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Housing Starts Jump; Home Sellers Lament.

Housing Starts jumped last month as builders got back to business. It's a telling sign for the economy, but bad news for next season's sellers.

With more homes coming online, home prices may be slow to rise nationwide.

A "Housing Start" is a privately-owned home on which construction has started. In November, starts rose by nearly 9 percent while remaining within the same tight range we've seen since June.

More interesting that Housing Starts, though, is the accompanying data for Housing Permits. After a 5-month plateau, Housing Permits finally broke through, posting its largest number in 12 months.

This, too, bodes poorly for sellers.

Housing permits are precursors to housing starts so because the number of permits are higher today, we expect that the number of starts will be higher just a few months from now.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

More permits means more starts which, in turn, leads to a larger home inventory. And when home supplies grow faster than the home demand, prices fall.

Throughout the early part of 2010, low mortgage rates and federal tax credits should help hold demand high but if builders flood the market with new, quality product, sellers may find that they've lost some of their leverage.

For home buyers, the rise in starts is welcomed.

Fannie Mae Gets Tough(er) On Borrowers. Again.

Fannie Mae raised the bar for mortgage applicants this past weekend. Getting approved for a home loan just got harder.

In its official announcement, Fannie Mae says the updates minimize long-term lending risks. If that's the case, this won't be the last guideline change Fannie Mae makes -- especially with loans defaulting at an above-normal clip.

The immediate changes are major. The first pertains to credit scores.

Effective December 13, 2009, the bulk of Fannie Mae's loans require a 620 credit score minimum. There are very few exceptions.

A second relates to loans with private mortgage insurance.

Homeowners whose loan-to-value exceeds 80 percent now have a choice:

Pay higher mortgage insurance premiums month-after-month
Pay a one-time fee paid at closing to compensate for higher risk
Both options result in higher consumer loan costs.

A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.

In no case whatsoever may debt-to-income exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for "expanded level" mortgage approvals. These updates affect just a small part of the population.

So, home prices are rebounding, mortgage rates are low, and -- for 5 more months at least -- there's a federal tax credit for qualified buyers. You don't have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.

The best "deal" won't matter if you can't get qualified on your mortgage.

As Unemployment Rates Fall, Mortgage Rates Rise

This morning's jobs report is causing mortgage rates to rise, capping a week during which rates have already jumped 3/8 percent off all-time lows.

The government's November Non-Farm Payrolls report reinforced the notion that the recession is nearly over, if not over already.

Just 11,000 jobs were lost last month -- much fewer than analysts had expected -- as the Unemployment Rate fell to 10.0%.

If it seems strange to be talking economic recovery while Americans are still losing jobs -- 7.2 million since 2008 -- remember that data always needs context.

See, analysts view employment figures as a lagging indicator for the economy. This is because business owners tend to make hiring decisions based on how business has been -- not on how it will be at some point in the future.

The jobs report rarely reflects the "right now". As an example, job loss peaked in January 2009 -- 4 months after the height of the financial crisis.

We saw the same pattern during the Recession of 2001.

According to government data, during the last recession, job loss peaked in October 2001 but the recession ended the very next month. It wasn't until October 2002 that employment went net positive on a monthly basis.

And this is why investors are cheering November's jobs report. Better-than-expected numbers and a falling Unemployment Rate show that the economy is improving.

Unfortunately for rate shoppers, better-than-expected data is pushing mortgage rates higher. Rates are expected to open 0.250% higher versus yesterday's close.

Home Inventory Plummets, Pushing Prices Higher

The supply of newly-built homes fell to its lowest levels since 2006, offering additional proof of a housing market in recovery.

Home supply is defined as the amount of time it would take to sell the current inventory of homes at the current pace of sales.

In October, for the 8th consecutive month, home supplies fell. Since peaking in January 2009, it's now down by almost half.

Lower supply leads to higher prices. This is Economics 101.

Furthermore, supply is expected fall into 2010. According to the government, builders are breaking ground on new homes at a declining pace, even as sales ramp up.

Builders are cheering the October New Home Sales report, but its the everyday sellers of "existing homes" that have real reason to celebrate.

See, as builders clear out their respective inventories and turn profitable, there's less reason for them to offer the types of over-the-top purchase incentives that characterized the last 12 months of selling.

With fewer builder incentives, the playing field levels between large corporations and individual home sellers.

And while this is happening, buyers are eagerly taking advantage of low mortgage rates and federal tax credits for buying homes. It's pressuring home prices higher overall.

Since January 2009, the average sale price of a newly-built home is up 6 percent

Existing Home Sales Blow Past Expectations

Existing Home Sales Blow Past Expectations

Another month, another piece of evidence that the housing market is in recovery.

Existing Home Sales surged in October as the nation's homebuyers took advantage of low mortgage rates, low list prices, and, for some, a generous tax credit.

Home resales are 23 percent higher versus a year ago and home supply is down to 7 months nationwide.

Inventory hasn't been this low since February 2007.

The news shouldn't be surprising, however. The same real estate trade group that produces the Existing Home Sales report also publishes a monthly report meant to predict future home sales called the Pending Home Sales Index.

Pending Home Sales have been through the roof since mid-May.

So, with pending home sales showing no signs of slowing and 80% of pendings turning into actual, closed sales, we can expect existing home sales volume to rise in the coming months, too. Especially because Congress extended the home buyer tax credit to include (1) "Move-up" buyers and, (2) Buyers with higher household incomes.

It's terrific news for home sellers. The housing market turnaround means higher sale prices and fewer concessions to buyers long-term.

To buyers, on the other hand, the news isn't so good. The window to find a "deal" appears to be closing quickly.

October home sales rise 10.1 pct from September

WASHINGTON – Home sales surged for the second month in a row in October, climbing to the highest level in 2 1/2 years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 37 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.

"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."

The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

The recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.

Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.

"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.

"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."

___

AP Real Estate Writer Alex Veiga contributed to this report from Los Angeles.

Housing Starts Are Down And Why It's Terrific News For Sellers

A "Housing Start" is a home on which construction has started and, for the 4th straight month, national single-family housing starts held steady last month.

When the demand for homes grows faster than the number of homes for sale, prices increase.

As recent home sales data confirms, buyers currently outpace sellers and one consequence of this is an increase in multiple-offer situations this year.

It's no wonder home prices are up across so many neighborhoods.

October's Housing Starts report is yet another piece of housing data foreshadowing rising home prices into 2010.

Building Permits were also down in October, a potential demand-to-supply imbalance magnifier. Without permits, there's no future construction. This drains supply. Meanwhile, tax breaks and low rates tend to stimulate demand and, right now, we've got both.

Therefore, so long as demand remains semi-constant into the New Year, expect home prices to rise.

In many markets, they already are.

2010 Conforming Loan Limits

A conforming mortgage is one that, quite literally, conforms to the mortgage guidelines set forth by Fannie Mae or Freddie Mac.

Each year, the government sets the maximum allowable loan size for a conforming mortgage, based on "typical" housing costs nationwide.

Loans in excess of this amount are typically called "jumbo".

While home prices increased from 1980 to 2006, so did conforming loan limits. Since then, however, as home prices have dipped, the conforming loan limit has held.

Now, in 2010, for the 5th consecutive year, the government set $417,000 as the nation's conforming mortgage loan limit.

The 2010 conforming loan limits, as released by the government, are:

1-unit properties : $417,000
2-unit properties : $533,850
3-unit properties : $645,300
4-unit properties : $801,950
But conforming loan limits don't apply to all U.S. geographies equally. As a result of various economic stimuli since 2008, the government now considers certain regions around the country "high-cost" areas. In these areas, conforming loan limits can range to $729,750.

There are less than 200 such areas nationwide. The complete list is published on the Fannie Mae website.

Will There Be Any Foreclosure Deals Left?

For the eighth straight consecutive month, national foreclosure activity in the U.S. was dominated by a small set of states.

As reported by RealtyTrac.com, more than half of October's foreclosure-related activity came from just 4 states:

California
Florida
Illinois
Michigan
The remaining Top 10 states in terms of total foreclosure activity included Arizona, Georgia, Texas, Ohio, New Jersey, and Maryland.

Foreclosures are up 19 percent from last October, but a deeper look at the RealtyTrac report revealed two positive developments for the housing market.

Foreclosure activity is down 3 percent from last month
Foreclosures per Household decreased in 9 of the 10 most heavily concentrated states
Furthermore, Nevada's foreclosure pace is down 4% from last year. This is a big deal because Nevada has long led the nation in foreclosure-related activity. Until last month, Nevada's year-to-year foreclosure rate hadn't fallen in more than 4 years.

It's too soon to say that the foreclosure market is drying up, but bargains are getting harder to come by. First-time buyers and bona fide investors alike have been snapping up property at a furious pace.

According to an industry trade group, distressed homes account for nearly one-third of home resale activity.

That said, buying foreclosures isn't for everyone.

For one, properties are often sold as-is and may be defective. The cost of repairs may negate "the deal" or "the steal" -- depending on the cost of the home.

Secondly, closing on a foreclosed home can be a 3-month long process. This is because banks rarely process home sale paperwork as fast as a "person" would. A 3-month timeframe may not fit your schedule.

In the end, fundamentally, buying a foreclosed home is the same as buying a "regular" home -- there's a contract and a closing. Most of the steps in the middle, however, are different.

Read the complete foreclosure report and take a peek at the foreclosure heat maps on the RealtyTrac website. If you like what you see, talk to your real estate agent about what to do next.

There's still good deals in the foreclosure market, but based on October's data, they may not last through the winter

Why The Day Before Labor Day Weekend Is Tough On Home Affordability

Volume figures to be light on Wall Street today as traders get a head start on Labor Day weekend. It could make shopping for a mortgage a bona fide challenge.

Expect rate volatility this morning and afternoon and, therefore, by extension, expect wild swings in the Home Affordability Index.

As mortgage rates rise and fall, monthly mortgage payments do, too.

The relationship between "vacation days" and mortgage rate volatility stems from 2 facts -- (1) Conforming mortgage rates are based on the price of mortgage-backed bonds, and (2) mortgage-backed bonds trade just like stocks. You can't make a deal without matching a buyer and a seller at a specific price.

With so many traders on vacation today, therefore, there are fewer opportunities to match buyers and sellers. As a result, expect mortgage bond prices to rise and fall with more velocity than on a "normal" day -- especially because the August jobs report was just released.

So far this morning, mortgage rates have been jumpy and are higher versus Thursday's close.

That said, mortgage pricing is fluid, changing every minute of every day. Today, expect those changes to be exaggerated. If you have a chance to lock a favorable rate, consider taking it because, before long, the rate could be gone.

Congress Expands And Extends The First-Time Home Buyer Tax Credit

Congress Expands And Extends The First-Time Home Buyer Tax Credit

Congress both extended and expanded the First-Time Home Buyer Tax Credit program Thursday.

The White House says the President will sign it into law today.

The up-to-$8000 tax credit's expiration date has been pushed forward to spring, requiring homebuyers to be under contract by April 30, 2010, and to be closed by June 30, 2010.

The program's basic eligibility requirements remain the same:

Buyers can't purchase the home from a parent, spouse, or child
Buyers can't purchase the home from an entity in which they're a majority owner
Buyers can't acquire the home by gift or inheritance
All parties to the purchase must meet eligibility requirements
The new law includes some notable updates, however.

For one, the definition of "first-time home buyer" has been expanded to include most homeowners with at least 5 years in their current home. "Move-up" buyers like these are now eligible for IRS tax credits, but with a cap at $6,500.

This means that you don't have to be a true first-time home buyer to claim the "first-time home buyer tax credit".

Other eligibility changes include:

The subject property's sales price may not exceed $800,000
The subject property must be a primary residence
Income thresholds raised to $125,000 for single-filers and $225,500 for joint-filer
And remember, the First-Time Home Buyer program grants a tax credit as opposed to a deduction. This means that a tax filer would receive a cash payment of $2,000 from the U.S. Treasury if his "normal" tax liability totals $6,000 and he was eligible for all $8,000 available under the new law.

The complete list of qualifying criteria is posted on the IRS website. Be sure to review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.

It's 5 months away.

A Simple Explanation Of The Federal Reserve Statement (November 4, 2009 Edition)

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy "has continued to pick up" since the September FOMC meeting and that housing market activity has increased.

It's the third consecutive post-FOMC statement in which the Fed speaks optimistically about the U.S. economy -- a signal that the recession is likely over.

The economy isn't without threats, however, and the Fed identified several in its announcement, including:

Ongoing job losses for American workers
Reduced fixed investment by businesses
Ongoing challenges for the financial markets
The overall tone remained positive, however, as inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.

The Fed plans to wind down its mortgage market support over the next 5 months, reaffirming its March 2010 exit date. For now, Fed support helps hold mortgage rates down.

Mortgage market reaction to the Fed's press release is negative overall. Mortgage rates are rising.

The FOMC's next scheduled meeting is December 15-16, 2009.

How To Test A Home Smoke Alarm

According to the United States Fire Administration, there were an estimated 1.5 million domestic fires last year, resulting in more than 3,400 deaths.

Many of these deaths occurred in homes with no smoke detectors or no working smoke detectors.

When detectors fail, it's often because its batteries are dead or missing. Therefore, make a point to test your smoke detectors annually.

Here's how to do it:

Have somebody go to the farther point of the house from the detector
Push and hold the testing button for 5 seconds to activate the alarm
Confirm the alarm is audible by all parties
You should also buy smoke detector aerosol and spray it directly into the device. This will simulate a real fire. If the alarm doesn't sound, the smoke detector will fail when it's needed most. Replace the device immediately -- even if it beeps when you push the Test button.

Smoke detectors are inexpensive and essential. Make sure the devices in your home are working properly. Test them at least once per year.

What The Media Missed In September's New Home Sales Report

Some days, newspaper headlines are a terrible place to get your real estate news.

Today is one of those days.

After the September New Home Sales report showed sales volume down from August, the mainstream media jumped on the story:

New Home Sales fall a surprising 3.6%
Surprise Drop In New Home Sales
Stocks slide as New Home Sales fall
But the headlines miss the point, somewhat. Yes, home sales volume is important to housing, but it's not as important as home supply.

A deeper look at the New Home Sales data reveals an interesting comparison point:

New home sales volume fell 3.6%
The number of new homes available for sale fell 3.8%
In other words, sales outpaced supply -- a running theme this year and a positive signal for housing.

Since peaking in January 2009, the supply of newly-built homes has now dropped by 40 percent. The average sale price is up 15% over the same period.

This is why you can't get your real estate news from the headlines. You have to dig a little bit deeper to get the real story.

September's New Home Sales report was plenty strong. The housing market recovery continues.

Foreclosures Concentrate In Just 4 States

For the seventh consecutive month, foreclosure activity in the U.S. was dominated by a tiny subset of states.

As reported by RealtyTrac.com, more than half of September's foreclosure-related activity occurred in just 4 states:

California
Florida
Nevada
Michigan
These states represent just 22.05 percent of the total U.S. population.

Overall, foreclosures are up 29 percent from September 2008 and, while, the data seems negative, defaults are creating some interesting buying opportunities.

Foreclosed homes often sell at a discount as compared to non-foreclosed homes. Cheap prices, low mortgage rates and willing buyers have helped to spur home sales in many U.S. markets. In August, "distressed homes" accounted for one-third of all existing home sales.

That said, buying foreclosures isn't for everyone.

First off, foreclosed homes are often sold "as-is" and may be in perfect condition, or may be inhabitable. If the property falls into the latter category, it's important to get estimates for the work needed to make the home livable. Suddenly, the home may not seem like such a "steal".

And, secondly, buying a home in foreclosure can be a 3-month process or more. For some people, this is just too long.

Buying a home in foreclosure is fundamentally the same as buying a "regular" home -- there's a contract and a closing. But most of the steps in between are different.

Read the complete foreclosure report, plus take a peek at foreclosure heat maps on the RealtyTrac website. If you like what you see, talk to your real estate agent about what to do next

Powermat : The Wireless Battery Charger For Cell Phones

Tired of "wire clutter" where your mobile phones, MP3 players and gaming devices compete for outlet space?

The Powermat may be your solution.

The Powermat is a 12-inch long wireless battery charger that's conspicuously missing "plugs". Instead, it uses magnetic induction to safely recharge up to 3 devices at once.

Just place your phone(s) on the pad and they charge automatically.

The Powermat debuted at the 2009 Consumer Electronic Show and was reviewed in video. The reviewers had many positive comments on the Powermat, but highlighted some negatives aspects, too. Give a look and see what you think.

Powermat retails for $99 on Amazon.com and is usually shipped for free.

As Gas Prices Rise, Home Affordability Wanes

With crude oil at its highest levels since October 2008, retail gas is up 8 cents per gallon this week.

It's bad news for home buyers and mortgage rate shoppers. The same force that's driving oil higher is linked to rising mortgage rates.

We're talking about the weakening U.S. Dollar which is now at its worst levels versus the Euro in 15 months.

Crude oil is priced in U.S. dollars, by the barrel. When the dollar loses value, more of them are needed to buy the same barrel of oil. As a result, predictably, the price of crude oil goes up.

Now, there are other reasons why crude oil is rising, but the fading U.S. dollar is one of the major ones and it's why we're addressing it.

The dollar has a similar impact on mortgage rates.

Mortgage rates are based on the price of mortgage bonds that -- like crude oil -- are also denominated in dollars. As the dollar loses value, so do mortgage bonds. This causes demand for bonds to drop and prices on bonds to fall.

Because bond prices and bond rates move in opposite directions, mortgage rates rise and this is precisely what's happening on Wall Street today.

Since touching a 5-month low in early-October, mortgage rates have tacked on as much as 1/2 percent, depending on the product. Moreover, with the dollar showing no signs of a rebound, the upward pressure on rates should continue.

If you're trying to time the market bottom, you may have already missed it. Consider locking your mortgage rate before rates increase even more.

And your everyday signal that rates are rising? Just check your price at the pump. If gas prices are up, it's likely that mortgage rates are, too.

PREVIEWING THE GOOD FAITH ESTIMATE

The new Good Faith Estimate makes its debut January 1, 2010.
Expanded from 1page to 3, the legislators responsible for the new Good Faith Estimate want it to be simpler for homeowners and home buyers to understand than the former version.
By most accounts, Congress will meet this goal.
The new Good Faith Estimate includes plain-English explanations of every fee, charge, and interest payment involved in a purchase or refinance. It also includes a section called "The Shopping Cart" in which applicants can compare lenders.
The new Good Faith Estimate is concise, too. Using a series of "Yes/No" checkboxes on Page 1, mortgage lenders specifically note:
The interest rate on the mortgage
Whether the interest rate can change over time
Whether the loan carries a prepayment penalty
The length of the rate lock
Currently, this information is spread across 3 separate forms.
Furthermore, the new Good Faith Estimate simplifies rate-and-fee comparisons, showing applicants how a lower rate can be available for a higher set of fees, and vice versa.
For all of its clarity, though, the new Good Faith Estimate still fails to address the issue of "suitability". As in, is this the right loan for the right borrower? That's something only a loan officer can do.
For suitable advice, talk with a loan officer who both listens to your needs and helps you plan for them. Great terms on an unsuitable loan are often worse than "good" terms on the right one

Inventory update in foreclosures, regular sales and short sales..

Here's a little status update on our Listings:

9151 Regal ave, Anaheim - accepting backup offers

4832 5th street, Santa ana- 199k accepting back up offers

5013 Kent ave, Santa ana- regulars sale , in escrow in 7 days $40,000 over asking!!

1106 Flintridge Santa ana- regular sale in escrow in 5 days $45k over asking.. Pool home

13022 Edwards , la mirada - Foreclosure that won't last the week..offers have been received, so there's no time to waste if you're interested in this one

4717 flight ave, santa ana- short sale approved, in escrow and axmceepting back ups . A steal at 270k!

15920 miller ave, Fontana - foreclosure - attention! Great opportunity ! Feel out of escrow ***Clean 1900 sq ft home $ 214k, was 232k
another one that will not last...

If u'd like more info on any of these, or any of our other listings, just contact me directly! 714-745-0896

The Fed Thinks The Economy Is Improving And What It Means For Home Affordability

Mortgage rates are higher after the Federal Reserve released the internal notes of its September 22-23, 2009 meeting.

Known as the "Fed Minutes", the report details the conversation and cross-currents that led to the Federal Reserve's decision to vote "unchanged" on the Fed Funds Rate after its last meeting.

The Fed Minutes are the lengthy companion to the more famous, succinct post-meeting press release.

As a comparison:

Press Release: 383 words
Minutes: 6934 words
The extra level of details is a big deal because Wall Street is perpetually in search of clues about what the Federal Reserve is going to do next.

In the past week, multiple Federal Reserve members hinted that the Fed Funds Rate may rise as early as April 2010. Fed Chairman Ben Bernanke even alluded to it, too.

The minutes revealed that the economy may improve even faster than was previously expected, too.

These acknowledgements are part of the reason why mortgage rates are up. Because the Fed Funds Rate rises to accommodate a growing economy, the prospect of economic recovery is drawing money into the stock market and away from mortgage-backed bonds.

Less demand for bonds means lower prices which, in turn, leads to higher rates.

The Extension Cord Idea You've Been Waiting For

The traditional, 6-socket surge protector is a ubiquitous product in American homes.

It also happens to be rife with design flaws, the most glaring of which is the socket layout.

Traditional surge protectors are built for skinny-plugged devices only. Few of today's electronics are "skinny plug".

The Socket Sense Expandable Surge Protector corrects the flaw.

The Socket Sense matches form and function. It features 6 angled, expandable sockets that make room for even the biggest and boxiest plugs. Its casing stretches from 13 to 18 inches, as needed, and has a slim, fit-anywhere design.

By providing for 6 input devices, the Socket Surge does the job of two traditional surge protectors. You can buy Socket Surge at most hardware stores and on Amazon.com, too.

The device retails for about $25.

The Case-Shiller Shows Home Prices Are Still On Their Way Up

For the second month in a row, 18 of the 20 Case-Shiller real estate markets posted higher home values. It's the 6th consecutive strong showing for the benchmark private-sector housing index.

Combined with falling home supplies and rising sales figures, this month's Case-Shiller Index suggests that housing may have bottomed sometime earlier this year.

It's cause for optimism.

Even Case-Shiller respresentatives seem excited. In its press release, the publishers singled out the index's winning streak, commenting on the recent "stabilization in national real estate values".

But, in that statement, we see the Case-Shiller Index's biggest flaw. The index ipurports itself to be a national real estate metric but, in reality, there is no such thing as a national real estate market.

All real estate is local.

The Case-Shiller Index reports home values for 20 U.S. cities. Each of those cities, however, is comprised of smaller neighborhoods, each with its own character, desirability, and price points. Case-Shiller attempts to lump it all together -- an impossibility.

As an example, New York City posted a nearly 1 percent increase in July but that figure is just a city summary. The actual market in three distinct neighborhoods -- Upper East Side, Chelsea, and Flatbush -- vary tremendously. Not to mention Long Island, too.

Flaws aside, though, Case-Shiller is still important. It helps to identify broader trends in housing and housing may hold the key to our economic future.

With July's Case-Shiller Index, we see that the housing market's recovery is being sustained

Use A Retractable Hose Reel To Simplify Yard Work

Sometimes, it's not the yard work that's so tough. It's fighting the garden hose.

Tangles, kinks and hassle can turn watering the yard into a chore unto itself.

Especially if you have store your hose in the garage. Coiling water-logged, dirty tubing can be a real pain.

Enter the 100-foot retractable hose from Frontgate. Wall-mounted and commercial-grade, it's a durable garden hose that simplifies yard work.

The half-inch diameter tubing extends from the casing which is on a 180-degree swivel. Reaching all the corners of your lawn is a breeze. And the hose retracts with little effort and no snags.

Plus, the plastic casing can protect your hose from the summer sun.

The Retractable 100-ft Hose Reel is available from Frontgate for $99. It comes with the 100-foot hose included.

Simple Real Estate Definitions : Escrow Account

An escrow account is a designated savings account into which funds get deposited for a specific purpose.

With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.

Escrow accounts are managed and disbursed by lenders.

When a homeowner "escrows" his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home's annual real estate tax bill plus 1/12 of the annual homeowners insurance bill.

By sending a pro rata portion of the tax and insurance bill each month, the homeowner's escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.

Using 401(k) Funds For A Downpayment? First, Consider The Tax Implications.

As downpayment requirements increase, anecdotally, home buyers are tapping 401(k) plans for extra cash.

Classified as a "hardship withdrawal", loans against your retirement funds can be cheap and simple.

There's no credit check or approval process
There's only a small set of paperwork
Money can be available in as little as a day
But just because you can get access to your retirement money doesn't mean that you should. 401(k) withdrawals should only be made after careful consideration.

There are some serious negatives, specifically with respect to taxation.

If you open a 401(k) loan and don't repay according to the loan terms, the withdrawal ends up getting taxed as income, plus a 10 percent penalty for people under 59 1/2.

That's a stiff penalty.

But, even if you do repay the loan on time, you're still getting leaving yourself subject to double-taxation.

Taxation #1 occurs when the loan is repaid using post-tax dollars
Taxation #2 occurs upon final withdrawal at retirement
Furthermore, when you borrow against a 401(k), you assume the opportunity costs of having that money out of the market. Since March, the Dow Jones Industrial Average is up 44 percent. If your 401(k) was empty, you'd have missed those gains forever.

Taking a loan against a 401(k) isn't necessarily a bad idea, there just may be better choices. If you're planning to withdraw from your 401(k) to make a downpayment on a home, talk with a qualified financial professional first.

You can never have too much good information.

Foreclosures Continue To Concentrate Across Just 3 States

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month.

However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined.

California : 30.0 percent
Florida : 15.7 percent
Arizona : 5.4 percent
On a per-household basis, the states ranked 2, 3 and 4. Only Nevada's foreclosure rate was higher.

Now, we point out these statistics for two reasons.

The first is to remind you that foreclosures can be highly local. For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others.

And, second -- foreclosures can represent a terrific buying opportunity. Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too.

Furthermore, as banks get better at disposing of foreclosed homes, the process of buying one isn't as challenging as it was, say, 12 months ago.

As part of its research, RealtyTrac.com catalogues a lot of foreclosed homes and lists them online. However, you may find it better to start your search with a local real estate agent that knows the foreclosure market.

So long as buying foreclosures is a high-touch process -- and it is a high-touch process -- you may want to have a human face and agent to guide you through it.

The complete RealtyTrac report is available online.

Fannie Mae Passes New, Tougher Mortgage Guidelines

Getting approved for a mortgage is about to get harder.
For the second time in less than 3 months, Fannie Mae announced changes to its mortgage guidelines. 
In its official announcement, Fannie Mae details the updates, meant to reduce the mortgage firm's overall risk.
The first major change is with respect to credit scoring.  All Fannie Mae loans -- whether underwritten electronically or manually -- require a 620 credit score minimum.  There are very few exceptions.
A second change relates to loans with private mortgage insurance.  Homeowners whose loan-to-value exceeds 80 percent now have a choice:
Accept higher mortgage insurance premiums month-after-month
Accept a one-time fee paid at closing to compensate for higher risk
Both options pass higher costs to consumers.
Then, a third change relates to maximum debt-to-income ratio.  As announced in a separate document, Fannie Mae will no longer approve expense ratios exceeding 45 percent except with very strong assets and credit to back it up.  In no case can expense ratios exceed 50 percent.
There are other changes, too, including the elimination of seldom-used mortgage products and new risk-based pricing on "expanded level" approvals.
Fannie Mae implements its updates during the weekend of December 12. 
Therefore, if you're going to need (or want) a new mortgage later this year, consider moving up your timeframe to October or November.  Once the guidelines change, getting approved for a mortgage is going to be tougher.

You've Got 15 More Days To Use The First-Time Home Buyer Tax Credit

The government's First-Time Home Buyer Tax Credit program expires November 30, 2009 -- a scant 60 days from today.

Considering it can take up to 60 days to close on a home, first-time buyers have 2 weeks at most to find a home.

Buyers not under contract by October 15 have little chance of meeting the November 30 deadline and, therefore, little chance of claiming the tax credit.

This is especially true for purchases involving short sales and foreclosures.


Congress passed the First-Time Homebuyer Tax Credit program as part of the 2009 economic stimulus plan. IRS Form 5405 outlines the program criteria which include the following stipulations:

Buyer may not have owned a "main home" in the past 36 months
The home may not be purchased from a parent, spouse, or child
Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers
The credit is capped at $8,000 or 10% of the purchase price, whichever is less. And don't forget -- the First-Time Home Buyer Tax Credit is a true tax credit. It's not a deduction.

This means that a tax filer who claims the full $8,000 and whose "normal" tax liability is $5,000 would receive $3,000 cash from the US Treasury when their tax return is processed by the IRS.

If you can't close by November 30, 2009, though, you can't claim the credit.

The clock is ticking. If you're planning to use the First-Time Home Buyer Tax Credit, the time to act is now.

The Sellers' Deadly Sins : How To Keep Your Home From Selling At Maximum Dollar

It's a sensational headline -- "The Sellers' Deadly Sins" -- but the message is clear. Home sellers make mistakes that not only cost themselves thousands, but sometimes cost the sale, too.

NBC's The Today Show lays it out cleanly in this 5-minute video:

Visit msnbc.com for Breaking News, World News, and News about the Economy

How to respond to an "insulting offer"
How to handle the first purchase offer you receive
What do when you can't leave your home for its Open House
What room in the home should be kept the neatest
But, be aware. At the video's end, there's a piece of advice that may sound extremely self-serving coming from a real estate professional. Don't let it turn you off. The video's overall message is spot-on and the advice is real-world tested.

Selling a home is a process. Make sure to do it properly.

Should You Lock Your Mortgage Rate In Advance Of Tomorrow's Federal Reserve Announcement?

The Federal Open Market Committee starts a 2-day meeting today in Washington.

The scheduled get-together ends at 2:15 PM ET Wednesday after which the FOMC will issue a press release to the markets.

Consider locking your mortgage in advance of the press release.

The FOMC meets 8 times annually and its adjournments are among the biggest market-movers of the year.

The Fed's post-meeting press release is a direct look into the mind of the Federal Reserve and Wall Street is looking for clues anywhere it can find them.

After its August 2009 meeting, the FOMC said in its press release:

Financial markets have improved, relative
Household spending remains constrained
Although weak, the economy is "leveling off"
Since then, however, credit risks have lessened on Wall Street, consumer spending has shown signs of life and Fed Chairman Ben Bernanke said the recession is "very likely over".

This is why tomorrow's FOMC press release is so important. Markets don't expect the Fed to raise or lower the Fed Funds Rate, but they do expect the Fed to shed light on its next series of moves.

If the Fed alludes to inflation and stronger growth ahead, mortgage rates should rise. By contrast, reference to slower growth ahead should help keep rates steady.

The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent -- the lowest it's been in history. However, it's what the Fed says Wednesday that will matter more than what the its does.

If you're floating a mortgage rate or wondering if the time is right to lock, the safe approach is to lock prior to 2:15 PM ET Wednesday.

Existing Home Supply Falls by Nearly a Year

As reported by the National Association of REALTORS®, the number of Existing Home Sales dipped last month, ending the metric's 5-month winning streak.

Newspaper headlines today are overwhelmingly negative on housing. You'd almost believe this year's housing recovery had ended.

That's hardly the case.

See, the other side of the Existing Home Sales story is that -- while the number of units sold did fall by 3 percent -- the existing supply fell by nearly an entire month.

To home buyers and home sellers, this is huge. Home prices are based on supply and demand and with supplies plummeting, it means that home prices are poised to rise.

Indeed, dwindling inventory isn't "news" to today's buyers. Multiple offer situations have been common since the start of the summer and, should supplies fall further, they may soon be the home-buying rule rather than the exception.

Since peaking in November 2008, existing home supplies are down 23%.

Home Prices Rise Again In July

As reported by the government, home prices are rising nationwide, up 0.3 percent in July.

Furthermore, versus November 2008, the Home Price Index has clawed back to unchanged.

The housing market appears to be holding its own.

However, we have to be careful about putting our full faith in the Federal Housing Finance Agency's data. It's somewhat flawed.

The Home Price Index is a national statistic and all real estate is local
The Home Price Index's methodology specifically excludes key housing demographics
As an obvious example, HPI only accounts for homes with Fannie Mae- or Freddie Mac-backed mortgage. Lately, the percentage of homes meeting that description is shrinking.

As FHA financing rises in popularity, Fannie and Freddie back far fewer loans than in the past. Furthermore, the HPI sample set also excludes newly-built homes and multi-unit properties.

Because of these exclusions, some analysts call the HPI incomplete. The same could be said of all home price metrics, however -- including the venerable Case-Shiller Index.

Therefore, what should be of interest to today's buyers and sellers is that all of "popular" home valuation models seem to be telling the same story -- home prices have stopped falling and look like they're beginning to rebound.

For a region-by-region breakdown of the Home Price Index, visit the FHFA website.

Regular Sales are Back!

Over the last 2 weeks, I have seen a surge in Regular or Equity Sellers. For most, this term is foreign only because Buyers are hearing about Short Sales, REOs, Foreclosures or Corporate Owned sales. The regular sale is the person that actually has equity in their home. There is no bank involved that needs to give an approval of the sale of a home. Waiting 3 months for a response on your offer is not part of the process with the regular sale. People are getting the confidence in the market and feel that its a good time to sell their home.

In the last 2 weeks, I have taken 2 regular sale listings and going on my third this afternoon. Being that prices have stablized in the OC market, for the most part, sellers feel that its time to cash out and take what they can get. As a buyer, these are the best homes to put offers. They will usually be in the best condition and as mentioned previously, dont have to wait for that lender approval. These homes usually go quickly, if priced correctly. For example, I had an Open House 2 weeks back, and had 28 people visit on Saturday and 37 people on Sunday. In turn, the home sold in 5 days of being on the market.

The resurgence of the Regular sale is definitely a good thing. Its a sign of hope for the Real Estate market that has taken a big hit over the last 2 and half years. Moreover, it gives buyers today a better quality home to chose from. A home that has been lived in and taken care of. This being in contrast to the Foreclosure and short sale property that have been neglected and in many cases, abused. Hopefully, with more Regular sales coming on the market and more confidence back in the market, we can expect a bit of more normal market for 2010. Only time will tell.

Summit Event in the Desert

For those that don't know, I have a business coach that fills me in every week with the latest trends and issues dealing with Real Estate. Well, this last week, Tom Ferry ( my coach) had his yearly event that spoke to about 2000 top agents from all over the nation. He spoke about the current Buyers Market that we are experiencing, the Foreclosures situation and most importantly, how to better communication with the public and get more involved with the conversation that is occurring between Realtors, buyers, seller, investors, etc... One of the major topics was about social media and house to get connect with this conversation that most of us don't know even exist. So, my pledge after the event is to become even more informed and connected by subscribing to twitter.com and facebook.com (twitter.com/alexanderpiana and facebook search alexander piana).

Ive always said communicaiton is the key in all things Real Estate, so Im excited to get this started.

H.E.R.A is coming...

H.E.R.A ( Housing and Economic Recovery Act) is unfortunately another obstacle that any buyer, real estate agent and most importantly, lender has to deal with. Basically, on any loan done in California, expect more costs, paperwork and delays with H.E.R.A. coming this July 30th.

In summary there are numerous fees in California that affect the APR or
Annual Percentage Rate, many of which are NOT lender related fees. Here are
some of the APR affecting fees: Points, Processing, Underwriting, Wire
Transfer, Tax and Insurance Reserves, Per Diem Interest, Escrow Fee, Escrow
Courier Fees, Escrow Loan-Tie-In Fees, any other Escrow related fees.

A few months ago we were hit with HVCC. For those that dont know what this is, basically it requires on all conventional loans, to have the appraisal ordered through a central headquarters. Lenders no longer have contact with the appraisers. This new guideline nearly cost me a deal this week, due to the fact that the appraiser decided to state on his appraisal report that the home NEEDED new paint and the woodflooring needed to be replaced. Last I checked, most REO/Foreclosure properties require one of the two.

If anyone one has their own stories on either HVCC or H.E.R.A , Id love to hear it.

The Recent Foreclosure Moratorium affect on Home Purchasing and Those asking for help...

If you have been already putting offers on homes and to try to pick up that next great deal, don't expect a whole more of opportunities to come your way this summer. With the latest 90 day Moratorium of Foreclosures, there will be an even tighter lock-down on the current inventories in California. Lesser amount of homes going to foreclosure will tighten up the already decreasing inventory, making that deal harder to come by.

In simple Supply/Demand terms, the demand for homes has increased steadily over the last 4 months and the Supply of homes as sharply decreased. This bottle-necking of Foreclosures isn't going to help in a much needed Inventory increase for buyers looking to get into the market.

On the other hand, is the governors 90 day Moratorium even going to work for those that need it? Historically , those that are in Notice of Default and are getting help from their bank for a loan modification, tend to default on the loan within the next year anyways. The offerings that the banks are giving aren't what the home owners are needing. Homeowners are looking for major reduction in payment, interest rate and/or principle reduction. Yet the banks, for the most part, aren't going jumping to do major changes to the current financing. Most of these loan mods are for a temporary period and is more a band aid for people to continue in making their payments.

Watch those rates...

As I expected, rates went up last week and currently changed the payment the of 3 of my current clients. Now,we have to look at lesser priced homes and/or go into other areas to view homes in our price range. Many times I have clients tell me that they want to buy because of prices being so low. What they also have to consider is the current rate they get their financing at. Here's an example, my client went from being able to buy at $280k last month, to now only qualifing for $250k. This is the only way she can keep the same payment.

I believe inflation was the cause of the recent increase in rates. Typically we see changes in the rates around the summer time for one reason or another. If you've got pre-qualified in the last 3 months and haven't spoken to your lender in a while, I highly encourage you to give them a call to confirm your payment once again. Don't be victim of payment shock with the new rates...

Spring is Here! What does this mean for Home Buyers?

This last weekend I was showing homes in the Anaheim ,Fullerton, Buena Park and Santa Ana areas. Almost every property that I showed had at least 5 offers already submitted!! Mind you, that most of the homes I show have ONLY have 3 -4 days on the market!! Is it me, or was there a switch that was turned on by people looking for Real Estate?? The competition on buying homes is cranking up!

Granted, I have been experiencing an increase in buyer activity since late last year but the are some major reasons why we are seeing a push recently in these last few weeks.

Some of the reasons are the following: 1.The Traditional Spring Time Real Estate movement ( people looking to buy during the spring and summer months due to the fact its easier to move when kids are out of school) 2. Tax Refunds being returned and Obamas First Time Buyer Tax Credit of $8000). 3. People moving there funds in 401Ks and stocks into a more promising Real Estate market 4. INTEREST RATES are still at an all time LOW and people want to take advantage before rate increase ( and they will, most likely to curb inflation) 5. Inventories of homes. (Although, we are experiencing less and less inventory every month, there are still several months of inventory on the market)

To give this a statically view, we just heard that February had produced some 44% increase in Home Sales in comparison to last year at this time. In addition, a 5% increase from Jan 2009. From what I have seen, heard and read, I have a good feeling that March Home Sales numbers are going to blow Febuary right out of the water!

Both Sides of the Housing Market...

My weekend was filled with 2 Open Houses in the Corona area. Within 4 hours or so my staff and I had a visit of over 20 families. For those that are not too familiar with the activity for an Open House, that is a substantial amount of people in a short period of time! After receiving 4 offers by Monday morning( 48 hours later), my conclusion is that the Real Estate market is alive and well. There ARE people buying their first home and people looking long term for investment/rental properties. Times couldn't be any better to buy Real Estate. I have been really seeing this movement for the last 6 months but more so recently. I'm sure the economic stimulus package and the governments tax credit of $8000 per couple did hurt matters any...

Unfortunately, the media today paints a much different picture of what is occurring with Foreclosure and Short Sale properties. Its commonly understood that Negative publicity always sells out the Positive. In the real estate example, the negative or the loss of a home by a family due to foreclosure, is something to understand and to learn from. Yet on the flip side, there is always a gain (or positive side) with another family that benefits, either with a new home for there family or a Rental property for their future. Its this positive that the media hasn't talked about at all. Being an agent and witnessing Real Estate move at the ground floor level, amidst daily transactions on selling and buying, I feel that the media could focus a bit more on the opportunities versus the losses within the housing market. I feel we all need a little bit of the bright side right now. Let me know what you think...

Buying a Home Today...

So I just finished showing properties in Corona, mainly newer homes in the $250-290K range. And I must say, that there are some great deals and steals for the First Time Buyer out there. I don't see a better time then now to become a First Time Home Buyer. I truely feel that we are experiencing something completely rare in the Real Estate World. I call it the Tri-fecta of Real Estate... low Property Values, amazing affordable Interest Rates ( in the 5!?) and a decent amount of home to view (although inventory actually has been decreasing in certain cities and counties). To top it all off, we now have a NEW 4th benefit of an extra $8,000 tax credit per couple, courtesy of Mr. Obama!

I look at it this way, even if your home devalues 5% through this year, SO WHAT! Its not like you're going to sell your home next year! The average new home buyer stays in his/her home around 6 years. History has taught us that the real estate cycle changes every 7-10 years. If you take advantage of the low interest rates (probably going up from here..), then factor in the new tax credit( cha-ching), then the mtg. interest and property tax write offs(looks like someones getting $ back from Unlce Sam...), it doesn't make sense to RENT! We all need shelter and a roof over our heads, so why not be the owner of that shelter and reap the rewards. Why let some landlord thats been increasing your rent little by little every year or so, get all the benefits... Real Estate ownership didn't become the most stable long-term investment by accident...there's a reason why most millionaires and billionaires have a heavy surplus of Real Estate in their portfolios.