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.

It is hard to know what and who to believe.  Some say our market is leveling out, others say we should expect another decline in the market.  From my point of view, all I have seen are the housing prices decreasing and the rate of foreclosures increasing.  When is this market ever going to change or level out?  I found an informative article that I wanted to share.

For more information, contact:
Walter Molony 202/383-1177 wmolony@realtors.org

Near-Term Home Sales to Stay in Narrow Range

WASHINGTON, September 09, 2008

The level of home sales is expected to show little movement in the months ahead, according to the latest projections by the National Association of Realtors^®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in July, fell 3.2 percent to 86.5 from an upwardly revised reading of 89.4 in June, which had risen 5.8 percent from May. The July index remains 6.8 percent below July 2007 when it stood at 92.8.

Lawrence Yun, NAR chief economist, said home sales continue to edge up and down. “Pending home sales are oscillating month-to-month, with the long-term trend essentially flat,” he said. “Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

Even with the latest pullback, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing. “Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets,” Yun said.² “The outer Washington, D.C., exurbs also are coming around very strongly. The Northeast region retreated following a robust gain in the previous month, and soft activity was observed in the broad midsection of America despite very affordable conditions.”

The PHSI in the Midwest rose 2.8 percent to 81.6 in July but remains 2.4 percent below a year ago. In the South the index was unchanged, holding at 93.7, but is 13.4 percent below July 2007. The index in the Northeast fell 7.5 percent to 73.6 in July and is 13.2 percent below a year ago. In the West, the index dropped 10.6 percent to 90.3 but is 6.5 percent higher than July 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said there’s been a surge in FHA mortgage applications. “Unfortunately, many people in high-cost areas aren’t familiar with FHA programs, which is why we produced a toolkit so Realtors^®, lenders, and other real estate professionals can familiarize themselves with this increasingly valuable program,” he said.

“FHA is taking a more active role in serving a broad cross section of home buyers, but it will take some time to fully get up to speed. We’re working with regulators to improve the process, and the good news is that this is becoming a big help to first-time buyers,” Gaylord said.

Yun said there are many ambiguities in the marketplace. “The economy is producing more, yet cutting jobs. A first-time home buyer tax credit and lower interest rates on newly conforming jumbo loans favors consumers, yet buyer confidence remains low,” he said. “Even with the Treasury Department’s direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.”

Yun mentioned that the speed and timing of a recovery depends on local market conditions. “Based on local market fundamentals, I expect robust home price growth in places like Denver and Houston over the next two years,” Yun said. “In addition, the frequent reporting of multiple bids in California and Florida may be signaling a bottom in home prices in these areas. Nationally, home sales are stable now but are expected to increase in coming quarters.”

Looking at middle-ground assumptions, existing-home sales are projected to total 5.01 million this year before rising 6.9 percent in 2009 to 5.35 million. After declining an average of 4 to 7 percent this year, home prices are forecast to rise by 2 to 4 percent next year.

New-home sales will total about 508,000 in 2008 and 463,000 next year, down significantly from 775,000 in 2007. With builders motivated to clear inventory, housing starts, including multifamily units, will probably fall 17.1 percent in 2009 to 801,000 units from 966,000 this year.

The 30-year fixed-rate mortgage, which also has been moving up and down, should trend up to 6.6 percent by the end of this year, edging up to 6.7 percent in 2009. NAR’s housing affordability index is likely to remain favorable throughout 2008, averaging 13 percentage points higher than last year.

Growth in the U.S. gross domestic product (GDP) is forecast to remain positive with a growth rate of 2.0 percent for all of 2008, and 2.0 percent also next year. The unemployment rate is estimated to average 5.8 percent over the coming year.

Inflation, as measured by the Consumer Price Index, is anticipated at 3.8 percent this year and 1.6 percent in 2009. Inflation-adjusted disposable personal income is projected to grow 1.8 percent in 2008 and 2.1 percent next year.

# # #

¹The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The decline from July 2007 was the most modest annual decline since December of 2006 when it was 3.9 percent below a year earlier.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 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.

²Market information is from unpublished snapshot data; please contact your local association of Realtors^® for more information.

Existing-home sales for August will be released September 24; the next Pending Home Sales Index / Forecast will be released October 8.

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.

This crazy real estate market so many of us are caught in is frustrating and confusing.  We have seen the prices of homes drop throughout the Eastern Madera County area.  Ahwahnee, Coarsegold, Oakhurst, Raymond, Bass Lake, Fish Camp, Yosemite Lakes, O’Neil’s, and North Fork are no strangers to the dropping market.  What can we do?? It seems as there is nothing we can do.  Not only is finding a buyer a problem but once we have a buyer and start the escrow process we run into so many more problems.  A huge problem that is emerging is the appraisal process.  Appraisers are being quite conservative, as if that is not bad enough.  Then the lending institutions want to send out their own appraisers at the buyer’s expense.  This is getting to be ridiculous.  Sales agents are getting frustrated, buyers do not want to pay for an additional appraisal (of course), and sellers are finding it hard to get through the escrow process.  Is this vicious cycle ever going to stop???  I find an interesting article on appraising that you might enjoy reading just go to the following link http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/17/RELP12AF53.DTL

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.”