Real Estate Information Archive

Conforming loan limits have been restored to as much as $729,750 in 250 counties around the U.S. as the regulator of Fannie Mae and Freddie Mac implements a policy change in last week's $787 billion economic stimulus bill.

H.R. 1, the American Recovery and Reinvestment Act, restores the higher limits in place for Fannie and Freddie during much of 2008, allowing the companies to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.

Congress instituted temporary increases in the $417,000 conforming loan limit in high-cost areas last year. A sunset provision brought the limit back down to 115 percent of median home price, with a cap of $625,500, on Jan. 1

While lawmakers had hoped that the secondary market for mortgage loans would be restored to health by now, problems continue, making jumbo loans costlier than those eligible for purchase or guarantee by Fannie and Freddie.

The new stimulus bill stipulates that loan limits are to be the higher of the 2008 limits or those put in place Jan. 1. In most high-cost markets, the 2008 limits are higher and loan limits are reverting back to last year’s levels. In releasing a list of loan limits by county, the Federal Housing Financing Agency said 43 counties in Virginia, North Carolina and California will keep increases originally instituted for 2009.

House Passes Stimulus Package

The U.S. House of Representatives approved an $819 billion stimulus package -- the Economic Recovery Package -- this week, which if approved by the Senate will extend all 2008 Metropolitan Statistical Areas’ (MSAs’) Fannie Mae, Freddie Mac, and FHA loan limits through the end of this year.  The extension will prevent an MSA’s 2008 loan limit from being reduced in 2009 for Fannie Mae, Freddie Ma and the FHA.  The bill also specifies that if an MSA’s loan limit is set to change, it can increase, but is prohibited from decreasing.

MAKING SENSE OF THE STORY FOR CONSUMERS

·     The proposed legislation will eliminate an existing payback requirement on the first-time home buyer tax credit for qualified buyers who purchase a home between Dec. 31, 2008 and July 1.

·     The package also will provide up to $1,000 per year in tax relief for most families, increase funding for alternative energy production, and direct more than $300 billion in aid to states to help rebuild schools, provide health care, and reconstruct highways and bridges.

·     The Senate currently is working on its version of the stimulus legislation, and is expected to vote on it next week.  Congress would like to get a bill to the President’s desk by President’s Day, Feb. 16.

Mortgage applications fell 38.8 percent last week as interest rates on most loans remained elevated above recent lows, the Mortgage Bankers Association said.

Applications for refinance loans fell 48 percent from the previous week during the week ending Jan. 23, while applications for purchase loans were off a more modest 2.9 percent, the MBA said.

While applications for conventional purchase loans were down 7.8 percent, applications for loans covered by government guarantee programs (largely FHA) were up 8.8 percent. The numbers were seasonally adjusted and also took into account the shortened holiday week.

Refinance loans represented a smaller share of total applications last week -- 72.8 percent, compared with 83.3 percent the previous week. The share of applications for adjustable-rate mortgages rose to 2.4 percent, up from 1.5 percent the week before.

The MBA's weekly application survey of members showed the average contract interest rate for 30-year fixed-rate mortgages decreased to 5.22 percent from 5.24 percent the week before, with points decreasing to 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.98 percent from 4.99 percent, with points decreasing to 1.13 from 1.2 for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 5.96 percent from 5.89 percent, with points decreasing to 0.06 from 0.07.

ALWAYS check with you lender for current rates.  

What is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home system components and appliances.

Is Everything in My Home Covered?

No. Not everything is covered; however, most of the system components and appliances that breakdown frequently are covered.

Even in a slower market, the good homes go fast! Smart sellers are realizing that a proactive selling strategy can go a long way in getting their home sold, even when inventories are high. Here are three tips for today’s sellers:

1. Price your home right. Markets change, so don’t be influenced by last year’s selling activity and home prices. Buyers will evaluate your home based on what others are selling for today, so make sure you know the market and price your home accordingly.
2. Make your home shine. Buyers like to envision a home they can move right into. Clean carpets, fresh paint, and a nicely landscaped yard can go a long way to make perspective buyers feel at home.
3. Anticipate the selling season. Many sellers wait for the market to pick up before they place their home for sale, but smart sellers anticipate these seasonal adjustments and list their homes early in the sales cycle. Give yourself the best opportunity by placing your home on the market before everyone else does!

Whether you’re looking to sell today or are thinking of selling tomorrow, please feel free to call and ask for a computer analysis of our recent market activity. We would be more than happy answer any questions you might have.

The following is an excerpt from the Los Angeles Housing Department memo on the rent stabilization act updated on December 17, 2008. Click here to find out if your rental is in foreclosure.

 The Los Angeles City Council enacted the Foreclosure Eviction Ordinance on December 17, 2008. The Ordinance provides that banks or lenders who foreclose on or after December 17, 2008 on single family homes or new multi-family properties (those with a Certificate of Occupancy after October 1, 1978) cannot evict a tenant merely because they foreclosed on the property. They can only evict a tenant based on the twelve legal reasons permitted under the RSO.

What should I do if I receive an eviction notice from the bank or lender? 

Tenants who receive an eviction notice because the building is entering foreclosure need to know that a foreclosure or sale of a building is not a lawful reason to evict tenants under the Los Angeles Municipal Code. If a tenant receives a Summons and Complaint for an Unlawful Detainer, time is of the essence! It is important that the tenant respond to the summons within  5 calendar days. For legal assistance after receiving an eviction notice, tenants should contact an attorney or seek assistance from a legal aid agency. Once a tenant receives a notice from a financial institution informing them of the foreclosure and change in ownership, tenants should make every effort to contact the financial institution and inquire about how to make rent payments. Tenants who are uncertain of who is the legal landlord should save their rent and be prepared to pay upon proper notice. For questions regarding evictions, please call the Los Angeles Rent Stabilization Hotline at (213) 808-8888 or (888) 557-RENT (557-7368).

It is important to note that this ONLY applies if your rental is located within the Los Angeles CITY limits.

Rates are still at an all time low and depending what area you're looking in prices of homes are actually going up.   Of course there is more inventory on the market and the days on market is about 65-70 days on average but areas like Santa Monica will always hold it's value.

Segments of last year's real estate market resembled thrill rides at Magic Mountain: Scream, Freefall and Psyclone. Translation: "bubble" fears, tumbling home sales and weaker price gains.

And this year's? Expect Merrie Melodie's Carousel — no thrills, no spills — economists and industry watchers say. That's not necessarily a bad thing, they add, after last year's wild ride. Barring big hikes in mortgage interest rates, which are not expected, or an even bigger glut of resale homes, the market will pretty much stay the current course.

"The first two or three quarters of this year will be the tail end of the ugliness," said Ryan Ratcliff, an economist at UCLA Anderson Forecast. "Things will pick up before the end of 2007."

In other words, the market is returning to "normal," a state in which sales and prices are in the "middle of the grid historically," said John Karevoll, chief analyst at the La Jolla-based research firm DataQuick Information Systems. That means single-digit price appreciation and a dip — then leveling off — of the sales count. By spring, "the market will be more in balance between buyers and sellers."

For real estate enthusiasts eager to peer into the crystal ball, here are predictions by a handful of Southern California's top economists and real estate experts about prices, sales, inventory, interest rates, realty hot spots and builders' prospects for the 2007 market:

Prices: Last year home appreciation slowed down. The median price of all new and existing single-family homes and condos in the Southland increased only 5.7% from the previous year, compared with the 16.8% gain of 2005, according to DataQuick. The upside for 2007 is that prices overall should hold that current level of growth through the end of the year, Karevoll said. The median price of a home in Southern California in December was $495,000, up 3.3% from the year before. The median price in Los Angeles County was $522,000, a record.

Less optimistic than most of his colleagues, Michael Carney, an economist with the Real Estate Research Council at Cal Poly Pomona, predicts that 2007 prices will fall about 5% from last year, as buyers continue to wait on the sidelines for prices to level off.

Sales: Leslie Appleton-Young, chief economist for the California Assn. of Realtors, predicts a 7% drop in sales this year compared with 2006, a much better prospect than last year's 23% dive from 2005's sales count.

The number of unsold homes on the market has diminished since summer, Appleton-Young said, possibly prompting previously unmotivated sellers to jump in this year. The market still has to absorb some of the homes for sale left over from 2006 before the sales count levels off, but "we're close."

The good sales news for 2007 is that "the worst is over," she added.

Inventory: This is the market's wild card, said Delores Conway, director of the Casden Real Estate Economics Forecast at USC. For now, many sellers are choosing not to compete with builders of new homes, who are lowering prices and offering concessions. So they're waiting to list their homes.

Conway expects the number of resale homes on the market to go up this spring, which it typically does. The unknown is how much. If it's a lot, that could force prices downward.

"We will see a surge of inventory only if something negative happens to the job market," she said.

Financing: Interest rates should remain close to their present levels, about 6% for 30-year fixed mortgages, said Rich Gale, a California Mortgage Bankers Assn. board member and division president of Provident Bank in Riverside. If the economy slows and the Fed lowers short-term rates in response, which Gale and some economists say could happen by midyear, mortgage interest rates would tick down slightly.

The number of loans for home purchases — not refis — is "way down" from the recent years' real estate markets and probably will remain so this year, Gale said. Refinancings, however, are expected to climb in 2007, as borrowers with adjustable-rate mortgages and option ARMs convert to fixed-rate mortgages. Currently, refis make up 49.9% of the mortgage business nationwide, according to the Mortgage Bankers Assn.; at the peak in 2003, they made up 76.7%.

Popular loans in 2007, in addition to 30-year fixed mortgages, will be the so-called hybrid five-year loans, Gale said. They have fixed rates for the first five years, then change to adjustable rates thereafter.

"We're in a fragile market," Gale said. "We're watching the market's direction in the next three to six months. A lot depends on what the Fed does then."

Realty hot spots: Buyers seeking more affordable housing — without long commutes from outlying areas — should consider towns that are not necessarily trendy, but have good schools and public safety, said Jack Kyser, chief economist of the L.A. Economic Development Corp.

La Mirada, Whittier and Downey are good bets. South Los Angeles still is a good place for entry-level buyers seeking lower prices, and San Dimas got Kyser's two thumbs-up for location (on a hill) and quality of life. The South Bay cities and Westside still are hot, but pricey.

New construction: By the end of the first quarter of this year, new-home builders will see a return to a more typical market, according to the California Building Industry Assn. So now — while unsold homes still are more abundant — is the best time to get a good deal.

Housing production in the state is expected to dip a bit lower than last year's, falling to a range of 155,000 to 170,000 permits issued for all types of units, a solid count for a "normal market," said Alan Nevin, the association's chief economist.

At the peak, in 2004, 212,960 permits were issued. Construction will be especially slow in the first quarter as builders sell off last year's leftover inventory. It should pick up during the last half of the year.

Builders will not be focused on affordable, entry-level homes, which are less profitable for them. There also will be a slowdown in high-rise, urban building, according to the association, until lenders and developers regain confidence in the market.