On December 23rd, CNNMoney.com posted an article about the worst real estate markets in the country with further declines ahead in 2009. Here they are in order (worst being first) with their 2009 projected declines:

1. Los Angeles Metro Area -24.9%
2. Stockton, CA -24.7%
3. Riverside, CA -23.3%
4. Miami-Miami Beach -22.8%
5. Sacramento, CA -22.2%
6. Santa Ana-Anaheim, CA -22%
7. Fresno, CA -21.6%
8. San Diego, CA -21.1%
9. Bakersfield, CA -20.9%
10. Washington, D.C. -19.9%

From one perspective, it looks like the worst of times. If you own a property with no equity and you need to sell…well, short sale is always an option. From another perspective, it looks like the best of times. If you’ve been waiting for a bargain on a vacation home, newer or bigger home, now is a great time to buyer. Investors can actually buy single family homes that will provide positive cash flow every month!

If you’re in Riverside County and wondering what your house is worth at Fair Market Value, give us a call. We’ll be happy to provide a free analysis. Call us at 800-895-5112.

with blessings,
Claudia

Here’s an update from our friend, Al the Loan Guy:

Since the Fed announced a plan to purchase $500 billion of mortgage-backed securities on November 25, mortgage rates have moved progressively lower, and the trend continued this week. Conforming fixed-rate mortgage rates dropped to levels last seen in 2003. Weak Retail Sales data and low inflation figures released during the week also supported the move lower.

As the government strives to offset the current weakness in the economy, its actions have exerted a much stronger than usual influence on mortgage rates. Programs to purchase mortgage-backed securities and to provide capital to financial institutions have been favorable for mortgage rates, while a bill introduced in Congress this week could have the opposite effect if passed. The bill would permit bankruptcy judges to modify troubled mortgages by reducing the principal and payments. The goal would be to help prevent foreclosures, which is a worthy objective. However, opponents of the plan are concerned that investors may require higher mortgage rates to compensate for the increased risk that loan contract terms may be changed. At this point, it’s not certain when the bill will come up for a vote.

Here’s an article from Yahoo News courtesy of the California Association of Realtors:

Homeowners who modified loans are in trouble again

Approximately 53 percent of homeowners who modified their mortgages during the first quarter of the year redefaulted within 6 months of the modification, leading some to question whether government money may be better spent on creating jobs rather than averting foreclosures.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Some analysts speculate that many borrowers with modified mortgages are in default because lenders did not modify the mortgages with terms or payments that were affordable for the borrower; however, data provided by the government does not provide enough detail about the types or quality of loan modifications made.

· If foreclosures maintain their current pace, the U.S. is on track to have 2.25 million foreclosures this year. As more companies are forced to layoff employees and homeowners find it difficult to meet their debt obligations, additional families could lose their home to foreclosure. New Jersey Gov. Jon Corzine called for a three- to- six-month halt on foreclosures while the government works out a more aggressive plan to keep families in their homes. In November, Fannie Mae and Freddie Mac announced they are halting foreclosure sales on single-family, occupied homes until at least January 2009.

· Some consumer advocates, lawmakers, and think tanks are advocating a dramatic government response, similar to the Home Owners’ Loan Corp. created in 1933 to help borrowers refinance troubled home loans. The Home Owners’ Loan Corp. was used to extend loans from shorter terms to fully amortized, longer term loans. Through its efforts, more than one million people facing foreclosure were granted long-term mortgages and were able to keep their homes. The Home Owners’ Loan Corp. turned a small profit in 1951 when it liquidated its assets.

If you need information about your options, whether to sell short, modify or walk away from your property, give us a call at 800-895-5112 and we’ll be happy to discuss your situation with you.

with blessings,
Claudia

From our friend, Al the Loan Guy:

“It was an exciting week for mortgage markets! Tuesday, the Fed and the Treasury announced a new program to purchase up to $500 billion in mortgage-backed securities (MBS), and mortgage rates dropped sharply after the news. The MBS purchases are expected to take place over the next few months. The goal of the new program is to lower mortgage rates, and the immediate reaction certainly was a big step in the right direction, as mortgage rates moved significantly lower during the week.

According to the Wall Street Journal, consumers around the country responded quickly to act on the drop in mortgage rates. In many cases, call volumes during the week were far above their recent levels as homeowners rush to refinance.

In the housing sector, October Existing and New Home Sales continued to fall modestly. On the plus side, inventories of unsold existing homes declined in October. Also, the outlook for future home sales grew more positive this week, since lower mortgage rates make homes more affordable. The chief economist for the National Association of Realtors (NAR) estimates that each 1% decline in mortgage rates could generate between 500,000 and 800,000 home sales. Combined with the recent drop in home prices, homes are more affordable now than they have been in years.”

Some banks are aggressively creating programs to help keep homeowners in their homes. Ckick on this link to see which banks are modifying loans with specific programs:

Chart of Programs

You might be feeling down and depressed if you watch the news on television or read the newspaper. Is there any good news in this time of challenge and change?

A couple of week ago, I attended a webinar presented by California Association of Realtors. Their economists DID have some good news. Here are highlights:

* While U.S. sales are flat, real estate sales in California are up. 2008 sales are up 12% so far over 2007, which will be the trough for California.
* California experienced a steeper decline than the nation as a whole, and we are ahead of the curve as we head towards recovery.
* From July 2007 to July 2008, California prices declined 40.3%. Some areas continue to decline even while sales volume increases. Good news? Homes under $500,000 are experiencing the sharpest decline. Homes over $500,000 are experiencing more stable pricing.
* The price peak for Riverside/San Bernardino area was July 2007. Our area is now 42.6% decline from the peak. Good news? Housing affordability in California has DOUBLED. In one year it has gone from 24% to 48%. Since first-time homebuyers drive the housing market, this is positive news.
* The peak of adjustable mortgages resetting was late 2007 and early 2008. Therefore, we are less likely to see foreclosures and short sales throughout 2008 and into 2009.
* C.A.R. economists project price stability in the second quarter of 2009. Sales bottomed out in 2007. We had a quick decline and are likely to experience a quick recovery.

Good news might be scarce, yet it ALWAYS exists in every market. If you are concerned about holding onto your home, give us a call at 800-895-5112. We’ll be happy to discuss your options and help you make the best decision for you and your family.

with blessings,
Claudia

Courtesy of the California Association of Realtors:

“Senate approves revised version of Emergency Economic Stabilization Act of 2008
The Senate on Wednesday evening approved a revised version of the Emergency Economic Stabilization Act of 2008 in a 74 to 25 vote, clearing the way for full consideration by the U.S. House of Representatives. The House voted down an earlier version of the plan on Monday and is expected to consider the revised version by Friday[today].

MAKING SENSE OF THE STORY FOR CONSUMERS

· The revised plan, which is designed to shore up the nation’s financial markets, includes a temporary one-year increase in Federal Deposit Insurance Corp. (FDIC) caps for bank and credit union accounts. The cap increases are critical because they increase the funding backstop the public relies upon should their banks fail. The plan also includes extensions on several business tax breaks and adjustments to the alternative minimum tax (AMT) for individual taxpayers. These, as well as the FDIC cap changes, are amendments lawmakers believe will help bolster approval by the House.

· If approved, the financial rescue plan would allow the government to buy residential and commercial mortgage-related assets, including mortgage-backed securities and loans, in an effort to ease current credit constrictions impacting businesses across all sectors, including the housing market. Also included in the revised plan are provisions to help struggling homeowners avoid foreclosure; increased oversight of the plan; and a limit on compensation for executives of the troubled financial firms that receive assistance.

· Some analysts believe that the economy will worsen if lawmakers fail to pass the bill, which will directly impact the housing market. As obtaining credit becomes more difficult for many businesses, unemployment rates, currently standing at 7.7 percent in California in August 2008, could rise, hindering consumer spending and the demand for housing.”

Check out this VIDEO for information on what the bailout means to you.

with blessings,
Claudia

Here’s another informative article courtesy of the California Association of Realtors:

“Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), were placed into a conservatorship Sunday by the U.S. Dept. of the Treasury. The Federal Housing Finance Agency (FHFA) will serve as the conservator, and the CEOs of each company were relieved of their duties. Replacing them are Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, who will now lead Fannie Mae and Freddie Mac, respectively.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Under the conservatorship, the FHFA has the authority to take up to an 80 percent stake in the companies, and will review both GSEs’ financial condition quarterly. The federal government also may inject capital into Fannie Mae and Freddie Mac, if needed. Both GSEs will be allowed to increase their mortgage funding over the next year and a half, and their stock will continue to trade, with stockholders retaining all rights in the stock’s financial worth. However, the plan does call for a 10 percent reduction per year to GSEs’ portfolios, beginning in 2010, until they have been reduced to $250 billion.

· Although the conservatorship has resulted in lower interest rates for consumers, and restored investor confidence, C.A.R. is concerned that the Treasury and the new CEOs will change the mission and role of GSEs. Without GSEs, mortgage capital eventually will be less predictable and more expensive. This may result in adjustable-rate mortgages becoming the standard loan for home buyers, as well as higher down payment requirements, and the possible disappearance of the 30-year fixed-rate mortgage.

· C.A.R. supports a structure that maintains GSEs in their current countercyclical roles and is urging lawmakers to support continued government involvement in supporting the institutional secondary market. As a result of these concerns, C.A.R. will be asking Congress to enact legislation to ensure GSEs continue to fulfill their congressional mission of supplying an affordable and stable flow of capital for home loans.”

Here’s an article excerpt from Yahoo News courtesy of the California Association of Realtors:

Primarily a result of lower gas prices, consumer confidence increased in August, with The Conference Board’s consumer conference index rising to 56.9, up from the revised 51.9 reading in July. Following a six-month decline, August was the second consecutive month that the index increased. A reading of 100 is considered the highest rating possible. In a separate report, new home sales posted an unexpected increase in July, while the Standard & Poor’s/Case-Shiller U.S. National Home Price Index showed prices declined at a slower rate in the second quarter, indicating that some areas may have reached the trough in home price declines.

MAKING SENSE OF THE STORY FOR CONSUMERS

· The Conference Board’s consumer conference index measures how consumers perceive the current conditions and future expectations of the US economy. The index is based on a survey of 5,000 U.S. households.

· The monthly survey details consumer attitudes and buying intentions. Increased consumer confidence generally indicates that consumers are more willing to make purchases. Decreased confidence indicates that consumers are likely to slow their spending.

· Although The Conference Board’s Present Situation Index declined to 63.2 in August, compared with 65.8 in July, consumers expect the economy to improve over the next six months, as indicated by The Conference Board’s Expectations Index. The Expectations Index increased by 10 points, the largest increase since November 2005.

with blessings,
Claudia

This is an excerpt of an article from USA Today provided by the California Association of Realtors:

Although home prices decreased 15.4 percent during the second quarter compared with the same period a year ago, in month-over-month comparisons, home sales are increasing, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index. According to the Office of Federal Housing Enterprise Oversight’s home price index, states with the largest annual declines include California at 16 percent; Florida at 12 percent; Arizona at 9 percent; and Rhode Island at 5 percent. Existing home sales increased in July and exceeded many economists’ expectations, while new home sales also increased 2.4 percent for the same time period.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Although home prices are decreasing, existing home sales are increasing nationwide and in California. In California, single-family, existing home sales increased 43.4 percent in July compared with the same period a year ago. Sales in July remained above the 400,000 level for the third consecutive month, with deeply-discounted, distressed sales continuing to drive volume in many regions of the state.

· The state’s Unsold Inventory Index (UII) for existing, single-family detached homes decreased to 6.7 months in July 2008, compared with 10 months (revised) for the same period a year ago. The UII indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

with blessings,
Claudia