The Associated Press, via Forbes.com

Median price of SoCal homes plunged 24 pct to 4-year low

Southern California home prices fell 24 percent in March, almost a four-year low, according to DataQuick Information Services.  March’s six-county regional median price was $385,000, down sharply from March 2007, when the median was at $505,000.  The last time the regional median price was that low was in April 2004, when it was $380,000.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Foreclosures are driving price declines.  Riverside/San Bernardino was most affected.  Fifty-six percent of homes sold in Riverside County in March were foreclosures, which caused the area’s median price to drop 27 percent to $306,250.  San Bernardino’s median price fell 28 percent to $265,000.
• Orange County continues to be the most expensive market in the region at $506,000, which was 20 percent below last year’s median price for March.

To read the full story, please click here:

http://www.forbes.com/feeds/ap/2008/04/15/ap4892381.html

     CNBC

Foreclosures jump 57 percent in last 12 months

Foreclosures haven’t yet peaked despite a dramatic 57 percent increase in filings and a 129 percent increase in bank repossessions between March 2007 and March 2008, according to a report issued Tuesday by RealtyTrac.  Nevada, California and Florida, respectively, experienced the highest level of foreclosure activity for March 2008, the report said.

MAKING SENSE OF THE STORY FOR CONSUMERS

• One of every 538 single-family households in the U.S. experienced some form of foreclosure filing during March, the report said.  RealtyTrac officials predict record foreclosure activity in the third or fourth quarter of 2008 as subprime ARMs adjust upward.
• In most states, foreclosure occurs in three phases:  a Notice of Default is filed after payments are missed, a notice of scheduled auction is filed if steps aren’t taken to remedy the default, and an REO filing occurs when the lender repossesses the property after failure to sell it at auction.
• Nevada, California and Florida experienced the highest foreclosure rates.  In California, one in every 204 homes was subject to a foreclosure filing in March for a total of 64,711 properties.  March filings were up almost 21 percent from February and approximately 106 percent from a year ago March.

To read the full story, please click here:  http://money.cnn.com/video/#/video/news/2008/04/15/news.harlow.041508.foreclosure.cnnmoney

     The New York Times

Looming deficit impedes federal housing agency

As the president and Congress propose extending the benefits of Federal Housing Administration (FHA) insurance to hundreds of thousands of homeowners in need of mortgage assistance, the FHA itself faces a deficit for the first time in its history due to problems with its seller-financed downpayment loan program.  If these problems continue, the agency could face a $1.4 billion deficit by 2009

MAKING SENSE OF THE STORY FOR CONSUMERS

• The seller-financed downpayment program today accounts for 35 percent of all FHA loans, up from 2 percent in 2000.  Under the program, sellers cover the buyer’s downpayment and typically add it to the total cost being financed through a mortgage.  These loans became more popular as homebuyers struggling to qualify for a home abandoned conventional FHA loans in favor of subprime mortgages.  Between 2002 and 2006, the number of conventional home loans insured by the agency plunged from 1.3 million to about 314,000.  Congress has been urged to take action to discontinue these loans, but opponents of such an action argue the program is necessary to help first-time buyers.
• Despite worries about FHA’s future, since September the agency has helped more than 150,000 homeowners refinance their mortgages.  The president hopes to increase that number to 400,000 by the end of the year, and Congress is considering legislation that would expand FHA programs to even greater numbers of Americans.

To read the full story, please click here:  http://www.nytimes.com/2008/04/09/business/09fha.html?_r=3&th=&emc=th&pagewanted=print&oref=slogin&oref=slogin&oref=slogin

    Bloomberg.com

Bernanke, Greenspan agree cash arms firms for slump

Corporate balance sheets of American businesses – other than banks – are in better shape today to face a recession than in previous economic contractions because they have banked some half a trillion dollars in cash, reduced short-term debt and slashed inventories, according to former Federal Reserve Chairman Alan Greenspace and current Fed Chairman Ben Bernanke.  That means companies aren’t likely to be as reliant on beleaguered banks to fund their operations.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Since the last recession, disciplined companies have been rewarded with 20 consecutive quarters of double-digit growth in profits.  S&P 500 companies alone have amassed about $615.5 billion in cash, compared with $352.4 billion prior to the 2001 downturn and $95.5 billion prior to the 1990-91 recession.
• Debt as a percentage of net worth for non-bank companies was only 63 percent in the fourth quarter of 2007, compared with 93.6 percent in 1990-91.
• Together, these figures indicate that companies may have to do less trimming of excess capacity and workers than they have done in recent recessions.  Some companies are even expanding, albeit cautiously.
• While these trends don’t ensure a rapid recovery if the country falls into a recession, it does position companies to ride out the storm.

To read the full story, please click here:  http://www.bloomberg.com/apps/news?pid=20601109&sid=ao6RcBfOUJz8&refer=home

    Santa Rosa Press Democrat

In tight housing market, Internet bidding gives homeowners another avenue

Home sellers and in Sonoma County tired of waiting to sell their home using conventional methods are turning to Internet auctions in an attempt to stimulate a faster sale.  Real estate auctions are the fastest-growing area in the auction industry, increasing 47 percent between 2003 and 2007, and the Internet is rapidly becoming the No. 1 venue for real estate auctions.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Selling a home the traditional way in Sonoma County takes on average about four months.  Some REALTORS^® are recommending auctions to their clients because they offer the potential to sell a home within a date-certain bidding period, rather than waiting for an indefinite period until a buyer makes an acceptable offer that meets the seller’s undisclosed “reserve” price.  Auctions appeal to sellers who want to move by a certain date or reduce their carrying costs. They also work well for unique properties, agents say.
• Auctioneers say auctions are just another tool REALTORS^® can use to market properties.  The benefit to sellers is that auction properties reflect the true worth of a property in today’s market.   However, buyers looking for a bottom-price deal don’t always see it that way.  A Penngrove estate on the market for six months at $2.45 million attracted 22 bids, but none high enough to meet the seller’s reserve price.
• Internet auctions provide another option that is attractive to buyers who want to remain anonymous or prefer an auction process that takes place in private, without the pressure of a competitor shouting out prices from nearby.
• Auction buyers pay a premium (10 percent on the Penngrove home) that is added to the final sales price to cover real estate commissions. 

To read the full story, please click here:  http://www1.pressdemocrat.com/article/20080409/NEWS/804090321/1036/BUSINESS01

In Other News…

   Los Angeles Daily News

Five local buyers profit from a real estate cycle that brings home prices within reach

To read the full story, please click here:

http://www.dailynews.com/news/ci_8906029

   Los Angeles Daily News

Many areas are becoming ghost towns as families foreclose

To read the full story, please click here:

http://www.dailynews.com/news/ci_8906031

   The Orange County Register

Federal program now best bet for home shoppers?

To read the full story, please click here:

http://www.ocregister.com/articles/fha-loans-loan-2016495-credit-market

     Sacramento Bee

Sacramentoregion’s home-sales tally offers ray of hope

To read the full story, please click here:

http://sacbee.com/142/story/854196.html


     Sacramento Bee

Gregory Group founder sees hope for Sacramento housing market

To read the full story, please click here:

http://sacbee.com/142/story/855844.html

     San Mateo County Times

Housing market continues plunge

Low-end houses slip; high-end ones stagnant

To read the fully story, please click here:  http://www.insidebayarea.com/sanmateocountytimes/localnews/ci_8861454

     Bloomberg.com

Lenders swamped by foreclosures let homeowners stay

Banks swamped by a tidal wave of foreclosures increasingly may be looking the other way and letting homeowners remain in their homes, according to some sources.  Banks say they are allowing homeowners more time to work out financial issues and potentially save their homes by avoiding foreclosure.  But some observers have expressed concerns that delaying the foreclosure process may only extend the agony for homeowners and prolong the housing market slowdown.

MAKING SENSE OF THE STORY FOR CONSUMERS

• 3.6 percent of borrowers were at least 90 days late on their payments in December – the highest percentage in more than five years, reported the Mortgage Bankers Association. Even so, it’s important to remember that 96.4 percent of borrowers were on time with their mortgage payments. And new foreclosures accounted for only 0.83 percent of all home mortgages in the fourth quarter of 2007, up from 0.54 percent in 2006.
• Lenders took an average of 61 days to foreclose on a property last year, compared with only 37 days the prior year.  State laws determine the length of time it takes for a bank to foreclose:  For example, in Georgia, it’s as little as 30 days and 35 days in Nevada.  In Maine, it takes up to a year while it can take as long as 19 months in New York.  In California, it usually takes a minimum of 120 days to complete an uncontested judicial foreclosure, but the timeframe can be significantly increased, for example, if the borrower contests the action or files for bankruptcy, according to Foreclosure.com.
• Banks sometimes let homeowners or renters stay put during a foreclosure to avoid legal fees and property maintenance and other costs, and to limit potential damage to the property that might occur if it was vacant for months on end.
• Banks also are slower to move on foreclosures because they are short-staffed and inundated with foreclosure paperwork.

To read the full story, please click here.

        Reuters

February pending home sales index drops to record lows

Pending sales of existing homes were weaker than expected in February and 21.4 percent below last year at this time, the NATIONAL ASSOCIATION of REALTORS® (NAR) reported Tuesday.  The NAR Pending Home Sales Index measures pending sales contracts and is seen as a barometer of future home sales activity.  However, the Index rose 2.1 percent for the month in the West.

MAKING SENSE OF THE STORY FOR CONSUMERS

• The Index fell 1.9 percent from 86.2 in January to 84.6 in February, the lowest level since NAR began publishing the Index in 2001.  Economists had expected a drop of 0.7 percent.
• Despite the decline, NAR expects home sales to remain flat before picking up during the latter half of the year, when increases in loan limits for jumbo mortgages are expected to help improve liquidity.
• By region, the Index in the West, which includes California, rose 2.1 percent.

To read the full story, please click here.

        San Francisco Chronicle

Lenders retreat as housing market plummets

The national housing market decline and resulting financial institution write-downs are beginning to hit home in the form of tighter credit, even for highly qualified borrowers with solid-gold credentials.  As lenders clamp down on new borrowers and cap existing home equity credit lines in an effort to limit future exposure, everyone from car dealers to landscape architects feels the effects.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Credit fuels economic growth by providing the means for people to purchase goods and services.  By 2004, Americans had borrowed more than $180 billion based on their home equity, plowing record amounts of cash back into the economy with the resulting purchases.
• In particular, lenders are cutting back on loans and lines of credit backed by real estate assets or raising interest rates and qualifying criteria.  By year-end 2007, home equity lending plunged to only $26 billion, according to the Federal Reserve.
• According to economists, other factors also are at play.  Slowing wage growth, rising prices for staples, falling stock portfolios and the cost of servicing existing debt all are causing consumers to rethink their spending habits.

To read the full story, please click here.

      The New York Times

White House offers new housing plan

The Bush Administration yesterday announced a plan   to provide housing market relief by loosening criteria for new mortgages insured by the federal government.  On Tuesday, support for a Senate bill that aims to stabilize home sales through tax breaks and other aid to homeowners lost momentum as the White House threatened to veto it if passed.  In the House, meanwhile, Democrats and Republicans debated various approaches to relieving the housing crisis. 

MAKING SENSE OF THE STORY FOR CONSUMERS

• The White House said Tuesday it is opposed to legislation that “will likely do more harm than good by bailing out lenders and speculators and passing the costs to other Americans who play by the rules and honor their mortgage debt obligations.”
• Potential House provisions include money for local governments to purchase foreclosed properties and bonds to fund refinancing programs.  Representatives also will weigh a proposal to create a property tax deduction for those who do not itemize deductions on their tax return and legislation aimed at helping homeowners and first-time buyers by offering up to $7,500 as a refundable credit, similar to a loan, that would be repaid over 15 years.
• The Bush-sponsored FHA plan, dubbed “FHA Secure,” would help as many as 100,000 additional homeowners this year.  Under the proposal, FHA insurance pricing would be more flexible and based on a consumer’s financial history.  Rules would be relaxed to allow consumers who have had up to two late payments within the last year to qualify for a new federally insured loan at the current 97 percent of value maximum.  Applicants with up to three months of delinquent payments would qualify for a 90 percent loan.

To read the full story, please click here.

In Other News…

      CNBC

Washington Mutual gets a $7 billion investment from a TPG-led group

To view the video, please click here.

     Los Angeles Times

Southern California beach house prices staying afloat

To read the full story, please click here.

    Sacramento Bee

Area cities trying to counter real estate slump

To read the full story, please click here.

   The Associated Press

Foreclosure crisis reaches into rural communities, too

To read the full story, please click here.

    Napa Valley Register

Local economy hanging tough

To read the full story, please click here.

    North County Times

Hot deals in midst of real estate bottom

To read the full story, please click here.

   Forbes

America’s riskiest real estate markets

Using data from a variety of sources, Forbes has compiled a list of the nation’s “riskiest” real estate markets – which includes San Diego and Sacramento.  But, the magazine concludes, there are signs that improvement may be on the horizon for these two major California markets.

MAKING SENSE OF THE STORY FOR CONSUMERS:

• The riskiest markets are those with high foreclosure rates, slow or no job growth, and a glut of homes on the market.  Markets like Detroit, Cleveland, and Miami display all three characteristics.
• By contrast, transactions are rising in San Diego, and that’s a good sign assuming the increase is sustained.  Rising transaction numbers may mean credit is becoming easier to come by and buyers are looking somewhat more favorably on the market.  In fact, Forbes suggests prices also may begin to rise over the next six months.  That’s because there usually is a lag between increases in transaction numbers and price increases.
• The Forbes report also projects better times ahead for San Diego and Sacramento thanks to a 125 percent increase in Fannie Mae/Freddie Mac conforming loan limits.  In San Diego, the report notes, 18 percent of the market will see improved lending conditions.

To read the full story, click here.



  National Public Radio

Many homeowners insist on inflated prices

Behavioral finance professor Hersh Shefrin of Santa Clara University discusses why some homeowners decline to accept an offer from a buyer that is less than their inflated asking price.

To listen, click here



   Dallas Morning News

Report:  Housing slump hitting second homes

Vacation home sales declined by more than 30 percent in 2007 and home sales to investors fell more than 18 percent from the previous year, according to a report issued Friday by the NATIONAL ASSOCIATION OF REALTORS®.

MAKING SENSE OF THE STORY FOR CONSUMERS:

• Sales of primary residences dropped 10 percent nationally over the same period, so it is no surprise that second-home and investment purchases, which tend to be discretionary, would fall as well.
• Second home and investment property buyers also have faced the same disruption in the mortgage market that buyers of primary residences have faced.  Mortgage credit tightened across the board during the last six months of 2007, creating a significant barrier to the completion of second- and investment-home sales.
• Despite the decline in sales, the median price of investment properties remained unchanged at $150,000 and vacation home prices fell by only 2.5 percent from 2006 figures to a median price of $195,000.
• Even with a softening in second/investment home sales, buyers remain optimistic:  80 percent of those surveyed by NAR in 2007 said they considered it a good time to invest in real estate.

To read the full story, please click here.



     Bloomberg.com

Banks fail to lower mortgage rates as Bernanke cuts

Though they’ve received seven interest rate cuts and a program designed to kick-start borrowing, banks are rebuilding their balance sheets rather than passing on the cuts to consumers in the form of lower interest rates.

MAKING SENSE OF THE STORY FOR CONSUMERS

• With home sales continuing to fall, policy-makers have shaved 3 percentage points off of bank borrowing costs, but the average fixed rate has dropped only half a point.  Last week, the rate for a 30-year-fixed loan was 5.85.
• In 2000, the last time home sales fell year over year, interest rate cuts helped revive the market.  During 2001, the Federal Reserve acted 11 times to reduce rates by a whopping 4.75 percentage points.   Fixed rates fell to a record low of 5.21 percent in June 2003.
• Because they have been holding steady at just below 6 percent in recent years, interest rates would have to fall to 5.7 percent or less to stimulate a wave of home purchase or refinance activity, according to one mortgage broker.

To read the full story, please click here.



    Reuters

Wall Street reacts to Paulson plan

Here’s a thumbnail sketch of Treasury Secretary Henry M. Paulson Jr.’s proposal, unveiled Monday, to create a set of federal regulators with authority over the entire financial system.

To view the video, please click here.