06 May 2010
Economic News Affecting the Housing Market

There was a lot of economic activity that kept investors watching every move.  As the Mortgage and Real Estate News reports:

With a Fed meeting, Treasury auctions, and major economic data on this week’s schedule, investors were watching closely for unfavorable news. In the end, there were no major surprises. Little changed in the Fed statement, auction demand was at average levels, and the economic data was generally close to expectations. The biggest influence on mortgage markets turned out to be turmoil in Greece, which caused investors to seek the relative safety of US bonds, and mortgage rates ended the week a little lower.

Beyond Greece’s economic trouble, investors have been watching to see whether other smaller European countries would slip into economic turmoil.  As a result, investors shifted funds to safer investments, including US Treasuries and mortgage-backed securities (MBS).

In a move that will have direct impact on the housing market, the Mortgage and Real Esta News reports:

Prior to Wednesday’s Fed meeting, it had been reported that support was growing among Fed officials to begin sales of mortgage-backed securities (MBS) from the Fed’s portfolio. The Fed statement made no reference to MBS sales, however. As expected, the Fed made no change in the fed funds rate. The statement described the economy in slightly more positive terms. Also, pending Home Sales, a leading indicator for the housing market, will come out on Tuesday.

While incremental, many of these moves in the economy can prove positive for the real estate market, both in Los Angeles and nationwide.

 

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13 Apr 2010
Pending Home Sales Gain, Possible Spring Surge

According to the National Association of Realtors:

Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit.  The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

The Pending Home Sales Index is based on a scale of 1 to 100.  One hundred is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.  The index breaks out differently from region to region. In the Northeast the index rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009. In the Midwest the index jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago.  Pending home sales in the South increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009. In the West the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.

These numbers and anecdotal evidence from various markets around the country, has led the National Association of Realtors to suggest that there is a distinct possibility of surge in home sales for the spring.  According to the NAR’s chief economist, Lawrence Yun:

“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit.”

All of this together looks like good news for the market as a whole and Los Angeles in particular.

 

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12 Mar 2010
State of California Housing Market

More First-Time Buyers in Real Estate Market

Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to C.A.R.’s 2009-2010 “State of the California Housing Market” report released today.

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.

Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009. Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.

 

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15 Feb 2010
Five Tips for Mortgage Rate Shopping Today

Here are five tips for those shopping for a mortgage today, especially if you need to refinance an existing loan:

1. Do the Paperwork Early

Once you’ve found the mortgage professional you’d like to work with, get started on the necessary paperwork. Rates move regularly,
and if paperwork has been started your file can be processed more quickly when rates hit a low. When you start the application process, your credit score will be pulled and you’ll need to submit support documentation including W-2 forms and pay stubs. You might be asked for updated documents nearer to closing.

2. Shape Up Your Credit

Check credit reports and fix problems as soon as possible.  Even seemingly small charges can haunt a borrower: A forgotten, unpaid parking ticket, for example, can noticeably affect a credit score, she said.

3. Decide the Rate Point You Want

If you have a 7% rate now, rates would have to hit 6% or lower for it to make financial sense to refinance.  Talk with your mortgage
professional about what’s best for your particular situation.

4. Don’t Waver on the Rate

Once you determine the rate you need, it’s wisest to stick to that decision. Consumers sometimes gamble that rates will go lower, and the plan can backfire if rates reverse course.

5. Remember, Rates are Still Good

Yes, rates could fall and create another record low as a result of a deepening of a recession, but it isn’t likely that many consumers would crave lower rates at the cost of economic shocks.

 

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