record 25.3 percent on a year-over-year basis last month to stand at $370,000, DataQuick Information Systems reported Tuesday. It was the lowest overall median since May 2003 and contrasted sharply with the all-time peak of $517,500 set in November 2005.
Single-family resale homes dropped to $405,000 from $420,000 in May and $565,000 in June 2007. Resale condos posted a median $259,000, down from $287,750 in May and $397,500 in June 2007.
Newly built homes rose from $435,000 in May to $490,000 last month, continuing a trend analysts attribute to the near-absence of newly converted condo projects on the market. Those former apartments typically sell for much less than newly constructed condos and houses and dominated the new-housing market until the recent downturn.
Sales topped the 3,000 level for the first time since August in a usual seasonal upswing of activity during spring and summer months. The total stood at 3,077, up from 2,979 from May but down 12.3 percent from year-ago levels. It was the 48th straight month of year-over-year declines in sales activity, a trend that began in July 2004.
Meanwhile, evidence is growing that bargain hunters are bidding more than the asking price for some properties, mostly foreclosures that banks are trying to resell quickly. HouseRebate.com said 17 percent of all sales countywide in the 30-day period ending June 26 were sold at price higher than the original listing price. A year ago, the overbidding percentage was only 6.5 percent.
HouseRebate CEO Brian Yui said interest is concentrated in houses priced at $500,000 or less. “Things are moving quicker and buyers are dealing with realistic sellers,” Yui said.
There has been a lot of negative press recently since the Government of Canada eliminated a zero down payment 40 year mortgage. But I like to have a positive outlook on life and here are some positive spins on some negative news:
1. Mortgage Rates are still at an all time low. There was a time in the early 80's when mortgage rates were 18% and higher. At that rate how could you ever pay down your principle. Now the 5 year discounted rate is 5.47%. That is a great deal!
2. Sales of homes are down from last year. Well, we had a great 13 year run with the market beating itself over and over again. Economies are cyclical. A rise is usually followed by a correction or fall. These cycle usually happen every 5 or so years. What are complaining about? 13 years is amazing. Yes, housing prices are still rising but unemployment is around 6%. Quite healthy, really.
3. The banks are losing money from investing in the US Mortgage Market. There is a silver lining to this as well. Bank stock prices are on the decline but historically banks have been a very good place to put your money. Now don't take my word for it since I am not an investment adviser, but I would be calling yours and asking him or her to watch the stocks for you and decide a good time to buy.
4. If we are in such trouble in the real estate market, why are there 41,230 housing starts in the GTA this year of which 18,390 were apartments and condos (numbers provided by CMHC). Someone has to be buying these. And with new homes being built often there is a shortage of skilled trades available like drywallers and bricklayers. Looks like an opportunity to me.
5. Gas prices are rising. Now is the time to explore alternative energy sources. It has been a long time since I completed my Grade 8 Science Fair Project entitled "Go Solar!" But once again opportunity knocks. Here is a whole new area for company growth, which in turn will feul the economy and real estate sales.
I think we are on the cusp of some very important changes and as the old song by Johnny Mercer goes "You've got to accentuate the positive
Eliminate the negative
And latch on to the affirmative
Don't mess with Mister In-Between".
No Mister (Or Mrs.) In-Between thinking here. Let's take advantage of the opportunities life is presenting us with!
We had a lot of news out today, all of which was bad. The Retail Sales report came out today at a 0.1% rise over last month. This is considerably lower than the projected 0.4% increase, and the lowest increase since the February Retail Sales Report.
The Producer Price Index (which measures wholesale inflation) came in at 1.8% on a seasonally adjusted basis in June. This is not good news for inflation, and as the biggest gain since November 2007, it will continue to chip away at investor confidence in the mortgage bond sector.
FED Chairman Ben Bernanke will be delivering his semi-annual monetary outlook to the Senate Banking Committee today. The expectations for his prepared speach are already creating concerns with investors and causing a sell off in stocks based on the assumption that continued problems with growth and unemployment will not ease in the near future.
All of this leads to a less than stellar environment in mortgage bonds. Normally, a stock sell off is good news for the bond market and mortgage rates in general. But with continued uncertainty about inflation, it is having little or no affect on bonds. My suggestion would be to lock your rate at current levels to protect against future loss on any active mortgage loan you have working.
It has been reported that approximately 200 people were waiting in line at Pasadena based IndyMac bank this morning to withdraw any and all money they could. For all the people who had more than the insured $100,000 at IndyMac, the FDIC has said they will cover up to half of the rest. That comes to a lot of money, so we’ll have to wait and see if they follow through with that promise. Meanwhile, The Federal Reserve unanimously approved new mortgage lending rules Monday in a crackdown on shady practices - particularly those involving subprime loans made to with weak credit.
This is the bill I wrote about last week. Both consumers and mortgage lenders were displeased with the original bill, which has since been tweaked in order to make as many people happy as possible. To that end, the agency made several substantial revisions to the proposed regulations it unveiled in December. Many of the changes acknowledged consumer advocates' concerns that the rules still contained too many loopholes that would allow shady mortgage lending practices to continue. But the Fed also made some concessions to industry executives, who feared increasing oversight would lead to less lending.
The new rules will apply to all mortgage lenders, not just those supervised and examined by the Fed. The new rules will go into effect Oct. 1, 2009, but that doesn’t mean the investigation is over. The people who brought us this bill have announced that they will continue to scrutinize all mortgage lending companies, in order to ensure they are following the new rules and aren’t getting around them and further complicating the mess we have in the housing market.
So here are the rules as they stand right now.The new rules governing "higher-priced," or subprime, loans will:
Prohibit creditors from extending credit without regard to a consumer's ability to repay the from income and assets other than the home's value. The mortgage lender will comply by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. Mortgage lenders will also have to verify income and assets that can determine whether or not the borrower is fiscally able to pay their mortgage.
Furthermore, the new bill will ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. Mortgage lenders and creditors will also have to establish escrow account for property taxes and homeowner's insurance. This rule will be phased in during 2010.
One of the changes The Fed made was to the definition of higher-priced loans with regards to mortgages rates that are at least 1.5 percentage points above the average mortgage rate, which is published by ; who by the way is also under the government’s radar for shady mortgage lending practices. No here’s a big one I have personally been affected by; Creditors and mortgage brokers cannot coerce a to misstate a home's value. I have lost thousands of dollars over the past five years do to this practice. For those real estate appraisers unwilling to fudge the numbers, this comes as a happy occasion.
Mortgage lending companies are now to be upfront and completely honest about late fees and hidden fees. It seems they were glossing over this information, which is one of the reasons so many people in the housing market find themselves in foreclosure now. They were led to believe their mortgage would be one fee, only to find out it was more do to those hidden fees. In order to further ensure people getting into the housing market know what they are in for, The Feds have included a rule that in any advertisement a company must include additional information about rates, monthly payments and loan features. The rule also bans seven deceptive practices, such as saying a rate is fixed when it can change. Sadly, that kind of stuff should have already been the standard operating practice. I find it disgusting that the government has to put these rules into writing and make them law.
Most advocates for the housing market and real estate consumer are generally pleasedwith the bill, and feel their months and months of keeping up with the progress of it has paid off. More than 4,500 comments were filed since the agency announced its plan in late December, and after reviewing the final rules, advocates said they felt the changes did provide additional protections for the consumers. In particular, it's important that the Fed eliminated the requirement that borrowers prove lenders engaged in a "pattern or practice" of originating unaffordable loans since that's very hard to do, said Brenda Muniz, legislative director of Acorn, a housing advocacy group.
As for whether this new bill will help the slumping housing market and bring real estate back to stability, that remains to be seen. There are also people who feel this bill is too little too late. But what about you; do you think this new bill will curtail shady mortgage lending practices. Leave us a comment and tell us how you feel.
Friday's news about the uncertainty of the future of Fannie Mae and Freddie Mac led to a huge sell off in stock for the 2 mortgage giants. Was it warranted, or just a fearful market overreacting? That question will probably not be answered today. But, the Treasury department stepping up to help out lends a little more stability to an uncertain market.
Treasury Secretary Henry Paulson and FED Chairman Ben Bernanke have given the green light to Fannie Mae and Freddie Mac to borrow money directly from the Central Bank at the federal discount rate of 2.25%. This is significant because it has never happened in the past. The federal funds discount window has been historically limited to banks and credit unions, but this option being made available to Fannie and Freddie is giving a little boost to the mortgage bond market and mortgage rates this morning.
It is not likely that this is a long term rebound in bond prices, but it is worth mentioning. In addition, the Producer Price Index (PPI) and the Retail Sales Report are due out tomorrow and will dictate the direction of the market when they come out.
If you have a mortgage currently working, you might want to go ahead and lock your rate. But, if your mortgage is a little farther out, wait and see what happens tomorrow to make a decision to lock or not.
Are you among the thousands of people in Greater Victoria who pay rent each month, knowing full well that you will never see that money again? For many, this need not be the case. Instead, why not take that money and build it into an investment that can last a lifetime? Right now there are excellent opportunities for first-time buyers. Mortgage rates are attractive and there are plenty of reasonably priced homes on the market.
What kind of home do you need and want?
Buying a home is a balance of many requirements such as family size, location, income and lifestyle. REALTORS® are excellent sources of advice and help in these matters. Not only do they have the experience and knowledge to make sure the choice you make will be the right one, but with access to the Multiple Listing Service® (MLS®), they can seek out suitable properties for you and provide you with a customized list of homes that meet your needs, wants and budget.
Ask yourself exactly what you need in a home. How many bedrooms? How close to schools or shopping centres? Do you plan to have more children? Do you need a garage or a finished basement? New homes offer extensive warranties and pristine conditions but may not have mature trees or landscaping. Older homes often include improvements such as finished basements or rec rooms, decks and patios. Be sure to have any resale home inspected for needed repairs or upgrading.
Next decide on a preferred location. Living in the city means you will be close to amenities such as theatres and shopping. If you prefer a more rural lifestyle, make sure the extra time spent driving each day won't detract from your enjoyment of the property.
Town homes and condominiums are obviously suited to particular lifestyles or budgets. Townhome or condominium living offers convenience and often means sharing common areas such as parking, hallways and landscaping.
What can you afford?
Once you have determined what it is you want and need, you'll have to find out what you can afford. The first tip is to set a maximum price range instead of just an upper price. It's not always wise to buy the most expensive home you can afford but better to aim lower in anticipation of extra costs or fluctuations in your income.
A REALTOR® or your financial institution can help you determine the amount of the mortgage you can carry by calculating your debt-service ratio. The rule of thumb is that the sum of all your current loan payments (car, personal, credit card, etc.) plus your mortgage should not exceed 40 per cent of your gross income. In addition, mortgage payments and property taxes should not be more than 30 per cent of gross income.
Buying your first home may seem intimidating in the beginning, but with careful planning, a clear idea of what you want and the help of a REALTOR®, home ownership can be become a joyful reality for you and your family.
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If you are one of those who want to acquire different kinds of loans, then Internet is a good place to begin with. www.gnty.com is one such website, which offer every kind of information related to the home loans and their mortgage rates. The Guaranty Bond Bank deals particularly in providing , home equity and as well. Undoubtedly, you can avail the loan services provided by the Guaranty Bond Bank and if still in doubt, you can take help of the professional loan advisors, which will assist you in analyzing different home loans as per your requirements and necessities. In addition, the experts will also assist in giving guidelines and suggestions to solve your queries and confusion to avail . One can easily rely on the Guaranty Bond Bank as it is the oldest Texas bank and also their terms, policies and program structure are simple to understand and enables you to bank you money as well as time as all the transaction can be done via online. For more information about home loans, free checking, home equity, mortgage rates, logon to
Mortgage rates fell last week, after the Federal Reserve declared that inflation would level off sometime later this year. This news was released by the troubled mortgage company. According to , “30-yeard fixed-rate mortgages averaged 6.35% with an average 0.6 point in the week ending Thursday, down from 6.45% last week, and that last year at this time, the 30-year loan averaged 6.63%.”
Now, you may see this as good news, but some may see it as dangerous. While I firmly believe that the interest rates, as they stood during the height of the bubble, were unrealistically low, I don’t want to see them flip to the opposite end of the spectrum. The interest rates had to readjust in order for the incredibly high cost of homes to come back down to earth. So seeing the rates start to go back down, however little it may be, is reassuring. As far as the Federal Reserve stating that inflation would level off, I don’t see that happening for a while, at least not until our new President takes office. Even then it will take whoever wins quit a while to clean up the mess the is in right now.
The good news is that the inflationary pressures, which the Federal Reserve expects to see ease, could help borrowers who are in the progress of or looking to refinance by giving them some encouragement. That being said, experts in the mortgage industry believe we will keep seeing the mortgage rate fluctuate until there is greater certainty about the health of the economy and inflation.
Given the recent economic data, experts suggest that anybody looking to sell do it now, because it could be a while before interest rates stay at a stable level.
And for any of you out there looking to get into the housing market by , an improvement in interest rates makes it a good time to go sign up for a deal. That being said, mortgage rates haven’t gotten high enough, yet, that it should make or break your decision to buy a home. Even though the mortgage rates we are seeing now are much higher than a year or two ago, they are still very low, so experts say that if you can’t afford a house with a fixed mortgage rate of 6.25%, you probably can’t afford the house.
If you are looking to buy a house, sell a house, refinance your house or you simply want to know the current value of your house, please visit us at for all your appraisal needs.
This week, the State Legislature enacted foreclosurereform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant San Diego homes. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013.
The full text of Senate Bill 1137 (Perata) is available at .