Diamonds & Champagne REALTOR® Action Fund Fundraising Event
SRAR members are invited to attend the upcoming Diamonds and Champagne fundraising event for REALTOR® Action Fund (RAF), presented by Old Republic Home Protection.
The evening will include delicious hors d’oeuvres, refreshing beverages, champagne, and a chance to win one of 3 REAL Diamond Bracelets.
Date: Saturday, May 22, 2010
Time: 6:00 – 8:00 p.m., Drawing at 7:45
Hosted by: 2010 SRAR President, Patti Petralia
Location: 18347 Hampton Ct., Porter Ranch, CA 91326
The cost is just $50 per ticket in advance/$75 at the door! Purchase tickets online at www.srar.com/diamonds
For tickets, contact Michelle Gerhard – michelleg@srar.com or by phone at 818-947-2298
Click here for flyer with more information.

Purchases of new homes surged in March to an annualized rate of 411,000, an increase of 27% over February, according to the U.S. Census Bureau.  That’s the fastest growth of new home sales since April 1963. While selling additional new home is an indication that consumers are feeling more bullish about the housing market, today’s news should be taken in context.  This news isn’t particularly shocking for those who follow the housing market, considering that pending home sales increased significantly in February. New home sales rising also complements yesterday’s news that the sales of existing homes increased in March.  The home buyer credit, set to expire in April, was described as mostly responsible for that news. There’s little doubt that the credit also drove new home sales to increase so much last month.  It is a little shocking that home buyers aren’t more interested in looking for deals on foreclosures or short sales, however.  Foreclosures hit a new high in March, so there are plenty of steals be had for bargain hunters.  Yet, many Americans chose to buy new homes instead.

March’s 411,000 annualized home sales were quite good compared to the prior month’s 324,000. But after a four-month decline, February had the fewest new home sales on record — since at least January 1963. So even relatively few sales in March would have had trouble falling below February’s level.  New home sales peaked at a rate of 1.39 million in mid-2005. Last month’s numbers would have to double to get back to the pre-housing bubble levels in the 800,000′s.  You only have to look back to July 2009 to see a higher number than in March.  Last month’s increased sales also didn’t do much to help lower the inventory of new homes for sale. It dropped a measly 2,000 homes from 229,000 to 227,000.  That means builders are keeping up with the demand for new houses.  While additional new construction is good news for jobs, it might not help the housing market’s price stability. As mentioned, foreclosures are still extremely high. Consequently, there is a substantial inventory of existing homes, which has increased by 9% over the past two months.  The market would be better served to sell off more of the existing home inventory before ramping up the building of new houses.  Then, construction jobs could still be created through renovation projects.  Price stability will be hard to attain as long as overall inventory is increasing.  This recent surge in new home sales is likely fleeting.  Its driving force — the home buyer credit — will be gone at the end of April.  So we can expect to see strong sales of new homes again this month, but fewer come summer. If construction doesn’t slow down accordingly, then the inventory of new homes will begin growing.

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits.  To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.  Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations.

Foreclosed homes taken back by lenders and distressed short sales accounted for nearly half of all residential home sales in California in 2009, according to a market report released this week by the California Association of Realtors (C.A.R.). In 2008, such sales made up 38 percent of annual transactions.

As one of the hardest-hit states by the housing downturn, the Golden State is littered with bank-owned properties and homes facing foreclosure, but the lower prices and increasing buyer appetite for these deals are helping to reduce some of California’s distressed inventory.

The median price of distressed properties declined nearly one quarter to $250,000 in 2009, compared with $330,000 in 2008, C.A.R. reported. Meanwhile, the median price of non-distressed properties decreased only 10.4 percent to $485,000 compared with $541,000 in 2008.

Although one-third of sellers sold their homes for a loss last year – the highest level on record since C.A.R. started tracking net cash losses in 1989 – the lower home prices lured investors. According to the state Realtors association, more than 70 percent of properties purchased by investors were either short sales or REO/foreclosures. The typical investment property had a median price of $232,750.

Lower home prices and a large supply of distressed properties, coupled with federal tax breaks, also encouraged first-time buyers to take the plunge into

homeownership. The percent of first-time buyers increased dramatically to 47 percent in 2009, up from 35.9 percent in 2008, according to the report.

“It is clear that the federal tax credit for homebuyers worked well in 2009 and is continuing to drive home sales,” said C.A.R. President Steve Goddard. “The homebuyers’ tax credit is arguably the most successful strategy employed by the government’s efforts to stimulate the economy.”

According to a survey conducted by C.A.R. on the effectiveness of the federal tax credit, nearly 40 percent of homebuyers in the state said they would not have purchased a home if the tax credit was not offered.

C.A.R. also noted that the large number of distressed properties led to more than half of all first-time buyers purchasing an REO/foreclosure or short sale property.

According to C.A.R.’s analysis, California’s median home price hit bottom in February 2009 at $245,170. Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009. The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009, the association said.

Homes priced $500,000 or less dominated the sales mix throughout 2008 and 2009, but C.A.R. says sales of high-end homes started picking up in late 2009, with the number of closings for homes priced $500,000 or higher rising 3 percent, and sales of homes priced $1 million or more experiencing their first year-to-year increase since July 2007.

A separate study by a local newspaper shows that a growing number of Californians are turning to the courts to fight the foreclosure process and prevent their homes from becoming REOs. According to numbers complied by the San Jose Mercury News, the number of foreclosure lawsuits filed in federal court in California has ballooned from just 29 cases statewide in 2005 to nearly 1,400 in 2009.

More active trial and permanent modifications under the Home Affordable Modification Program (HAMP) took place in California than any other state, says the US Treasury Department.  Regionally, however, the switches to permanent modifications is uneven as Florida and Illinois rounded up the rest of the top three spots.  The Treasury launched HAMP in March 2009 to provide capped incentives to servicers for the modification of loans on the verge of foreclosure. Nationwide, more than 116,000 permanent modifications took place through January, up from 66, 0000 mods in December.  There are more than 830,000 active trial modifications currently under the program.  California led all states with more than 191,000 permanent and active trial modifications through January, according to the Treasury. Florida came in second with 116,000. Illinois was third with more than 49,000.  In 2009, California ranked fourth in the highest foreclosure rate, according to RealtyTrac.  There, one in every 21 homes received a foreclosure filing for the year. Filings include default notices, scheduled foreclosure auctions and bank repossessions. Florida had the third highest foreclosure rate in 2009, where one in every 17 homes received a notice. Illinois had the ninth highest foreclosure rate with one in every 40 homes receiving a notice, according to RealtyTrac.

Based on Treasury estimates, 5.6m homeowners are currently 60 or more days behind on their mortgage. Of those, 1.7m are eligible for HAMP, but that number is expected to increase through 2012 – when HAMP is supposed to end.  According to the monthly Treasury report card, however, participating servicers hold more than 3.4m HAMP-eligible mortgages. The Treasury uses this number to gauge the percentage of loans servicers have either put into active trial modifications or provided permanent relief for.

All HAMP modifications include an interest rate reduction to get a borrower’s debt-to-income ratio down to 31% after the modification. For those that needed further modification, 41.7% received a term extension on their loan, and 27.4% received principal forbearance. The average median monthly payment for borrowers dropped to $835 from $1,431 before entering the program.

The Fed announced today that it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time.  “Information….  suggests that economic activity continues to strengthen and that deterioration in the labor market is abating,” the Fed said in a prepared statement.  “Household spending is expanding at a moderate rate, but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.  Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls.  While bank lending continues to contract, financial market conditions remain supportive of economic growth.  Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability,” the Fed said.

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.