A recent report by the California Association of Realtors finds 67 percent of California sellers sold their homes due to inability to meet their mortgage obligation. Changes in family and employment status as well as adjustments to monthly mortgage obligations played significant roles in California’s homeowners’ decisions to sell their homes in 2009.
C.A.R. President, Steve Goddard, stated that tighter underwriting standards for refinances coupled with a decline in home equity impacted the market in 2009. “Many homeowners chose to sell last year because their adjustable-rate mortgage reset at the same time home prices were experiencing an unprecedented decline, leaving them with little equity and difficulty in qualifying for a refinance.”
On average, homes sold for $20,958 less than the original asking price in 2009. The median difference between the listing and the selling price was $32,315. The percentage of first time sellers also grew to 44 percent in 2009, a 33 percent increase from 2008, and nearly three times the amount from 2007 of 15 percent of first time sellers.
Fed Announces Interest Rates to Remain Low
Investors breathed a sigh of relief Wednesday when Federal Reserve Chair Ben Bernanke told Congress that interest rates are likely to remain low for an extended period. The economy, he said, "still requires support for recovery."
Investors see these low rates as a boon to a recovery of employment and business.
Bernanke’s announcement also took the edge off the news Wednesday that housing sales hit a new low in January.
Investors see these low rates as a boon to a recovery of employment and business.
Bernanke’s announcement also took the edge off the news Wednesday that housing sales hit a new low in January.
$1.5 billion in housing help for unemployed, underwater borrowers
President Obama recently announced a $1.5 billion program to help borrowers in states that foreclosures were highest: California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.
The money is planned to go to state agencies that can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
However, how the effort will help people remains to be seen. The administration did not provide many details on the state agencies' programs, saying it was leaving it to them to come up with the solutions. At least three of the agencies, in Florida, Arizona and Michigan, were surprised by the announcement and are still assessing how they will utilize the money.
The move is the administration's latest attempt to fix its signature foreclosure-prevention effort, as known as the Home Affordable Modification Program, which has been widely critized for not doing enough to help distressed homeowners.
The money is planned to go to state agencies that can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
However, how the effort will help people remains to be seen. The administration did not provide many details on the state agencies' programs, saying it was leaving it to them to come up with the solutions. At least three of the agencies, in Florida, Arizona and Michigan, were surprised by the announcement and are still assessing how they will utilize the money.
The move is the administration's latest attempt to fix its signature foreclosure-prevention effort, as known as the Home Affordable Modification Program, which has been widely critized for not doing enough to help distressed homeowners.
Mortgage rates poised to jump as Fed cuts funds
The Federal Reserve is poised to turn off a major money spigot that has helped sustain the ailing real estate sector, as an extraordinary program under which the Fed has pumped $1.25 trillion into the mortgage market is slated to end March 31, 2010.
While experts agree that the Fed's exit will cause mortgage rates to rise, the big unknown is how severe the effect will be. Several financial experts have forecasted rates to climb as high as 7 percent by the end of the year. The Fed has indicated that it might resume buying mortgage-backed securities if mortgage rates spike.
What does this all mean? If you are considering purchasing a home, it would be prudent to lock in your mortgage rate as soon as possible. You can expect high volitility in the mortgage market during the spring and summer months.
While experts agree that the Fed's exit will cause mortgage rates to rise, the big unknown is how severe the effect will be. Several financial experts have forecasted rates to climb as high as 7 percent by the end of the year. The Fed has indicated that it might resume buying mortgage-backed securities if mortgage rates spike.
What does this all mean? If you are considering purchasing a home, it would be prudent to lock in your mortgage rate as soon as possible. You can expect high volitility in the mortgage market during the spring and summer months.
CA home affordability up from 2008
Home affordability in the Golden State held steady in the fourth quarter of 2009 at 64 percent, according to a report by the California Association of Realtors.
That means 64 percent of California households could afford to buy an entry-level home, the same percentage as in the third quarter of 2009 and above the revised 61 percent figure for fourth quarter of 2008.
The median price for an entry-level home in the state was $257,940; the estimated monthly payment including taxes and insurance was $1,470; and the minimum household income needed to purchase a home at that payment was $44,100, the report said.
That means 64 percent of California households could afford to buy an entry-level home, the same percentage as in the third quarter of 2009 and above the revised 61 percent figure for fourth quarter of 2008.
The median price for an entry-level home in the state was $257,940; the estimated monthly payment including taxes and insurance was $1,470; and the minimum household income needed to purchase a home at that payment was $44,100, the report said.
Housing Market Stabilizes in CA
California’s housing market has shown signs of stabilization since early last year. Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its lowest point in February 2009.
In December 2009, California’s median home price was 25.1 percent above the low for the current cycle and the median price of an existing, single-family home rose to $306,820, an 8.4 percent rise year-over-year. This is the second consecutive year-over-year increase, and the 10th consecutive month-over-month increase.
Although home buyers should not focus solely on future home price appreciation, homeowners who purchase a median-priced house, live in their home for at least five years, and sell it at the then current median price, have averaged an annual rate of return of more than 11 percent, according to data collected by California Association of Realtors over the last 40 years.
In December 2009, California’s median home price was 25.1 percent above the low for the current cycle and the median price of an existing, single-family home rose to $306,820, an 8.4 percent rise year-over-year. This is the second consecutive year-over-year increase, and the 10th consecutive month-over-month increase.
Although home buyers should not focus solely on future home price appreciation, homeowners who purchase a median-priced house, live in their home for at least five years, and sell it at the then current median price, have averaged an annual rate of return of more than 11 percent, according to data collected by California Association of Realtors over the last 40 years.
Program encourages borrowers to pursue loan modifications
Freddie Mac and 13 national and local non-profit organizations recently announced the launch of Freddie Mac Borrower Help Centers, including one in San Bernardino.
The centers are designed to encourage delinquent borrowers to pursue mortgage workouts. At the centers, Freddie Mac borrowers will receive free, confidential one-on-one mortgage counseling.
The company also is launching a separate Borrower Help Network which will offer similar counseling services over the phone to targeted Freddie Mac borrowers.
The centers are designed to encourage delinquent borrowers to pursue mortgage workouts. At the centers, Freddie Mac borrowers will receive free, confidential one-on-one mortgage counseling.
The company also is launching a separate Borrower Help Network which will offer similar counseling services over the phone to targeted Freddie Mac borrowers.
Eligible for a Loan Modification?
If you can no longer afford to make your monthly mortgage payment, you may qualify for a loan modification.
Millions of borrowers who are current but having difficulty making their monthly payments, as well as borrowers who have already missed one or more loan payments may be eligible for a mortgage modification under the Home Affordable Plan.
To find out if you are eligible, click here.
Millions of borrowers who are current but having difficulty making their monthly payments, as well as borrowers who have already missed one or more loan payments may be eligible for a mortgage modification under the Home Affordable Plan.
To find out if you are eligible, click here.
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