WASHINGTON -- Democratic and Republican congressional leaders completed a deal Thursday with the White House on an economic stimulus package that would give most tax filers refunds of $600 to $1,200. The plan also provides tax incentives for businesses and contains a measure that would help an important segment of the mortgage market.
The package temporarily raises the conforming loan limits for Fannie Mae and Freddie Mac, beyond the current $417,000, which would allow the government-sponsored companies to buy bigger loans in areas with high housing costs. The new cap, expiring Dec. 31, could be as much as about $730,000, depending on a metropolitan area's median housing price. That would help free up the market for "jumbo" mortgages, which has suffered amid a broader credit crunch.
While the stimulus package still needs to pass the Senate and be signed off by President Bush, this would dramatically assist in completing new purchase and re-fi mortgages in our area. This will help some of those in danger of foreclosure, by making more money at cheaper rates available for lending.
As we know, the devil is in the details, but since the housing sector threatens to do significant damage to the rest of the US economy and indeed, the world economy, some kind of relief was expected.
It remains to be seen whether this is a full surrender by Washington to the financial and banking sector, and whether increasingly stringent and historically sound lending practices will prevail, or if this is just a big pre-election give-away scheme by politicians which will do more long term damage to housing and the economy.
Stay tuned to The Real Blog for analysis. However, for the short term, our local real estate market will benefit and speaking as a Realtor, some freeing up of the credit market may help a lot.
Thursday, January 24, 2008
Sunday, January 13, 2008
Reality 101: How to Create an Immigration Depression
[The following is an portion of a column by John Mauldin in Frontline Thoughts. Info on subscription is at the bottom of this page. While the political season could also be described as the silly season, there are serious issues that need to be addressed... seriously. While many Realtors absolutely will not include any political commentary (ever), I sometimes will. That's why it's called The Real Blog.]
How to Create an Immigration Depression
The call by Huckabee and others to deport 12,000,000 illegal immigrants is simply economic suicide. It would create a depression (not just a minor recession) in short order. Let's reduce productivity by 10-15%. Let's reduce consumer spending by 7-8%. Shut down hundreds of thousands of businesses who could not get workers they need. Who will pick the crops? Or do any of a hundred jobs that Americans don't want to do? It would drive up labor costs and create inflation. It would be a disaster of Biblical proportions.
Now, I am all for controlling the border. I want to know who is coming in. But we have to deal with reality, and the reality is that we need those workers who are here. The economy simply will not function without them. You can't send them home and then tell them to apply and hope they can get back in, and then expect business to function as usual. It will take years for a bureaucracy to handle the paperwork.
Go ahead. Close the borders. Find out who is here illegally and make sure they do not have a criminal record. If so, they go. The rest need to get documented, and we need to radically increase the number of immigrants we allow (after we control the borders!), especially educated workers who can help us build our knowledge economy.
And yes, this is amnesty. That is the cost of not controlling the border all these years. Nothing we can do about it, unless we want to shoot ourselves in both feet just to prove a point. Sounds rather dumb to me.
The great irony is that within ten years we are going to need even more immigrants to replace retiring boomers, as well as to pay into social security and Medicare programs. We are going to be competing with Europe for those immigrants. We need to get a head start.
And yes, it is a lot more complex than this quick analysis. But pandering to voters who for whatever reason want to stop illegal immigration by throwing out everyone who is here illegally is not the answer. Establish fines, require documents, whatever. But recognize reality and stop telling voters what they want to hear when your policies simply cannot work and will be destructive.
***************************************************************
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
To subscribe to John Mauldin's E-Letter please click here:
http://www.frontlinethoughts.com/subscribe.asp
How to Create an Immigration Depression
The call by Huckabee and others to deport 12,000,000 illegal immigrants is simply economic suicide. It would create a depression (not just a minor recession) in short order. Let's reduce productivity by 10-15%. Let's reduce consumer spending by 7-8%. Shut down hundreds of thousands of businesses who could not get workers they need. Who will pick the crops? Or do any of a hundred jobs that Americans don't want to do? It would drive up labor costs and create inflation. It would be a disaster of Biblical proportions.
Now, I am all for controlling the border. I want to know who is coming in. But we have to deal with reality, and the reality is that we need those workers who are here. The economy simply will not function without them. You can't send them home and then tell them to apply and hope they can get back in, and then expect business to function as usual. It will take years for a bureaucracy to handle the paperwork.
Go ahead. Close the borders. Find out who is here illegally and make sure they do not have a criminal record. If so, they go. The rest need to get documented, and we need to radically increase the number of immigrants we allow (after we control the borders!), especially educated workers who can help us build our knowledge economy.
And yes, this is amnesty. That is the cost of not controlling the border all these years. Nothing we can do about it, unless we want to shoot ourselves in both feet just to prove a point. Sounds rather dumb to me.
The great irony is that within ten years we are going to need even more immigrants to replace retiring boomers, as well as to pay into social security and Medicare programs. We are going to be competing with Europe for those immigrants. We need to get a head start.
And yes, it is a lot more complex than this quick analysis. But pandering to voters who for whatever reason want to stop illegal immigration by throwing out everyone who is here illegally is not the answer. Establish fines, require documents, whatever. But recognize reality and stop telling voters what they want to hear when your policies simply cannot work and will be destructive.
***************************************************************
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
To subscribe to John Mauldin's E-Letter please click here:
http://www.frontlinethoughts.com/subscribe.asp
Friday, January 11, 2008
Ever Optimistic Realtors' Association Spins the Market...
Home Sales Slowdown in the Santa Clarita Valley May Be Easing
Despite ongoing national reports about slow home sales and troubles in the home loan industry, a total of 111 single-family homes and 38 condominiums sold during November throughout the Santa Clarita Valley, the Southland Regional Association of REALTORS® reported.
The single-family resale total was down 39.3 percent from a year ago, a decline that was below the 50 percent or higher drops reported in other Southern California communities, suggesting that local buyers recognize the opportunities that exist in today's market.
"I don't think you can time the housing market anymore than you can time the stock market," said Larry Gasinski, the 2007 president of the Association's Santa Clarita Valley Division. "How do you know when any market has hit bottom and is on its way back up again?
"It's a buyers' market today so why not make an offer?" he said. "If you think prices will drop 10 percent over the next year, open up with an offer that is 10 percent lower than current sales comparisons. Waiting could mean the home you love will not be there, that favorable loan interest rates will be gone, or that you'll be competing with many more prospective buyers."
The 38 condos that sold were down 56.8 percent from a year ago when the total was 88 sales. The November tally was the lowest condo sales total on record, beating the prior low of 42 sales set in October 2007.
The median price of single-family homes sold during November was $522,500, down 9.9 percent from a year ago. The median has been falling slowly since the record high of $643,000 was set in April of 2006. After nine years of increases in the annual median price, 2007 is likely to post a decline of about 5 percent.
The condominium median price reported during November of $316,000 was down 13.4 percent from November 2006, but increased 1.9 percent from the median reported in October.
The condo record high of $397,000 was set in January 2006.
"The resale market in the Santa Clarita Valley appears to be finding a new equilibrium faster than other communities," said Jim Link, the chief executive officer of the Southland Regional Association of Realtors. "Until the lending industry starts making jumbo loans higher than $417,000 the recovery will be very slow. Still, the region's economic fundamentals are good and a growing number of buyers recognize that there are opportunities today that didn't exist just a short while ago."
A total of 2, 341 properties were listed for sale throughout the Santa Clarita Valley at the end of November, an increase of 7.2 percent from a year ago, but down 4.2 percent from this October, which suggests that the pace of listings is slowing.
At the current rate of sales, the active inventory represents a 16-month supply - a clear indicator of a buyers' market and well above the desired 5- to 6-month inventory that would represent a balanced market.
While statistics do not exist to prove the point, it is believed that today's inventory is far less than the totals reported in the early 1990s when the nation and the state were going through a deep economic recession.
"The market will remain stymied until more prospective buyers realize that affordable home loans are still available and that opportunities in today's market outweigh the risks of waiting," Link said. "The elements that made Santa Clarita desirable during the boom years - a great community, excellent value for the housing dollar, and a marvelous lifestyle - ensure that the local resale market will recover faster than other communities."
[from SRAR homepage Jan 11, 2008]
Despite ongoing national reports about slow home sales and troubles in the home loan industry, a total of 111 single-family homes and 38 condominiums sold during November throughout the Santa Clarita Valley, the Southland Regional Association of REALTORS® reported.
The single-family resale total was down 39.3 percent from a year ago, a decline that was below the 50 percent or higher drops reported in other Southern California communities, suggesting that local buyers recognize the opportunities that exist in today's market.
"I don't think you can time the housing market anymore than you can time the stock market," said Larry Gasinski, the 2007 president of the Association's Santa Clarita Valley Division. "How do you know when any market has hit bottom and is on its way back up again?
"It's a buyers' market today so why not make an offer?" he said. "If you think prices will drop 10 percent over the next year, open up with an offer that is 10 percent lower than current sales comparisons. Waiting could mean the home you love will not be there, that favorable loan interest rates will be gone, or that you'll be competing with many more prospective buyers."
The 38 condos that sold were down 56.8 percent from a year ago when the total was 88 sales. The November tally was the lowest condo sales total on record, beating the prior low of 42 sales set in October 2007.
The median price of single-family homes sold during November was $522,500, down 9.9 percent from a year ago. The median has been falling slowly since the record high of $643,000 was set in April of 2006. After nine years of increases in the annual median price, 2007 is likely to post a decline of about 5 percent.
The condominium median price reported during November of $316,000 was down 13.4 percent from November 2006, but increased 1.9 percent from the median reported in October.
The condo record high of $397,000 was set in January 2006.
"The resale market in the Santa Clarita Valley appears to be finding a new equilibrium faster than other communities," said Jim Link, the chief executive officer of the Southland Regional Association of Realtors. "Until the lending industry starts making jumbo loans higher than $417,000 the recovery will be very slow. Still, the region's economic fundamentals are good and a growing number of buyers recognize that there are opportunities today that didn't exist just a short while ago."
A total of 2, 341 properties were listed for sale throughout the Santa Clarita Valley at the end of November, an increase of 7.2 percent from a year ago, but down 4.2 percent from this October, which suggests that the pace of listings is slowing.
At the current rate of sales, the active inventory represents a 16-month supply - a clear indicator of a buyers' market and well above the desired 5- to 6-month inventory that would represent a balanced market.
While statistics do not exist to prove the point, it is believed that today's inventory is far less than the totals reported in the early 1990s when the nation and the state were going through a deep economic recession.
"The market will remain stymied until more prospective buyers realize that affordable home loans are still available and that opportunities in today's market outweigh the risks of waiting," Link said. "The elements that made Santa Clarita desirable during the boom years - a great community, excellent value for the housing dollar, and a marvelous lifestyle - ensure that the local resale market will recover faster than other communities."
[from SRAR homepage Jan 11, 2008]
Wednesday, January 02, 2008
Taxes are reassessed in housing slump
Homeowners across the nation are looking to county governments to reassess the values of their homes in the face of flattening and falling prices that have befallen scores of markets. Downward assessments, done at the request of homeowners or pre-emptively by government, appear to be most pronounced in areas where the housing market was exploding just a few years ago, or where economic conditions are poorest.
While every state and local government has its own methods for assessing home values for tax purposes - some do it annually, some every five years and everything in between - many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.
No one has aggregated the total number of counties reassessing home values, and many counties take at least a year to catch up to the marketplace. In some places where reassessments are rising, the numbers have yet to approach historical heights.
Cities where home values have fallen the most are the obvious first place to look for residents clamoring for reassessments, but that is not always the case. Some states, like California, Michigan and Nevada, have statutory caps in property tax increases, which mean the market value of single family homes almost always exceeds the assessed tax values, except in a major downturn. (The New York Times)
While every state and local government has its own methods for assessing home values for tax purposes - some do it annually, some every five years and everything in between - many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.
No one has aggregated the total number of counties reassessing home values, and many counties take at least a year to catch up to the marketplace. In some places where reassessments are rising, the numbers have yet to approach historical heights.
Cities where home values have fallen the most are the obvious first place to look for residents clamoring for reassessments, but that is not always the case. Some states, like California, Michigan and Nevada, have statutory caps in property tax increases, which mean the market value of single family homes almost always exceeds the assessed tax values, except in a major downturn. (The New York Times)
States unveil new nationwide mortgage regulatory framework
On January 2, a new era for mortgage regulation in the United States will ring in when the states' Nationwide Mortgage Licensing System (NMLS) goes live. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announced that NMLS, an Internet-based system that will serve as the foundation of a coordinated state mortgage regulatory framework, officially became operational on the first business day of 2008.
The launch of NMLS is just one part of a multi-faceted plan being implemented by CSBS and AARMR to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. To accomplish this, many states have changed or are in the process of changing their laws and regulations.
The launch of NMLS is just one part of a multi-faceted plan being implemented by CSBS and AARMR to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. To accomplish this, many states have changed or are in the process of changing their laws and regulations.
Ten Reasons Why Now is a Great Time to Buy
1) Selection, selection, selection.
There are about 2300 resale homes on the market in the Santa Clarita Valley area. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 1,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a also a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.
2) No Bidding Wars.
In 2005 there was one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
3) You can make an offer.
A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
4) Patience is tolerated.
In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
5) Due diligence is welcomed.
In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
6) There are plenty of spec homes.
In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
7) Repair requests are welcomed.
After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
8) Few, if any investors.
It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
9) Location, location, location.
Today's buyers can find homes closer to work. In the past buyers flocked to Palmdale or Riverside County in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
10) Real Financing is available.
The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!
There are about 2300 resale homes on the market in the Santa Clarita Valley area. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 1,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a also a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.
2) No Bidding Wars.
In 2005 there was one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
3) You can make an offer.
A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
4) Patience is tolerated.
In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
5) Due diligence is welcomed.
In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
6) There are plenty of spec homes.
In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
7) Repair requests are welcomed.
After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
8) Few, if any investors.
It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
9) Location, location, location.
Today's buyers can find homes closer to work. In the past buyers flocked to Palmdale or Riverside County in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
10) Real Financing is available.
The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!
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