Market Watch

Home prices fall a record 10.7% in past year
Of 20 cities, only Charlotte holds on to meager appreciation

Standard & Poor’s Case-Shiller home price index for 20 cities fell a record 2.4 percent between December and January and has dropped a record 10.7 percent from the same period a year ago, according to January figures released Tuesday.  Of the 20 cities studied, all posted declines year-over-year except Charlotte, N.C., which rose 1.8 percent.  All 20 cities posted month-to-month declines.

A separate index from the Office of Federal Housing Enterprise Oversight (OFHEO) showed a smaller 3 percent year-over-year decline and a 1.1 percent December-to-January drop.

MAKING SENSE OF THE STORY FOR CONSUMERS:

• National surveys such as these are useful in measuring broad macroeconomic trends but are of marginal value to the individual consumer in the process of buying or selling a home.  That’s because real estate prices are set at the local level and can vary dramatically from market to market, neighborhood to neighborhood, and home to home based on a variety of factors.
• NAR on Tuesday reported an increase in sales nationally for the first time in seven months.  This gain is encouraging because increases in sales were not expected until the second half of the year. According to a C.A.R. report, February sales volume in California was up 9.5 percent compared with January, marking the fourth month in a row that figure inched higher
• In some markets, like Sacramento, falling prices have recently stimulated sales as buyers take advantage of the downturn.  As inventories of homes are drawn down, prices should begin to stabilize.

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   San Francisco Chronicle

Just a tidbit of good news on home sales

Wall Street and others cautiously applauded this week’s home sales reports as a sign that the real estate and stock markets may be “scraping along the bottom” in preparation for some slight improvement later this year or in early 2009.

MAKING SENSE OF THE STORY FOR CONSUMERS:

• There is increasing optimism that the Federal Reserve’s recent efforts to lower interest rates and shore up Bear Stearns are having a positive effect on the stock market and may start to bolster home sales later in the year.  While it is too early to call a “bottom” to the decline, these signs are positive indicators.
• A large inventory of homes to choose from, favorable interest rates, and increases in the FHA and conventional mortgage loan limits mean consumers will continue to experience favorable pricing in many areas of the state.

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     Sacramento Bee

Federal Housing Finance Board acts to expand funding pool for mortgages

The Federal Home Loan Bank system will be allowed to double the amount of capital it can spend to purchase mortgage bonds.  Twelve privately funded Federal Home Loan Banks will be permitted to purchase about $100 million in mortgage bonds over the next two years.  These bonds are packaged by Fannie Mae and Freddie Mac and will help ensure there is cash in the system for lenders to lend and consumers to borrow.

 

 

MAKING SENSE OF THE STORY FOR CONSUMERS

• This action will bring much-needed liquidity to a home loan market that has been wanting for investors since last summer’s subprime mortgage crisis.
• More mortgage capital means a greater number of consumers will be able to obtain a mortgage to purchase a home or refinance their existing home.

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In other news:

    National Public Radio

Home sales, consumer sentiment hit lows

Consumer confidence skidded to its lowest level in five years thanks to rising prices, a troubled housing market, and tighter credit, The Conference Board reported.  The measure was far below what was expected.

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     Los Angeles Times

FHA loans can ease the mortgage squeeze

The federal agency may aid those with little equity or cash for a down payment

The Depression-era FHA program is experiencing a renaissance now that the size of loans it can insure has been sharply increased.

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     The New York Times

The affluent, too, couldn’t resist adjustable rates

Affluent consumers increasingly are ensnared in the home mortgage crisis thanks to adjustable-rate mortgages they can’t refinance.  Here’s what some are doing about it.

To read the full story, please click here.

    MarketWatch

Real estate bargain hunting:  Three lessons from a one-day tour of Foreclosureville

The Sacramento suburb of Lincoln was the fastest-growing suburb in the U.S. from 2000-2006.  But foreclosures turned entire neighborhoods into ghost towns.  Today, Lincoln is showing signs of recovery:  14 months of foreclosure inventory has been reduced to two months and multiple offers are becoming more common.

To read the full story, please click here.