Media Advisory 4/17/08

Thursday, 17 April 2008

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?