5 Reasons to Buy a Home in 2011

Real estate is likely to improve in 2011. Here are five reasons consumers should consider a home purchase next year:

1. Mortgage rates will stay low. Even with rates climbing (maybe to as high as 6 percent by 2012) they are still well below where they have been historically.

2. Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.

3. Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.

4. Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.

5. Homes are shrinking. Homes are getting smaller, which has made them more affordable.

If you are thinking about buying a home in 2011, please contact our office at 619-993-0687 so we can help you start the home buying process.

December Housing Scorecard

The latest housing figures from the U.S. Dept. of Housing and Urban Development (HUD) and the U.S. Dept. of the Treasury show continued home affordability in the housing market, with interest rates near record lows, but the market remains fragile, as prices are unsettled.

Foreclosure starts and completions dropped significantly in November, as lenders review internal servicing procedures. The housing scorecard is a comprehensive report on the nation’s housing market.

The December Housing Scorecard features key data on the health of the housing market including:

Foreclosure starts and completions declined significantly in November. As lenders review internal procedures related to foreclosure processing, many foreclosure actions have been delayed leading to a 21 percent decrease in foreclosure activity in November. While this is the biggest month over month decrease since 2005, the decline is likely to be temporary as lenders eventually revise and resubmit foreclosure paperwork in the coming months.

As expected with the expiration of the home buyer tax credit, new and existing home sales have remained below levels seen in the first half of 2010. However, the December report also shows that home prices and home equity declined moderately, as prices remain unsettled at this fragile stage of the recovery.

More than 3.9 million mortgage aid offers were initiated between April 2009 and the end of October 2010 —more than double the number of foreclosure completions during that time. These actions included more than 1.4 million Home Affordable Modification Program (HAMP) trial modification starts, more than 600,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and nearly 1.8 million proprietary modifications under HOPE Now.

San Diego Home Sales Down, but Prices Up

San Diego home sales dropped 11.4 percent from Nov 2009 levels.  On a somewhat positive note, it was the smallest downturn for single-family sales in 20 markets and much less than the 24.6 percent decline in the U.S.

San Diego's median price of $391,700 was up 4.1 percent from November 2009, the sixth largest year-over-year increase. Washington ranked first at 9.5 percent, reaching a median $336,100. San Diego's overall price ranked second behind New York City.

Economists point to the recent slow down in sales because many buyers purchased homes earlier in the year to take advantage of federal homebuyer tax credits.

Interest rates have been rising since the most recent low of 4.11 percent in early November to 4.83 percent as of  last week. The latest interest rate figures will be released by Freddie Mac on Dec. 23, 2010.

More Foreclosures Expected in 2011

Brace yourself for another rough year in housing. The number of foreclosures is expected to increase in 2011 as more troubled mortgages work their way through the pipeline.

Next year could very well be a peak year for foreclosures, as the market is expected to tally about 1.2 million bank repossessions in 2010, with expectations even higher in 2011.

The forecast is partially due to issues the industry has faced with the robo-signing controversy that began in the fall and delayed a large portion of foreclosures from being completed this year, when lenders discovered procedures might not be in accordance with the law.

Continued high unemployment also is expected to exacerbate the foreclosure problem in the year ahead, as will recasting interest rates on adjustable-rate mortgages, which will increase monthly payments for some homeowners.

Home construction up in November

Home construction nudged up in November after two months of declines.

Builders broke ground last month on a seasonally adjusted 555,000 units, a 3.9 percent rise from October, the Commerce Department reported Thursday.

Even with the gain, housing starts are just 16 percent above the 477,000 unit pace from April 2009 - the lowest point on records dating back to 1959.

They are down 76 percent from their peak in January 2006, and 45 percent below the 1 million annual rate that analysts say is consistent with a healthy housing market.

San Diego one of few metro areas to show higher home values

San Diego had the best home value improvement in 2010 out of large metro areas, according to Zillow.com.

The area's estimated year-end value for all homes was $378.5 billion, up $10.2 billion from 2009. 

At 2.8 percent, that was the biggest rise in the top 20 and 14th among all 129 markets.

While San Diego had the best upswing of the year among the biggest markets, recent sales figures indicate that prices have slid back below their recent peaks and some economists believe there will be little change next year.

Freddie Mac temporarily suspends foreclosure evictions

Freddie Mac says it has ordered all evictions involving foreclosed, occupied, single-family and 2- to 4-unit properties that had Freddie Mac mortgages to be suspended from Dec. 20, 2010 to Jan. 3, 2011.

"If the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays," said Anthony Renzi, executive vice president of single family portfolio management at Freddie Mac.

Consumer survey indicates a housing recovery after 2012

Nearly 60 percent of Americans believe the housing market won’t recover until 2013 or later, according to a survey released by Trulia.com and RealtyTrac.

Conducted just before the midterm election, the survey found:

• 5 percent said the recovery has already taken place
• 10 percent expect it to occur next year
• 27 percent in 2012
• The post-2012 recovery is predicted by 58 percent:
• 24 percent in 2013
• 12 percent in 2014 
• 22 percent in 2015 or later

Half of adults surveyed said they have less faith in mortgage lenders, banks and the government.  Another 35 percent believe the “robo-signing” issue will delay the housing market’s recovery. Some lenders recently acknowledged that they had not followed proper paperwork procedures in handling foreclosures and were halting foreclosure proceedings temporarily. The problem was not as pronounced in California.

The survey revealed that 48 percent of homeowners would consider walking away from their mortgage if it was higher than their home value. If their mortgage becomes unaffordable, two-thirds said they would consider calling their lender to try and modify the loan. The next most popular action, held by 10 percent, would involve renting a room to a tenant to help cover the mortgage.

Mark Marquez, president of the San Diego Association of Governments, agreed that the recovery may be two or three years away, but that San Diego might recover six months to a year sooner.

“San Diego has a history of being first in and first out,” Marquez said. “That being the case, I anticipate our economy probably recovers quicker than the national pace.”

Deficit Plan Opposed by Realtors

In February, the White House created the National Commission on Fiscal Responsibility and Reform to examine how the country spends money and collects taxes.  The commission also was tasked with creating a proposal that would cut the federal budget deficit.

• The deficit commission’s proposal was released to the public this week and calls for cutting the federal debt by $4 trillion through 2020 by upending many tax and spending policies.
• Among the proposed changes include a recommendation to reduce the mortgage interest deduction (MID) currently offered to homeowners as an incentive to own a home. The ability of homeowners to deduct the interest paid on mortgages is a powerful incentive for home ownership and has been one of the simplest provisions in the federal tax code for more than 80 years.
• The commission’s proposal would change the MID to a 12 percent non-refundable tax credit, with no credit offered for mortgages higher than $500,000 nor for interest on a second residence or home equity.
• The CALIFORNIA ASSOCIATION OF REALTORS® and the NATIONAL ASSOCIATION OF REALTORS® are strongly opposed to the proposed changes to MID and are working vigilantly to ensure elected officials are aware of the opposition and that implications of the proposal are understood.
• As the housing market continues to recover from the worst financial crisis in recent history, any change that reduces the ability of the market to heal is misguided and must be rejected. The proposal from the commission will negatively impact the housing market, further erode opportunities for homeownership across the country, and will contribute to further price declines and diminished equity for homeowners.
• Although the proposal has been made public, the full 18-member panel still must vote on the proposals before a formal recommendation can be issued to Congress and the White House. A vote is expected to take place Friday.
• Homeowners and home buyers are encouraged to call their member of congress and urge him or her to preserve the MID.