The California Association of Realtors report that the Emergency Economic Stabilization Act May Help Homeowners: Enacted on October 3, 2008, this historic federal legislation earmarks $700 billion for the Treasury Secretary to purchase troubled assets from financial institutions. The Secretary and other federal agencies are also charged with the task of mitigating foreclosures for mortgages and mortgage-back securities and encouraging loan modifications. Furthermore, this law strengthens the FHA-insured refinance loans for troubled mortgages under the HOPE for Homeowners program, including authority for the program’s board of directors to increase the maximum loan amount above 90% of the appraised value. This bill also extends the tax exemption for debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 from December 31, 2009 to December 31, 2012.  Source: H.R. 1424.

Jim Cramer, of MAD MONEY, blogged on July 23, 2008, “I am now telling you that between now and the next six months you have to buy a house.”  Mr. Cramer is giving great advice. Home prices are low and so is the interest rate.

CNNMoney.com reported in August that nationally, 55% of homes sold from April through June were affordable to families earning the US median income of $61,500.00. This was according to a quarterly report released by the National Association of Homes Builders (NAHB). That’s up from 53.8% in the first quarter of 2008, and the most affordable home prices have been since the second quarter of 2004.

The Housing and Economic Recovery Act of 2008 (H.R.3221), has many programs to help people buy the American dream. Under H.R. 3221, new homebuyer tax credit is available for qualifying home purchases after April 11, 2008, and before July 1, 2009. The Act provides eligible first-time homebuyers a refundable tax credit equal to the lesser of 10% of the purchase price of a principal residence or $7,500 ($3,750 for married individuals filing separately). A taxpayer is considered a first-time homebuyer if he (or spouse, if married) had no ownership interest in a principal residence during the 3 year period before the purchase of the home to which the credit applies.

Under H.R. 3221 the Department of Veterans Affairs is raising the ceiling on its no-down payment home loans from the current $417,000 to as much as $729,000. VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments. There are about 2.3 million existing VA home loans, more than 90% made with no down payment.

This is just to name a few great programs available which reinforce Mr. Cramer’s reasoning to buy NOW.

In California we continue going through a challenging market slump that some call a normalizing market. Some areas of the country, like Florida and parts of Nevada are experiencing the same adjustment. But one must remember that these areas experienced a very high appreciation in the past few years unlike any time in history, and history shows this adjustment was expected and will prove to be healthy for the overall market, in fact we may be seeing the beginning signs of progress.

The problem facing us now is the issue of inventory (supply and demand). To regain a stabling market value we must reduce the inventory of houses. Fresno reports record sales of homes. This is a direct cause from falling prices do to foreclosures and bank owned properties. As the inventory of homes drop, prices will start to stabilize.

One of the main reasons for the drop in housing prices is the increasing number of foreclosures and bank owned homes coming on the market. The dark side is that there is no sign of this market going away anytime soon, as the foreclosure crisis continues to affect more homeowners every month.

For the buyer, it’s a great time to buy and invest in the real estate market. For the seller, it may not be as bad as some say, take away the foreclosures and bank owned homes and you’ll find that the decline in the value of your home may not be as drastic as you think.

Do not believe the negative media reports about the real estate market. The media continues to report the dismal affect on the market focusing on foreclosure numbers, price declines, and inventory levels. This continued reporting may lead one in believing real estate is a bad investment. Don’t believe everything you hear, especially from a bias media that thrives on negative reporting and the doom and gloom of America. Check out the facts. I believe the facts show it’s a great time to invest in the real estate market.Even today with the negative media reports, you can find facts to support that real estate continues to be a great investment:  

1.        The National Association for Business Economics reports “a bottoming out in housing this year”.

2.  Mark Zandi, of Moody’s Economy wrote “We are at the beginning of the end of the downturn”.

3.           Adam York indicated in Wachovia “The vast majority of the declines in sales are behind us”.

4.           The market is getting a handle on the foreclosure crisis. You couldn’t say that a year ago.

5.           The Case-Shiller housing price index is showing month over month price growth in about a third of the 20 cities it covers, suggesting that the buying interest is returning and prices are back on an uptrend.

6.           Home builders are back to buying land and shifting from a defense to offense mode.

7.           Monthly mortgage payments have meet the equivalent of monthly rent.

Just a few facts to show that it’s a time to buy and invest in the market. Let those that believe the media sit it out and wait while you take advantage of a great opportunity, it’s your time.You’d better hurry or someone will beat you to it.

More and more home buyers feel their home purchase is as good as investing in stocks, according to a survey by the National Association of Realtors. According to NAR About 79 percent of buyers purchased their home through a real estate broker or agent. Forty-three percent of buyers found their broker-agent through a referral from a friend or family member. About a third of buyers reported that their first step in the home-buying process was looking online for sale properties and a whopping 84 percent of buyers report they used the Internet to search for homes at some point in their home-seeking process.  Overall, the typical home buyer is 39 years old, while the typical repeat buyer is 46. Nine percent of home buyers reported they were born outside the United States. Three-quarters of buyers between 18 and 24 purchased a home because of their desire to own a home and establish a household.  Nearly three quarters of first-time buyers rely on savings for their down payment and Ninety-three percent arranged financing for their purchase.

Could it be possible??  Gas prices are dropping??  Each day as I drive out of beautiful Oakhurst, through Coarsegold, pass the Madera Ranchos I can’t help but notice the gas prices dropping (not as much as I like though).  As I head into the horrific smog trapped in our San Joaquin Valley, my eyes happen to catch the prices of gas listed at each gas station.  I note the cheapest price and that is where I stop on my way back up hill.  So far the cheapest gas prices off of route Highway 41 between Coarsegold and Fresno is the Valero or AM/PM located on the Highway 41 Business Route.  If you are like me and don’t want to get off the freeway but still are looking for a deal the Valero at the 22 mile house is only 4 cents more.  I am excited to see gas prices plunging little by little as I endure the year making the commute to Fresno. 

A first time homebuyer will now receive a tax credit of 10% of the purchase price up to $7500 maximum for the tax year in which they purchase their home.  A first time homebuyer qualifies as long as the buyer and spouse if any, has not owned a principal residence in the U.S. for the last three years.  The tax credit is available for homes purchased from April 9, 2008 through June 30, 2009.  For more specifics about this credit please consult with your tax professional.

Is the cost of California real estate overvalued?  California is a great place to live.  You have the beaches, the desert, the mountains, Disneyland, Hollywood, Yosemite, and many other famous attractions.  There are parts of California with highly desirable weather and parts with breathtaking beauty (Yosemite, Mariposa Groves, coastline, and Giant Sequoias).  But is the cost of living in California overvalued?  I know there are many parts of California that I would never be able to afford a home- even with a double income from two well paying jobs.   I often ask myself- should we move to another state where real estate and the cost of living are less expensive?  Is it worth the money to buy and live in California?  I don’t know.  What do you think?

I thought this article would offer hope to many of us out there.  It can only get better.

On the Path to a Housing Rebound

By Shawn Tully, CNNMoney.com

Jul 2nd, 2008   

“The pain that homeowners and homebuilders are feeling now is a sign that things are going to get better.

NEW YORK (Fortune) — The news that housing starts have fallen to their lowest level in 17 years sounds like one more reason to be depressed about the shrinking value of your home. In fact, it’s an almost certain sign that the path to a housing recovery is finally in sight.

If prices are going to stabilize, let alone rebound, the United States needs to produce far more first-time home buyers than new houses. That’s the only way to tame the glut of “For Sale” signs dotting front yards from the Inland Empire of California to the Gold Coast of Florida.

Builders constructed far more homes from 2002 until 2006 - the peak bubble years - than could possibly be absorbed by the normal growth in households.

Slideshow: Summertime poolside living

As a result, the market is now swamped with one million new and existing homes for sale that aren’t occupied, and hence need to sell quickly. That’s a multiple of the figure in most downturns, and it testifies to the duration and girth of the bubble.

“For the recovery to begin, builders need to eliminate the standing inventory of finished, unoccupied new homes,” says Mike Castleman, founder of Metrostudy, which assembles sales data on four million subdivisions across the U.S.

The massive overhang of unsold inventory has remained stubbornly high. Sure, builders cut back, but sales dropped just as quickly.

Now that excess supply is finally beginning to shrink. In April, the number of new homes for sale stood at 456,000 according to the U.S. Commerce Department, still a big number, but 93,000 below the mountainous figure a year ago.

The return of the first-time buyer

The key player in any recovery scenario is the first time buyer. The housing market operates with a pronounced laddering or ripple effect. When entry-level buyers flood the market, they not only stimulate production of new homes, they purchase existing homes. Those purchases, in turn, allow the sellers to move up to bigger houses.

But when the first-timers are absent, the entire buying chain gets frozen.

Today, newbies are coming back. Why? For the first time in years, entry-level homes are affordable. Builders have slashed prices, and what they’re building tends to be far smaller than the McMansions of the boom, selling for far lower prices. KB Home’s average selling price dropped to $248,0000 in its February quarter, versus $267,000 a year earlier. In 2006, KB’s basic model in Victorville, Cal., a former boomtown east of Los Angeles, took up as much as 3,800 square feet and sold for $328,000. Today, its stripped down offering goes for $220,000, at less than half the size.

So the first time in a decade renters can carry the mortgage payments and taxes on a new house for what they’re paying a landlord. Call it the New Affordability.

Here’s how the numbers play out: Single-family housing starts are now running at fewer than 500,000 a year. The normal demand for housing, based on immigration and household formation, is around one million units.

We won’t get back to that figure for a while because so many people rushed to buy homes during the boom.

But with first timers returning, sales should rise to almost 700,000 units by the end of next year, according to Bernard Markstein, senior economist for the National Association of Home Builders. That means sales will soon exceed new production by as much as 250,000 units a year.

That margin forms the foundation of the housing revival that comes in four steps.

Step 1:

First, the return of first-time buyers will shrink the overhang of new houses for sale.

Step 2:

Second, because so few new homes are being built, first-timers will start buying existing homes from owners who want to move up but have been trapped by the dearth of buyers. Their improved fortunes, though, come with a big caveat: The prices of new homes are now lower than comparably-sized existing homes. It’s as if used cars are selling for more than new ones. That can’t last. So move-up buyers are going to have to accept less than they had hoped to get for their current homes.They’ll get a big break as they trade up, however. Unless they bought at the height of the boom, they’ll still sell at a profit. They can then use that equity to buy bigger homes at bargain prices. During the bubble, homebuilders started pushing up home sizes to 3,500 square feet or more. It’s those behemoths that are selling for the steepest discounts today.

Step 3:

Next, housing starts should start rising, probably next year. The increase, however, will be slow and gradual. For the next two years at least, homebuilders will compete ferociously with existing home sellers for customers.

Step 4:

Eventually, the glut of existing homes will disappear as well. The excess of new-home buyers over new homes being built makes that inevitable. But the oversupply is so enormous that the healing process could take as much as three more years. Only then will prices in former bubble markets start rising again.

What could go wrong?

One event has the potential to slow or even derail the recovery: A sharp rise in interest rates. Right now, the first-timers are gorging on 6% loans guaranteed by the FHA. But rates may not stay there.

If they rise to 8% or higher because inflation rebounds, it would take a far bigger drop in prices to make new and existing homes affordable.

The New Affordability is now in place. But if rates rise, we’ll have to establish a New New Affordability - at even lower prices.”

In continuation from Friday’s post….

Consider combining your balances from all of your credit cards into a consolidation loan or putting all of your debt on one card. This way, you will be able to make larger lump sum payments. Making smaller payments to several cards will take you longer to get out of debt. It is also not as daunting having only one payment to make instead of many. If you cannot combine your debt, then make large payments to your highest interest rate credit card, and minimum payments to your lower interest rate credit cards, until your debt is paid in full.

Do not add more debt to what you currently owe. Put away or cut up your credit cards. Think how every $50 you charge is another monthly payment that you must pay back.

Always pay more than the minimum payments. How sad to look back 20 years from now and realize that you are still paying for Aunt Dolly’s fuzzy robe and slippers. Give till it hurts. It will make you proud to see that balance drifting away!

Try to reduce your interest rate. Many banking institutions are willing to negotiate your rate once they know that you might be having trouble. They would rather keep you as a customer, with you paying some interest, rather than Charging Off your debt and then having nothing in return. Of course they are always hopeful that you might want to charge some more too.

Return unused purchases. Don’t let them lay around the house. If you don’t need them, take them back. You will appreciate the credit issued on your credit card more than the clutter in your closet.

Keep track of how you are doing. Log your payments. One of the biggest motivators is to see that debt going away. In time, and with careful planning, you will be free of all of your credit card worries.