New Homes Sale Up but Median Price Down 2.6%

According to the Census Bureau report, new home sales were up in August to 9.6% to an annual volume of 1.18 million while the median price was down 2.6% to $267,000.

Mortgage rates are still exceptionally low with the bond at 3.99% and the stock market continuing to falter. We should see these low mortgage rates continue for some time.

Thanks for Reading.
Jessie J. Beaudoin

Median California Home Prices up 16.8% While Sales Down 8.5%

Closed escrow sales of existing, single-family detached homes in California totaled 591,150 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide.

Across California, home resale activity decreased 8.5 percent from the 645,720 sales pace recorded in August 2003. C.A.R. President Ann Pettijohn was quoted as saying, "We anticipated a decrease in home sales last month compared to August 2003. Last summer, mortgage interest rates were at their lowest levels in more than 30 years and monthly existing home sales hit an annualized all time high of nearly 646,000 units."

"Residential real estate sales in California are on track to set a new annual record in 2004," said Leslie Appleton-Young, C.A.R.'s vice president and chief economist. "Year-to-date sales are up 5.2 percent compared with the same period in 2003."

Here are some facts from the August 2004 C.A.R.'s resale housing figures:

• The median price of an existing, single-family detached home in California during August 2004 was $474,370, up 16.8 percent increase over the revised August 2003 median of $406,140.
  
• The August 2004 median price increased 2.6 percent compared with a revised $462,140 median price in July.
  
• The median number of days it took to sell a single-family home was 26 days in August 2004, unchanged from the same period a year ago.
  
• C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in August 2004 was 4.3 months, compared with two months (revised) for the same period a year ago. (The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate)
  
• 98.6 percent or 421 of 427 cities and communities showed an increase in their respective median home prices from a year ago according to a more localized statistics generated by C.A.R. and DataQuick Information Systems

Here are some other area specific highlights with real estate listings links to specific cities:

Statewide, the 10 cities and communities with the highest median home prices in California during August 2004 were: Beverly Hills, $1,445,000; Manhattan Beach, $1,400,00; Laguna Beach, $1,375,000; Los Altos, $1,350,000; Palos Verdes Estates, $1,325,000; Burlingame, $1,270,000; Newport Beach, $1,100,000; Saratoga, $1,062,500; Orinda, $950,000; Calabasas, $935,000.

Statewide, the 10 cities and communities with the greatest median home price increases in August 2004 compared with the same period a year ago were: Hercules, 59.7 percent; Colton, 58.3 percent; Adelanto, 57.9 percent; Duarte, 56.7 percent; Inglewood, 55.1 percent; Barstow, 52.4 percent; San Gabriel, 52 percent; Huntington Park, 50.8 percent; Yucaipa, 49.5 percent; Compton, 49.4 percent.

Search how your area did from all of the California real estate sales information from C.A.R.

Thanks for Reading
Jessie J. Beaudoin

Nationally... Home Sales Slow Down Slightly

NAR reported that the existing home sales were down from an annual pace of 6.72 million to 6.54 million for month of August. Home sales overall are still near historic levels but this is the second month that we see slowing in the market.

The median homes sales price was $190,100 in August. That's up 7.3 percent from August 2003 when the median price was $177,200, and basically unchanged since July's median of $190,200. June of this year is when the median home price hit a record $191,000.

Mortgage rates are still at 6 month lows even as short term mortgage rates like the prime rate have increased over the last three months because of the Fed and Mr. Greenspan. The short term rates are also still near 40 year lows and typically affect home equity loans / HELOCS.

Loan term mortgage rates have remained low as the long bond market has been hovering around 4.05% with a recent 6 month bottom of 3.98% yield yesterday. If the bonds hold their prices and the economic data continues to be weak these mortgage rates may hold stable for some time.

Thanks for Reading.
Jessie J. Beaudoin

Mixed Signals... Housing Start Up while Permits Down?

U.S. Census Bureau and U.S. Department of Housing and Urban Development announced today that new-home construction gained and is at a 5 month high in August while building permits slowed.

Housing starts is when new home builder actually break-ground for the new homes while the permits is the early stage of preparation for building homes and a good indicator of the future starts. Here are some of the facts:

• Single-family housing starts in August 2004 were at a rate of 1.67 million, up 0.4 percent above the July figure of 1.66 million.
  
• Privately owned housing starts in August rose 0.6 percent in August from the previous month, registering a seasonally adjusted annual rate of 2 million units. August 2004's pace is 9 percent above last years rate of 1.83 million units.
  
• Privately owned housing completions in August were at a seasonally adjusted annual rate of 1.89 million units, up 1.6 percent above the revised July estimate of 1.87 million and up 20.3 percent above the August 2003 rate of 1.58 million.
  
• Single-family housing completions in August 2004 were at a rate of 1.53 million, 0.4 percent above the July figure of 1.52 million.

Now for the mixed signals of the building permits, which may mean builders are getting a little more conservative and lacking some confidence in the market even with these low mortgage rates.

• Privately owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1.95 million units, a drop of 5.5 percent below the revised July rate of 2.06 million and 0.6 percent below the August 2003 estimate of 1.96 million.
  
• Single-family authorizations in August were at a rate of 1.54 million, down 3 percent from the July figure of 1.59 million.

Mortgage rates are only .5% off last years 48 year lows. As the bond market stays below the 4.16% new ceiling we may see a slight decrease in mortgage rates as the market looks for a new floor.

Today, Greenspan and the Fed should increase the prime rate by a quarter percent pushing up mortgage rates on some adjustable rate mortgages such as home equity lines of credit but these short term interest rates are still are historic lows.

Thanks for Reading.

Jessie J. Beaudoin

New Record for San Francisco Bay Area Real Estate Prices

San Franciso real estate prices break records and home sale volumes reach third strongest month in more than 16 years. Here are some basic facts of the hot market:

• San Francisco median prices now $520,000 up 1.2% from July and up 16.3% over last August.
• 12,674 new and existing homes & condos sold in the nine-county region, down 1.5% from last month; up 1.5% from August 03.
• June of this year was highest ever with 14,104 sales.

Search San Francisco real estate listings and MLS.

It is interesting to see everything going on in various areas of California if you consider records in San Bernardino & San Francisco but lowest sales in 8 years in Orange County? We'll have to keep an eye on things.

California mortgage rates remain low and the bond market was way down yesterday breaking the floor of 4.16% down to 4.07% pushing mortgage rates lower. Today things picked up slightly but are still below 4.16%. This conditions still make an excellent opportunity for a mortgage refinance.

Thanks for Reading.
Jessie J. Beaudoin

Southern California Real Estate Up and Down in August

Southern California is has mixed results in home sales last month according to DataQuick. A total of 31,131 homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in August, down 5.6 percent from July's 32,988 and down 9.6 percent from a near-record 34,437 of August last year.

Here is were things get odd. The inland empire experienced its strongest August ever but the flip side is the Orange County real estate experienced the lowest sale activity for the month of August in 8 years.

Orange County real estate sales activity was 3,745 vs. 5,511 from the same month last year which is a 32% drop. During the same period the median priced home in orange county climb 25% to $543,000.

San Bernardino County & Riverside County real estate sales totaled 9,898 in August which is up 5.4% over the same month last year. Median home prices also climbed nearly 30% in the last 12 months reaching $334,000 from $261,000.

Overall, southern California real estate prices were up 20.4% from August last year to $407,000 but the month over month increase was the lowest this year with only 1.2%.

What appears to be happening is the move-up home buyers which represented 6 of 10 home sales in the last few years are slowing down while first time home buyers are still buying in the more affordable areas. You are also seeing the inventory of homes started to increase.

Mortgage rates are still low and the bond market is still feeling pressure.

Thanks for Reading!
Jessie J. Beaudoin

Housing Bubble... In the News Again.

There is a very interesting article coming out in Fortune magazine that many of you will want to read. The title is: "Is the Housing Boom Over?"

The article makes an argument for way there may be a housing bubble coming around the corner. Here are some of the highlights that reference the California real estate market:

• Overvalued Markets. To calculate whether a market is overvalued or undervalued, Ingo Winzer of The Local Market Monitor compares home prices to incomes.
  - Los Angeles / Long Beach Real Estate = 27% Overvalued
  - Orange County Real Estate = 36% Overvalued
  - Sacramento Real Estate = 35% Overvalued
  - San Diego Real Estate = 40% Overvalued
  - Modesto = 43% Overvalued
  
• "The most alarming development, though, is the change in psychology. "The market isn't acting rationally," says Christopher Thornberg, an economist at UCLA. "It's now an emotion-driven market where people are buying on the expectation of future appreciation." Increasingly Americans view houses not primarily as places to live but as foolproof, can't-lose investments. The passionate faith that money poured into real estate will magically multiply is creating a self-fulfilling speculative frenzy that's bound to end badly. "
  
• "Another sign of fever: the unprecedented volume of deals. Home sales keep shattering records at a rate that's totally out of proportion with demographics, incomes, and every other metric. Last year Americans bought 7.2 million new and existing homes, almost 10% more than in 2002, and sales are running at a rate of 7.9 million this year. That pace of 660,000 homes turning over a month is probably unsustainable."
  
• "In the early '90s slump, for example, prices in Los Angeles county dropped 21%. And this time around there's a real danger that a downturn in prices, or even a stall, could slam the economy, especially all-important consumer spending. Americans have used their homes like ATMs, taking out $662 billion in home-equity loans and refinancings since 2001—a cash infusion that helped support the economy at a time when the job market was tough and the stock market made investors feel ever poorer. And rising home prices conveyed a sense of well-being that encouraged more spending even by homeowners who didn't refinance. According to Mark Zandi of Economy.com, home-price gains and refinancing added seven-tenths of a percentage point to GDP growth in each of the past three years. "
  
• "The average nationwide rise of 47% in median home prices since 1995 (after adjusting for inflation) is like nothing America has ever seen. In the boom from 1982 to 1989, median prices jumped by 14%"
  
• "A recent survey by economics professors Robert Shiller and Karl Case found that 28% of homebuyers in Boston, Los Angeles, and San Francisco expect home prices to rise 20% a year for the next ten years. "
  
• "California, for example, 3.1% of buyers are reselling houses within six months, up from about 2% a year ago."
  
• "The California speculators who drove up prices in Las Vegas 45% from November to May have moved on...with rents that weren't high enough to cover taxes and interest, many investors bailed. Since May, the number of homes for sale in Las Vegas has soared from 4,000 to 14,000."
  
• "Prices are also way out of line when stacked against another important yardstick: personal income. From 1975 to 2000, home prices always stayed in the range of 2.7 to 2.9 times median annual income; in fact, 2.9 was once considered a huge number. It's where the ratio stood before housing prices sank in the early 1990s. But starting in 2000, this crucial figure entered uncharted territory. Today the ratio stands at 3.4, 17% higher than just five years ago. And get this: The ratio is now 6.4 in California and five in Massachusetts. Just to return to the once-lofty level of 2.9 would require roughly five years of flat prices—about the same kind of market correction that would be necessary to bring prices back in line with rents. "
  
• "California, the median home price is $464,000, vs. $382,000 a year ago. To qualify for a mortgage to purchase that nearly half-a-million-dollar property, a husband and wife would have to earn a combined $112,000 a year; 12 months ago the income threshold was $85,000. Today fewer than one in five California households can afford to buy the median-priced house. "
  
• "homebuyers are coping with higher rates by taking out adjustable-rate loans. Early last year, about 16% of all new mortgages were ARMs. By this summer that figure had jumped to 36%, and in California—with its glaring affordability problem—60% of new buyers are armed with ARMs. The catch is that in the future those ARMs convert to what are almost certain to be far higher rates after periods that range from six months to five or seven years."

If you are in the California real estate market... you should read this article as there is much more information to read than the snippets here.

Thanks for Reading.
Jessie J. Beaudoin

California Mortgage Rates Getting Lower

The 10 year bond continues is drop in yield. Over the last 3 months we have gone from 4.85% down to todays closing at about 4.14%. This downward pressure has lowered mortgage rates. If we see the yield drop below 4.00% you should see mortgage rates near or below the 5.0% mark. This would be near the lows from Oct. / Nov. last year when bond yields were approximately 3.87% and the 30 year fixed mortgages at about 4.875%.

Thanks for Reading.
Jessie J. Beaudoin

Fewer California Foreclosure Home but Increase in Late Mortgage Payments

More California homeowners were late with their mortgage payments in the second quarter than during the previous quarter, but fewer homes were actually in foreclosure according to the Mortgage Bankers Association.

Here are some of the mortgage facts:

• Statewide, 2.19 percent of all mortgages were at least 30 days overdue in the second quarter, up slightly from 2.13 percent in the first quarter, but down from 2.9 percent in the second quarter of last year.
  
• California mortgages in foreclosure fell both on a quarterly and annual basis, to 0.27 percent.
  
• The peak for homes in foreclosure proceedings was the second quarter of 2001, when 0.87 percent of loans were in danger of foreclosure.

Foreclosure proceedings usually begin several months after a homeowner stops paying the mortgage, if the borrower is unable to either resume paying or sell the property and pay off the loan. The entire foreclosure process lasts 3 months and 21 days if a consumer does not bring their payments current. At that point, the lender would take possession of the home and sell it as a "foreclosure".

California foreclosures are quite low because of the strong appreciation so if individuals get in trouble they have time to refinance or sell the home. As home prices stabilize you will eventually see an increase in foreclosures.

Thanks for Reading.

Jessie J. Beaudoin

Only 18% of California Residents Can Afford to Buy California Real Estate

The California Associations of Realtors released its home affordable index today and the data is depressing for those who do not currently own a home. Only 18% of California households are able to afford a median price home in California. This is unchanged from the previous month but is 9% lower than July 2003 affordability index of 27%

The minimum household income needed to purchase a median-priced home of $463,540 in California in July was $109,590, based on an average effective mortgage interest rate of 5.93 percent and assuming a 20 percent down payment.

This figure was up from $86,120 in July 2003, when the median price of a home was $381,940 and the prevailing interest rate was 5.39 percent but fell from June 2004's minimum household income of $111,690.

Comparatively, the median priced home in the U.S. for July is $191,300 and the income needed to purchase is only $45,230.

Here are some other notable facts:

At 42 percent, the High Desert region was the most affordable region in the state, followed by the Sacramento and Central Valley regions at 26 percent.

The San Diego region was the least affordable in the state at 10 percent, followed by the Orange County and Monterey regions at 11 percent. View stats from other California areas.

Also what is shocking about this figure is the assumption... "... minimum household income needed to purchase a median-priced home of $463,540 in California in July was $109,590, based on an average effective mortgage interest rate of 5.93 percent and assuming a 20 percent down payment"

Now from my 14 years as a California mortgage broker and thousands of closed purchase transactions, I can tell you that not many people have the $92,708 in savings for the down payment... unless they are selling a home currently. So the 18% figure is even less if you really look at it because how many of those families that make the $109,590, how many have that amount in savings?

Thanks for Reading!
Jessie J. Beaudoin

Existing Home Sales to Break New Record

The National Association of Realtors reported today that existing home sales should reach a record 6.5 million homes this year which is a 5.7% increase over last year's 6.1 million. Additionally, new home sales are expected to rise to a record 1.16 million homes.

Although mortgage rates are predicted to climb about 6% by the fourth quarter, the average mortgage rates for the year should be about 5.9%, which is the second lowest average since the mid 1960's.

These revised figures from last month are attributed to the recent decline in mortgage rates which creates a favorable market conditions. The number of home buyers is expected to exceed the number of sellers but increasing mortgage rates will help the situation.

Thanks for Reading.
Jessie J. Beaudoin

California Mortgages Rates under 6% for 5 Consecutive Weeks.

California mortgage rates are remain under 6%. Week economic data and the drop in consumer confidence in August has keep mortgage rates low.

According to Freddie Mac's weekly survey of the 30 year fixed rate mortgage, it is currently 5.77% with an average of .8% points. The average for the 15 year fixed rate is 5.15% with .7% points.

Today the reportedly strong job maket has caused the bond market to react sharply (as bond yields increase so do mortgage rates) causing mortgage rates to increase slightly. Also because of this report many feel the Greenspan may again increase the prime rate at the next Fed meeting on Sept. 21. If you have been thinking about a California mortgage refinance this may be the best time to lock in a mortgage rate.

Have a great labor day weekend!

Thanks for Reading.
Jessie J. Beaudoin

9.36% Annual Increase in National Real Estate Prices... Highest in 25 Years.

Today, the Office of Federal Housing Enterprise Oversight's House Price Index where releases and here is the bottom line:

• Average U.S. home prices increased 9.36% from the second quarter of 2003 to second quarter of 2004.
• Home appreciation for this last quarter was 2.21% which is on pace for an annualized rate of 8.83%.
• The four states with the greatest increases are: Nevada, Hawaii, California and Rhode Island.
• Smallest increase: Utah, Texas and Indiana.

Chief economist at OFHEO, Patrick Lawler states, "The appreciation over the past year is the largest four-quarter increase since 1979. Read the entire OFHEO House Price Index report.

Here are some California real estate facts from the report:

House price increase: 1 year: 18.39% - 5 year: 84.10% - Since 1980: 338.72%

Thanks for Reading,

Jessie J. Beaudoin