In September, California home sales increased 2% compared with the same period a year ago. 

Vice President and Chief Economist Leslie-Appleton-Young reported “A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008.”  Young continued “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”

Fannie Mae and Freddie Mac are offering financing incentives for buyers of foreclosed homes owned by Fannie and Freddie.  Home buyers have until October 30th to apply for Freddie Mac’s SmartBuy program to help cover closing costs.  To qualify for the program, the home must be a principal residence and must be selected from Freddie Mac’s HomeSteps Website.  The URL is www.homesteps.com/homeshoppers.htm for its foreclosed properties.  Loans must close by year’s end.  The HomeSteps properties also include two0year warranties on major appliances and electrical, plumbing, and air-conditioning and heating systems.  Fannie Mae’s HomePath program ( www.homepath.com ) is an ongoing program and offers more incentives than Freddie Mac’s.  Through participating lenders, Fannie will offer mortgages to buyers who make a down payment of 3 percent.  The buyers do not have to secure private mortgage insurance, a common practice with nearly all lenders.  Home buyers can negotiate for Fannie Mae to offer closing-cost assistance.  Unlike Freddie Mac’s program, Fannie’s assistance level is not capped.  Under the HomePath program, the average participating homeowner has received payment equivalent to 3.75 percent of the loans value.

National average home prices rose 6% from August to September, driven by an increase in real estate owned (REO) sales prices and transaction counts, according to a monthly real estate market survey conducted by Campbell Surveys.

Increased demand REO property increased in September. The average price of distressed REO property was $124,500 in September, up from $106,700 in August. Combined with move-in ready REO, distressed properties accounted for 31% of purchase transactions during the month.

The increase comes after a 1% decline experienced between July and August and was fueled by a 16% increase in home purchase transactions month-over-month, according to the survey.

“Our survey statistics are indicating a mini-boom in the housing market,” said Thomas Popik, the survey’s research director. “There’s a confluence of positive factors: historically low interest rates, high demand from first-time homebuyers before the expiration of the tax credit at the end of November, increased affordability, lower inventories of foreclosed properties, and a perception among homebuyers and real estate agents that the market has turned.”

Prices of non-distressed properties remained nearly level, up slightly to $268,200 in September from $267,900 in August. Non-distressed sales accounted for 55% of home purchases. Short sales took a 14% share of the transaction pool.

First-time homebuyers accounted for 42% of home purchase transactions in September, and real estate agents surveyed reported that first time homebuyer traffic was up, while existing homeowner and investor traffic was down. The majority of first-time homebuyers in September purchased move-in ready REO, according to the survey.

The results are based on a national survey of more than 1,500 real estate agents and changes in price and transaction rates are recorded by individual agent’s reported activity.

Effective October 11th, 2009, the Buyer’s Choice Act prohibits an REO lender selling residential property up to four units from directly or indirectly requiring the buyer to purchase escrow services or title insurance from any particular company.  A buyer, however, who has received written notice of title recommendations.  An REO lender that violates this law can be held liable for three times the charges the buyer incurred, whereas a violation by the seller’s agent may be subject to license disciplinary action.  This law expires on January 1, 2015.  Assembly Bill 957.

Existing single-family homes and condo sales increased during August a combined 8 percent while the stabilization of resale prices continued, the Southland Regional Association of Realtors reported.  670 single-family homes changed owners last month, up four sales or 1% from a year ago.  It was the 14th consecutive month that the monthly tally was higher than the prior year.  After lagging for quite a few months, condo sales took off during August with the 230 closed condo escrows as the second highest total for the year.  The condominium tally was up 13.3 percent from a year ago, which is great for this time of the year when sales activity typically begins to slow.  “The emphasis in this recovery so far has been on single-family homes, so it was a nice surprise to see buyers finally recognizing the value in condominiums,” said Ana Maria Colon, president of the Southland Regional Association of Realtors.  As an example of what’s currently happening in the market, Colon focused on a townhouse located in Sylmar that was bank owned and recently listed for sale at $119,500.  “Multiple offers flooded in, all above list price, with some as high as $175,000,” she said.  “The bank accepted an all-cash offer, turning down higher offers that would have required financing.  All-cash offers obviously have a huge advantage, said Jim Link, the Association’s Chief Executive Officer, because obtaining financing remains difficult, especially if a buyer has a limited down payment.  “It will take a 20% or higher down payment to get lenders even a little excited,” Link said.  “Otherwise, lenders will make buyers jump numerous hurdles.”  Link and Colon agreed that current demand for housing could absorb many more homes, but a lack of inventory is a brake on sales.  The active inventory at the end of August stood at 3,045 listings, down 52.8 percent from a year ago.  Link and Colon also agreed that with the state’s moratorium drawing to a close at the end of September the market most likely will be able to absorb any added inventory.

According to C.A.R.’s “2010 California Housing Market Forecast,” California median home price will rise 3.3% to $280,000 in 2010 compared to a projected median of $271,000 this year.  Sales for 2010 are projected to go down 2.3 percent to 527,500 units, compared with the projected 540,000 units in 2009.  “California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak.  “This follows two years of double digit sales declines in 2006 and 2007.  Looking ahead, we expect sales to moderate to a more sustainable pace.”  He continued “After experiencing its sharpest decline in history, we expect the median price to rise modestly next year.  2010 will mark the beginning of the “new normal’ for California’s housing market.  This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end market, coupled with moderate home-price appreciation.”

C.A.R. Vice President Leslie Appleton-Young added “With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season.  We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer.  For the year as a whole, home prices are forecast to reach $280,000.  The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government.”