Clear Capital Predicts Stabilized 2012 Real Estate Valuations

TRUCKEE, Calif. – Jan. 9, 2012 – Clear Capital (www.clearcapital.com), released its monthly

Home Data Index™ (HDI) Market Report, with news of a year-over-year national price change in

2011 of -2.1%, and forecast of a slight 0.2% gain in 2012. Report highlights include:

 2011’s decrease of -2.1% year-over-year was bolstered by a stabilizing of prices in the

latter half of the year and decreasing REO saturation.

 In 2012, U.S. home prices are forecasted to show continued stabilization with a slight gain

of 0.2% across all markets, remaining near levels not seen since back in 2001.

 Importance of micro-market analysis is reiterated as the 2012 forecast is for a flat U.S.

market, but only 40% of individual markets (20 of 50) are projected to be stable.

 

“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,”

said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “With national

prices down a little more than two percent for the year and sitting at their lowest point since

2001, our projections show that the current balance the market has found will continue through

2012.

“However, individual markets reacting to their local economic drivers exhibit a wide range of

performance levels,” added Dr. Villacorta. “Although the national numbers suggest markets are flat,

when looking at individual metro markets it turns out only 24% of them showed signs of

stabilization in 2011, while the others are still moving more dramatically higher or lower. What’s

most interesting is that the lower segments of appreciating markets are driving much of the current

price growth. In places like Florida, which have historically been hard hit, we are now

seeing considerable activity in lower-end properties as demand continues to heat up.”

 

For the complete report click here.

 

Why Housing is a Buy!

By: Gerri Willis – Fox Business News – June 10, 2011

Reports today that housing prices could go down another 10 percent to 25 percent. I’m just not that bearish. I could be wrong but there is a great case for buying a house now.

First off, housing is cheap. Prices have already fallen more than 30 percent nationally, and much more in cities like Las Vegas and Phoenix. That means homes are on the markdown table – and that means opportunity.

Even better, interest rates are at lows. The average 30-year mortgage rate, according to Bankrate.com, is 4.46 percent. A 15-year mortgage is just 3.64 percent. This is an unbelievably good rate and with all the stimulus the federal government has pumped into the economy, it’s not likely to last forever.

Here’s an example of how much money you could save now by buying: Let’s compare a house bought in 2006 when the median price was $221,900 and average mortgage interest rates were 6.41 percent. You’d have a monthly mortgage of $1390.

A median-priced home today is $133,500. Rates have fallen, too, to 4.46 percent, for a monthly mortgage of just $825. The difference is $564 a month or $6,800 a year. The difference in the total costs of the two loans over 30 years – interest and principle combined — $203,002 – or enough to send the kids to college and buy a second home.

My advice: Be a contrarian!

Read more:

http://www.foxbusiness.com/on-air/willis-report/blog/2011/06/10/why-housing-buy#ixzz1P13STc4g

 

Housing Construction in California Rises in April, CBIA Announces

SACRAMENTO – Total housing starts in California, as measured by the number of building permits issued, rose 2 percent in April, the California Building Industry Association announced today.

According to statistics compiled by the Construction Industry Research Board (CIRB), permits were pulled for 3,474 total housing units in April, up 2 percent from the same month a year ago but down 23 percent from March. Permits for single-family homes totaled 1,978, down 16 percent from April 2010 but up 10 percent from the previous month, while multifamily permits totaled 1,496, up 43 percent from a year ago but down 45 percent from March.

For the first four months of the year, permits were pulled for 13,250 total units, down 4 percent when compared to the first four months of 2010 when 13,784 permits were issued. Permits for single-family homes were down 22 percent while permits for multifamily units were up 26 percent.

“While it wasn’t a huge increase, it’s nice to see a slight improvement over last year,” said Mike Winn, CBIA’s President and CEO. “We are closing the gap compared with last year in year-to-date figures as well, and we hope to see continued increases in the summer months.”

Winn noted that CIRB is now projecting 51,000 total permits will be pulled in 2011, up from 2010’s total of 44,762 permits, but still down from 2008’s total of 64,962.

“It appears we will experience another year of modest improvement, but it’s an improvement nonetheless,” said Winn. “As housing has historically been a prolific job and economic generator, we urge local government officials to work with builders on reducing and delaying the collection of impact fees to help make projects more financially feasible so that we can help in our state’s economic recovery by putting more people back to work. We would also urge our state lawmakers to ‘do no harm’ and thoroughly examine any legislation that might harm our industry’s still-fragile recovery.”

###

The California Building Industry Association is a statewide trade association representing thousands of homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. More information is available on the Association’s Web site, www.cbia.org.

The Construction Industry Research Board (CIRB) is a nonprofit research center established in 1974 to provide statistical information on the California building and construction industry. More information is available on the CIRB Web site, www.cirbdata.com.

 

Source: California Association of Realtors

Survey: Next two years is prime time for real estate investors

Real estate investors are likely to be three times more active than other types of homebuyers in their local markets within the next two years, according to a nationwide survey from Realtor.com operator Move Inc.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers — those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11 percent expect to sell within a year of purchase, according to the survey.

Some 56.5 percent of investors said the repair and maintenance of their property has not been difficult, and 42 percent plan to spend their own time and energy for that upkeep going forward.

Among the rest, 29.5 percent said they would hire a contractor for repairs and 28 percent said they would purchase move-in-ready properties. About 65.7 percent don’t expect repair costs to surpass 20 percent of the property’s purchase price, the survey said.

“This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers who buy and sell properties quickly,” said Steve Berkowitz, Move CEO, in a statement.

They’re mostly entrepreneurial individuals who will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities.”

More than half of investors, 53.5 percent, expect home prices to remain the same in the next six to 12 months. Of the rest, 23 percent expect prices to fall. About 69 percent expect it would be easier to find properties in the next six months, though 43.5 percent expect it would be harder to find bargains.

Some 41.5 percent of investors expect it would be easier to sell their properties in the next six months, the survey said.

Only 18.5 percent of investors said they will engage in an all-cash purchase, while 75.5 percent plan to combine cash and credit to purchase a property. More than half (59.5 percent) plan to put down cash but finance more than half of the purchase.

Sixteen percent plan to put down more than 50 percent in cash and finance the rest. Of the cash-only buyers, eight out of 10 expect discounts from sellers.

About 65.5 percent of investor respondents expect the financing difficulties first-time buyers are having will make it easier for them to compete for properties, according to the survey.

“The fact that most real estate investors plan on combing cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales,” Berkowitz said.

“This suggests they’re seeing tremendous or once-in-a-lifetime opportunities and may be tapping into credit or taking out second trusts on existing properties. The data also shows they’re expecting high returns to match the level of investment they’re making in an arena that is new to many investors.”

Most, 59 percent, of investors said they were new to investing; only 36.5 percent had experience with more than one property transaction. Nearly half (48 percent) said they expected a profit of 20 percent or more from their property investments, equal to a 4 percent annual rate of return over five years, the survey said. Another 40 percent expected a profit of 10 percent.

 

Source: California Association of Realtors

 

Research Brief: Small Business Optimism to Fuel Hiring

Marcus & Millichap Research:

Rising Small Business Optimism Points to Strengthened Spending, Hiring in 2011

CA Assoc. of Realtors responds to White House GSE Proposal

No doubt you heard about the White House’s proposal today to shut down Fannie Mae and Freddie Mac and reduce the government’s role in housing finance.

I want you to know that C.A.R., along with NAR, is actively engaged on behalf of REALTORS® and the nation’s home owners to protect the flow of affordable mortgages to home buyers.

The elimination of government involvement would raise borrowing costs for home buyers by severely restricting a safe and affordable flow of financing, making mortgages less available, and, ultimately, further impeding the still-fragile housing market recovery.

Congress needs to understand that during economic downturns, the housing market needs government involvement to ensure capital stability. History has shown the private market is incapable of supporting the mortgage financing demands of the nation’s home buyers during the hardest of times.

We can’t have a restoration of the old GSEs with private profits and a taxpayer loss system, but C.A.R. and NAR believe that Fannie Mae and Freddie Mac should be converted into government-chartered, non-profit corporations. This would ensure the government’s role in a stable real estate finance system, while eliminating the conflict created by the GSE’s current charter allowing for a private profit and public loss structure. With a clear explicit guarantee by the government, these entities would continue to be able to offer low interest rate loans onto home buyers and assure investor confidence.

Moreover, the White House’s proposal to allow the maximum loan limit to drop back to $625,500 in high-cost areas also would hamper California’s housing recovery. California dominates the jumbo loan market and cannot afford a reduced loan limit. Any reduction to the conforming loan limit will prevent low- and moderate-income home buyers in high-cost areas from accessing low-cost, low-rate mortgages.

The debate around GSE reform is just getting started, and we expect it will continue for some time to come. In the meantime, C.A.R. and NAR will continue advocating for a strong government presence in the housing market.

I’ll keep you updated.

Sincerely,

Beth

Beth L. Peerce

2011 President

CALIFORNIA ASSOCIATION OF REALTORS®

December 2010 Home Sales Rise in California

C.A.R. reports California home sales rise in December, posting seven-month sales high

LOS ANGELES (Jan. 21) – California home sales rose in December, posting their highest level since May, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The statewide median price increased from November, but was down from a year ago.

“December’s sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher,” said C.A.R. President Beth L. Peerce. “Most of December’s sales opened escrow in October and November. Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,” she said.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,680 in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. December’s sales were up 5.9 percent from November’s revised pace of 491,590 but were down 6.8 percent from the revised 558,840 sales pace recorded in December 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from a revised $296,690 in November but was down 1.6 percent from the revised $306,860 median price recorded for the same period a year ago.

“While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “For 2010 as a whole, sales reached 494,900 homes sold, down 9.5 percent from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2 percent to reach $302,900 for the year, up from the $275,000 recorded in 2009,” she said.

Here are other highlights of C.A.R.’s resale housing report for December 2010:

• A greater than usual drop in listings combined with the sales increase caused C.A.R.’s Unsold Inventory Index to decline more than one month. The Unsold Inventory Index for existing, single-family detached homes was 5.0 months in December, down from 6.2 months in November. The index was 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

• Thirty-year fixed-mortgage interest rates averaged 4.71 percent during December 2010, compared with 4.93 percent in December 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 3.31 percent in December 2010, compared with 4.31 percent in December 2009.

• The median number of days it took to sell a single-family home was 57.5 days in December 2010, compared with 35.1 days for the same period a year ago.

Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 97 of the 329 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for November may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. online at

http://www.car.org/marketdata/historicalprices/2010medianprices/dec2010/.

• Statewide, the 10 cities with the highest median home prices in California during December 2010 were: Beverly Hills, $2,180,000; Los Altos, $1,300,000; Calabasas, $1,175,000; Laguna Beach, $1,105,000; Manhattan Beach, $1,085,500; Newport Beach, $1,000,000; Santa Monica, $921,000; Cupertino, $904,500; Rancho Palos Verdes, $849,000; Los Gatos, $840,000.

• Statewide, the cities with the greatest median home price increases in December 2010 compared with the same period a year ago were: Beverly Hills, 54.3 percent; Calabasas, 39.1 percent; Poway, 25.5 percent; Ridgecrest, 23.3 percent; San Juan Capistrano, 19.2 percent; Compton, 17.5 percent; Laguna Hills, 15.7 percent; Santa Cruz, 14.1 percent; Gilroy, 14.1 percent; La Habra, 13.2 percent.

(Editors’ note: C.A.R. will no longer publish localized Dataquick numbers beginning with the January 2011 home sales news release to be issued next month. Also, C.A.R. will begin issuing a Pending Sales Index news release beginning in late February.)

Multimedia:

• Visit http://videos.car.org/mediavault.html?menuID=1&flvID=14 to view a video of C.A.R. Chief Economist Leslie Appleton-Young discussing highlights of the December sales and price report.

• Visit http://car.org/media/ppt/Dec_UII.ppt to view Unsold Inventory by price point.

• Visit http://car.org/media/ppt/Dec_pk_trough.ppt to view a data table comparing current prices with trough prices in areas throughout the state.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

December 2010 Existing-Home Sales Jump

December Existing-Home Sales Jump

Existing-home sales rose sharply in December, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.

Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”

The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.

“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.

Inventory Levels

Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.

NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.

Transaction Types

A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.

Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.

Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.

Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.

Performance by Region

Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.

Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.

In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.

Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.

For information and statistics regarding specific Truckee and Lake Tahoe real estate market areas please contact me.

Median home prices up in San Jose, San Francisco areas, most U.S. cities

By Alan Zibel  Associated Press

Posted: 08/11/2010 08:08:55 AM PDT
Updated: 08/11/2010 08:08:55 AM PDT

WASHINGTON — Home prices rose in nearly two-thirds of U.S. cities — including the San Jose and San Francisco areas — this spring as buyers took advantage of tax incentives that gave the struggling housing market a temporary jolt.

The median sales price for previously occupied homes rose compared with last year in 100 out of 155 metropolitan areas tracked in the April-to-June quarter, the National Association of Realtors said Wednesday. That compares with 91 out of 152 cities in the January-to-March quarter. Fourteen cities had double-digit price increases.

But the boost to the housing market in the second quarter faded shortly after tax credits expired at the end of April. Home sales fell in June and are expected to plunge further in July. Prices are expected to follow in the second half of the year.

The lowest mortgage rates in decades haven’t been enough to energize buyers. Home loan applications were virtually flat last week, the Mortgage Bankers Association said Wednesday.

The national median price in the second quarter was $176,900, up from $174,200 in the same quarter last year and up from $166,400 in the January-to-March period.

The median price is the midpoint, which means half of the homes sold for more and half for less. It typically falls in the winter and rises in the summer months. That’s because families with children traditional move during the summer and buy larger homes.

The largest price gain was in Akron, Ohio. Prices there were up 36 percent from a year ago. The San Francisco and San Jose areas, which have mounted a strong rebound from the housing bust, also saw prices rebound by about 25 percent. Prices in the Riverside metro area were up 18 percent from a year ago.

The biggest price drops were in Cumberland, Md., Tucson, Ariz., Ocala, Fla. and Beaumont-Port Arthur, Texas. Prices in all of those cities were down at least 13 percent from last year.

Governor signs home tax credit bill

Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.

To learn more about the California Home Buyer Tax Credit, click here.

All About Short-Sales

Thinking of Making an Offer on a Short Sale?  What You Need to Know…

Are you looking to buy a new home? Are you thinking that now’s a great time to find bargains? That’s true, but it pays to know a little about the seller’s situation before you make an offer.

If a home is being sold for below what the current seller owes on the property-and the seller does not have other funds to make up the difference at closing-the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You’re a good candidate for a short-sale purchase if:

• You’re very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

• Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you’re preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

• You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property-or you need to be in your new home by a certain time-a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you’re serious about purchasing a short-sale property, it’s important for you to have expert assistance. Here are some people you want to work with:

• Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who’s knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

• A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they’ve represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)

• Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it’s much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

Some of the other risks faced by buyers of short-sale properties include:

• Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

• Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.

• No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

For more information regarding Truckee real estate short-sale properties and north Lake Tahoe real estate short-sale properties, please contact me.

* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

Pending Home Sales Down but Housing Affordability at Record

WASHINGTON, March 03, 2009Pending home sales declined on the heels of a weakening economy and with some buyers waiting for clarity on housing stimulus provisions, according to the National Association of Realtors®.

The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in January, fell 7.7 percent to 80.4 from a downwardly revised reading of 87.1 in December, and is 6.4 percent below January 2008 when it was 85.9. The index is at the lowest level since tracking began in 2001, when the index value was set at 100.

Lawrence Yun, NAR chief economist, said the downturn in the economy also weighed heavily on the data. “Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,” he said. “We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit.”

The PHSI in the Northeast dropped 12.7 percent to 57.8 in January and is 19.7 percent below a year ago. In the Midwest the index declined 9.2 percent to 72.6 and is 13.8 percent below January 2008. The index in the South fell 11.9 percent to 82.2 in January and is 9.1 percent below a year ago. In the West the index rose 2.4 percent to 103.6 and is 13.5 percent higher than January 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said it’s ironic with the weak housing market that affordability conditions have improved dramatically. “Housing affordability is at a record high – the buying power of a typical family has risen significantly,” he said. “With the drop in interest rates, a median-income family can afford a home costing $20,000 more than a year ago for the same monthly mortgage payment. With the strong housing stimulus, we are hopeful inventory will get trimmed and help prices to stabilize in many areas by the end of this year.”

NAR’s Housing Affordability Index rose 13.6 percentage points in January to 166.8, a new record high.2 The HAI, a broad index of affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

The HAI indicates a median-income family, earning $59,800, could afford a home costing $283,400 in January with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest; affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. A year ago, the typical family could afford a home costing $263,300.

Yun added, “Conditions have been aligning very favorably for home buyers with the exception of consumer confidence. But I am hopeful that sales will turn around by late spring and early summer because history suggests that home sales can rise even in times of job losses when housing affordability rises.”

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1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Each March, NAR Research conducts a review of PHSI seasonal adjustment factors and fine-tunes data for the past three years.

2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the better housing affordability is for buyers.

The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.

Monthly publication of the index began in 1981 with annual data calculated back to 1970.

Existing-home sales for February will be released March 23; the next Pending Home Sales Index will be on April 1.

For specific Truckee real estate and north Lake Tahoe real estate statistics please  email me.

Scott C. Kennedy

Owner / Broker-Realtor®