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Fannie Mae Expects Slow But Sure Housing Growth in 2015

by Sonja Coffee

Fannie Mae Expects Slow But Sure Housing Growth in 2015

Where the U.S. housing market is concerned,Fannie Mae chief economist Doug Duncan said he is anticipating overall weaker home sales in 2014 than in 2013. But he expects that overall home sales in 2015 will post their best performance since 2007 despite seeing only moderate growth for the year.

The forecast on the state of the nation's housing market and on the overall economy were included in the Fannie Mae Economic & Strategic Research Group's October 2014 Economic Outlook, published on Thursday.

"We lowered our expectation for housing starts just slightly to one million units for 2014, but our view of mortgage originations has not changed," Duncan said. "Our estimate for 2013 was in line with the recent release of 2013 data under the Home Mortgage Disclosure Act, and our projection of total production in 2014 is little changed at approximately $1.1 trillion. For 2015, we are cautiously optimistic that ongoing labor market improvements, low mortgage rates, rising inventories, and some easing of lending standards will boost home sales by roughly 5.0 percent. However, we still believe housing will continue along its upward grind rather than have the breakout year some are expecting."

Economic growth has been slow on a global scale this year, but that has not dimmed the outlook for the U.S. economy, according to the findings of Fannie Mae's ESR Group. Real economic growth in the U.S. seems poised to exceed 3.0 percent for the second half of 2014, which is expected to provide a solid basis for continued growth into 2015.The slow global economic growth may prevent the Federal Reserve Board from making any interest rate policy changes until Q3 2014, it has not prevented a positive outlook for the economy in the U.S.

"Given the expected strengthening economic activity in the U.S. in the second half of the year, we continue to expect to finish just above 2 percent growth for all of 2014," Duncan said. "The risks are tilted to the downside due to current geopolitical events in Russia, Ukraine, Hong Kong, and the Middle East, as well as the economic slowdown in the Eurozone, China, and Japan. However, recent data suggest these factors have not significantly swayed American consumers. Real consumer spending is poised to pick up in the second half of 2014 from the first half, due in large part to improving labor market conditions, continued declines in gasoline prices, and a subdued pace of inflation."

Author: Brian Honea October 23, 2014

Keeping up with the Joneses isn’t the only goal of the San Bernardino County Board of Supervisors’ decision Tuesday to consider two property tax relief measures to spur home sales.

The tax relief measures — Propositions 90 and 110 — will give homeowners from neighboring counties mobility to buy a newly purchased or newly built home in San Bernardino County without having to worry about paying higher property taxes if they are 55 or older, or are permanently disabled.

Taxes on California homes are reassessed at market value when the property is sold.

For those mulling a move-up buy, a higher property tax can be a disincentive to make that purchase.

The board on Tuesday voted 4-0 to reinstate Prop. 90 and Prop. 110 — a local-option law — retroactively to Jan. 1, 2014. James Ramos, third district supervisor, was absent. A vote for final adoption is set for Oct. 21.

If adopted, a qualified homeowner would be allowed to transfer the base-year value of their existing home in another county of California to the newly purchased home in San Bernardino County.

The tax program is expected to level the playing field because Propositions 90 and 110 are already in place in nine other counties: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Diego, San Mateo, Santa Clara and Ventura.

Riverside County signed on recently, after repealing the local-option measure in July 1995.

by DEBRA GRUSZECKI, Press Enterprise

August 2014 Pending and Distressed Sales Report

by Sonja Coffee
 
August 2014 pending and distressed sales report
 
 
 

For release:
September 23, 2014

California pending home sales retreat again in August; distressed market continues improvement

LOS ANGELES (Sept. 23) – Diminished housing affordability continued to hold back pending home sales for the fifth straight month in August as rising home prices contributed to a further reduction in the share of distressed home sales, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 

Pending home sales data:
 
• California pending home sales fell in August, with the Pending Home Sales Index (PHSI)* dropping 4.5 percent from 104.5 in July to 99.8 in August, based on signed contracts.  The month-to-month drop was inconsistent with the seasonal trend, which typically shows a slight increase from July to August.

• Pending sales were down 8.7 percent from the 109.3 index recorded in August 2013.  The year-over-year decrease was in line with the six-month average of -8.9 percent recorded between February 2014 and July 2014.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – improved further in August, increasing from 90.3 percent in July to 91 percent in August.  Equity sales have been rising steadily since the beginning of this year.  Equity sales have made up more than 80 percent of total sales for more than a year and have risen above 90 percent for two straight months. Equity sales made up 84.6 percent of sales in August 2013.

• The combined share of all distressed property sales continued its decline in August, dropping from 9.7 percent in July to 9 percent in August.  Distressed sales continued to be down nearly 50 percent from a year ago, when the share was 15.4 percent.

• Twenty-two of the 41 reporting counties showed a month-to-month decrease in the share of distressed sales, with 19 of the counties recording in the single-digits, including Alameda, Contra Costa, Marin, Napa, Orange, San Mateo, Santa Clara, and Sonoma counties — all of which registered a share of five percent or less.

• Of the distressed properties, the share of short sales fell to its lowest level since February 2008, falling to 4.6 percent in August, down from 5.3 percent in July.  August’s figure was less than half the 10.2 percent recorded in August 2013.

• The share of REO sales fell in August to 4 percent, down from 4.1 percent in July and from 4.8 percent in August 2013. 

• August saw an increase in active listings across all property types, especially in short sale properties, which helped to improve housing supply conditions.  The Unsold Inventory Index of equity sales edged up from 3.9 months in July to 4.1 months in August, and from 2.5 months in July to 2.8 months in August for REO sales.  The supply of short sales rose from 5 months in July to 6 months in August.

July pending and distressed home sales report

by Sonja Coffee

August 26, 2014

July pending home sales lose steam; share of equity sales expands further

LOS ANGELES (Aug. 23) – Despite ultra-low interest rates, California’s real estate market continued to under perform in July, with pending home sales posting lower for the fourth straight month.  At the same time, equity home sales improved further, as both short sales and REO sales continued to decline, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 
 
Pending home sales data:

• California pending home sales fell in July, with the Pending Home Sales Index (PHSI)* dropping 2.3 percent from 107 in June to 104.5 in July, based on signed contracts.  The month-to-month drop was consistent with seasonal trends.

• Pending sales were down 9.2 percent from the 115.1 index recorded in July 2013.  Pending sales have been down year to year since October 2012, but the pace appears to be decelerating as the decrease in July was smaller than the average in the last six months.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – continued its upward trend, inching up in July to 90.6 percent, up from 90.3 percent in June.  Equity sales have been rising steadily again since the beginning of this year.  Equity sales have been more than 80 percent of total sales for more than two years and have risen above 90 percent for the second straight month. Equity sales made up 82.8 percent of sales in July 2013.

• The combined share of all distressed property sales declined further in July, dropping from 9.7 percent in June to 9.4 percent in July.  Distressed sales continued to be down more than 50 percent from a year ago, when the share was 17.2 percent.

• Twenty-one of the 41 reporting counties showed a month-to-month decrease in the share of distressed sales, with 20 of the counties recording in the single-digits, including Alameda, Contra Costa, Marin, Orange, Plumas, San Diego, San Luis Obispo, San Mateo, Sonoma, and Santa Clara counties — all of which registered a share of five percent or less.

• Of the distressed properties, the share of short sales fell to its lowest level since February 2008, falling to 4.9 percent in July, down from 5 percent in June.  July’s figure was less than half the 11.6 percent recorded in July 2013.

• The share of REO sales fell in July to 4.1 percent, down from 4.4 percent in June and from 5.2 percent in July 2013. 

• The supply of equity and REO properties eased in July, with the Unsold Inventory Index of equity sales edging up from 3.8 months in June to 3.9 months in July, and from 2.4 months in June to 2.5 months in July for REO sales.  The supply of short sales dipped from 4.8 months in June to 4.7 months in July.

Charts (click links to open):

• Pending sales compared with closed sales
• Historical trend in the share of equity sales compared with distressed sales.
• Closed housing sales in July by sales type (equity, distressed).
• Housing supply of REOs, short sales, and equity sales in July.
• A historical trend of REO, short sale, and equity sales housing supply.
• Year-to-year change in sales by property type.

Share of Distressed Sales to Total Sales
(Single-family)

Type of Sale July 
2014
June 2014 July 
2013
Equity Sales 90.6% 90.3% 82.8%
Total Distressed Sales 9.4% 9.7% 17.2%
     REOs 4.1% 4.4% 5.2%
     Short Sales 4.9% 5.0% 11.6%
     Other Distressed Sales (Not Specified)  0.4% 0.3% 0.4%
All Sales  100.0% 100.0% 100.0%

Single-family Distressed Home Sales by Select Counties
(Percent of total sales)

County July
2014
June 2014 July
2013
Alameda 4% 4% 8%
Amador 15% 23% 20%
Butte 8% 5% 13%
Calaveras 10% 16% NA
Contra Costa 5% 4% 6%
El Dorado 9% 12% 16%
Fresno 17% 17% 32%
Glenn 25% 21% 39%
Humboldt 9% 8% 16%
Kern 12% 11% 21%
Kings 19% 25% 31%
Lake 20% 23% 40%
Los Angeles 9% 10% 17%
Madera 9% 15% 33%
Marin 2% 3% 7%
Mendocino 14% 10% 21%
Merced 9% 16% 24%
Monterey 9% 13% 27%
Napa 9% 6% 15%
Orange 5% 6% 10%
Placer 6% 7% 17%
Plumas 5% 18% NA
Riverside 13% 13% 23%
Sacramento 12% 13% 24%
San Benito 15% 7% 22%
San Bernardino 15% 16% 25%
San Diego 2% 3% 5%
San Joaquin 14% 14% 28%
San Luis Obispo 5% 5% 9%
San Mateo 2% 3% 4%
Santa Clara 3% 2% 4%
Santa Cruz 7% 7% 16%
Shasta 18% 14% 27%
Siskiyou 11% 19% 45%
Solano 10% 13% 31%
Sonoma 5% 6% 14%
Stanislaus 14% 12% 30%
Sutter 14% 8% 20%
Tulare 18% 21% 31%
Yolo 14% 12% 20%
Yuba 25% 9% 35%
California 9% 10% 17%

NA = not available


*Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008.

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 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles. 

What Exactly Is a REALTOR®?

by Realtor.com

What Exactly Is a REALTORĀ®? photo

A REALTOR® is a licensed real estate salesperson who belongs to the National Association of REALTORS®, the largest trade group in the country.

Every agent is not a REALTOR®, but most are. If you’re unsure, you can ask your agent if they’re a licensed REALTOR®.

REALTORS® are held to a higher ethical standard than licensed agents and must adhere to a Code of Ethics.

Some REALTORS® are brokers, while some are agents. Unfortunately, people use the term interchangeably: there are some differences.

Brokers are usually managers. They run an agency and have agents working under them as salespeople. They might own a real estate brokerage or manage a franchise operation. They must take additional courses and pay additional fees to maintain their state-issued broker license.

An agent, on the other hand, is a salesperson selling on behalf of the broker.

Agents are also state licensed and must pass a written test before legally acting as a real estate agent. Each state has its own licensing laws and standards.

Some states—like Illinois—have eliminated the real estate salesperson license and mandate all agents take additional course work and pass another test to become brokers. They are broker associates still selling under a managing broker.

The Typical REALTOR®

There is a stereotype of the typical REALTOR® that must be dispelled: the stereotypical agent works a few hours a day and makes millions of dollars a year. Reality TV shows perpetuate this myth.

On television, buyers find the perfect house after visiting just three homes—and write an offer that is accepted immediately. The next thing you know, they’re moving in!

Nothing could be further from the truth.

The typical buyer searches with a REALTOR® for about 12 weeks and looks at about 10 properties before selecting a home, according to the National Association of REALTORS®. They then wait about 30 days—on average—or the deal to close. The agent is only paid once the deal closes.

If the buyer decides to sign another lease—or not to buy—that agent is not compensated. The same is true of listings. If the listing does not sell, the agent is not paid.

The average agent earned $47,700 in 2013, according to the National Association of REALTORS® Member Profile 2014.

Selling real estate is a commission-only business. That means an agent can work with a buyer for months without ever making a commission—because deals fall though and not every listing sells. It’s a business run on trust and faith.

Also, many people see the commission check at the closing table and have no idea how that money is split. They think their agent walks away with all of it—that’s just not true.

Remember, agents work for brokers. The commission check is made payable to the brokerage which then cuts a check to the listing agent and the selling agent. Both agents also must pay a percentage of their earnings to their broker.

Generally, agents also are responsible for paying their own federal and state income taxes, social security tax, and health insurance.

Terms You Should Know When Buying or Selling a Home

by Sonja Coffee

 

Amendments

A change—either to alter, add to, or correct—part of an agreement without changing the principal idea or essence.

Appraisal

An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

Assumption

Taking over another person’s financial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real property.

Beneficiary

The recipient of benefits, often from a deed of trust; usually the lender.

Close of Escrow

Generally the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

Comparable Sales

Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”

Deed of Trust

An instrument used in many states in place of a mortgage.

Deed Restrictions

Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.

Earnest Money Deposit

Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.

Easement

A right, privilege or interest limited to a specific purpose that one party has in the land of another.

Hazard Insurance

Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

Impounds

A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.

Legal Description

A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

Lien

A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.

Mortgage

The instrument by which real property is pledged as security for repayment of a loan.

PITI

A payment that combines Principal, Interest, Taxes, and Insurance.

Power of Attorney

A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”

Purchase Agreement

The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.

Quitclaim Deed

A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.

Recording

Filing documents affecting real property with the County Recorder as a matter of public record.

 


 

Posted: |

 

Southern California’s residential housing market got off to a wobbly start in 2014, and is still feeling the effect of the drag from last year, a market tracker said Wednesday.

Buyers still face a scant inventory, higher prices, rising interest rates and a dearth of bargain-priced foreclosed homes, said La Jolla-based DataQuick.

Last month there were 14,471 sales on new and previously-owned homes in the six county region, which was down 21 percent from 18,415 in December and down 10 percent from 16,058 a year earlier.

 

Sales were 17 percent below the average 17,493 for a January dating back to 1988, when DataQuick began tracking the marker. That is not unusual, though, since the market collapsed in the middle of the last decade.

“Sales haven’t been above average for any month in more than seven years,” said DataQuick analyst Andrew LePage.

Sales have fallen below the year-ago level for four months in a row.

“Why? We’re still putting a lot of the blame on the low inventory. But mortgage availability, the rise in interest rates and higher home prices matter too,” DataQuick President John Walsh said in a statement.

 

“Two of the bigger questions hanging over the housing market right now are, how much pent-up demand is left out there and will inventory skyrocket this year as more owners take advantage of the price run-up?’”

The answers won’t be known until spring, he said.

The market did not vary much around the region.

In Los Angeles County the median price rose 20.5 percent to $410,000 from $340,000 a year earlier. Sales fell 7 percent to 4,913 from 5,308 in January 2013.

In San Bernardino County the median price jumped 24 percent to $220,000 from $177,500 a year earlier and sales fell 11 percent to 1,910 from 2,137.

 

Riverside County’s sales declined 10 percent to 2,576 from 2,858 and the median price increased 23 percent to $277,000 from $226,000.

Foreclosure sales — homes foreclosed on in the prior 12 months — accounted for 7 percent share of the resale market in January, up from 6 percent in December but down from down from 17 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007, DataQuick said. They reached a high of 57 percent in February 2009.

 

Short sales — transactions where the sale price fell short of what was owed on the property — made up an estimated 12 percent of Southland resales last month. That was down from 13 percent the prior month and down from 24.2 percent a year earlier.

 

The drop in distressed property sales and rising prices eroded affordability but that seems to have stabilized in the latter part of last year, according to the Los Angeles-based California Association of Realtors.

The group said that price gains slowed in last year’s fourth quarter, which helped affordability.

During the last three months of 2013 in Los Angeles County 44 percent of households could afford a median priced home costing $423,090. In the Inland Empire 44 percent of households could afford a median priced home costing $263,580, the association said Wednesday.

Statewide, 32 percent of families could afford a median priced home costing $431,510 in last year’s fourth quarter.

stock_realtor_handing keys to clients

Real Estate Representation: What Are the Different Types, and What Do They Mean?

When you work with an agent in a real estate transaction, you’re either a client or a customer of that agent. There is a difference, and it’s important.

A client has a brokerage relationship with a Realtor®: The client has signed a contract and is legally represented by that Realtor® and the Realtor®’s brokerage. Every other person who’s party to that transaction is considered a customer of that Realtor®. The Realtor®’s primary fiduciary responsibility is to the client.

In real estate transactions, there are two main types of representation:

  • Seller representation: If you are selling a property and enter a brokerage agreement with a Realtor®, that Realtor® and their firm become your representative during that specific transaction. They are legally obligated to represent you and your financial interests as a seller.
  • Buyer representation: If you are buying a property and enter a brokerage agreement with a Realtor®, that Realtor® and their firm become your representative during that specific transaction. They are legally obligated to represent you and your financial interests as a buyer.

Representation is straightforward if the buyer and seller agents are affiliated with different companies. However, when the agents on opposite sides of the transaction work for the same brokerage, representation and agency become more nuanced and complex.

These are the four most common types of agency and what they mean:

  • Seller agency: A Realtor® from Brokerage A represents the seller in a transaction. This Realtor® looks out for the best interest of the seller in the transaction, and owes the buyer honesty and any material facts about the listed property that are needed to make an educated decision.
  • Buyer agency: A Realtor® from Brokerage B represents the buyer in a transaction. This Realtor® looks out for the best interest of the buyer in the transaction, and owes the seller honesty and any material facts that are needed to make an educated decision.
  • Dual agency: One Realtor® from Brokerage A represents both the buyer and the seller in a transaction. This Realtor® represents the buyer and seller equally and owes confidentiality to both parties. Realtors® in a dual-agency relationship facilitate the entire transaction and may not provide full advice to either party due to confidentiality.
  • Designated agency: Real estate Brokerage A represents both the buyer and seller, with one Realtor® from Brokerage A representing the seller and a separate Realtor® from Brokerage A representing the buyer. The brokerage represents the buyer and seller equally, owes confidentiality to all parties and may do nothing to the detriment of either the buyer or the seller.

That’s a high-level overview of representation and agency. But it’s important to note that agency law varies from state to state, and not all agency types are covered in this article.

 

Home Improvements That Pay You Back

by Sonja Coffee

HomeImprovements

2013 Ended With Higher Housing Demand, Prices

by Sonja Coffee

Report: 2013 Ended With Higher Housing Demand, Prices

Mortgage Industry CollapseIt’s official: Home prices and housing demand in 2013 closed in a stronger position compared to 2012, according to the National Housing Trend Report just released by realtor.com®.

The median list price for December 2013 was 8.1 percent above December 2012, according to the data. The median age of inventory was down by 5.1 percent and the number of units for sale was essentially unchanged — all positive signs of a stronger market compared to December 2012.

The report also showed some month-over-month slowdowns  typical of the winter home-buying season. The total inventory of homes for sale in the United States declined from 1,846,155 units in November to 1,731,017 units in December. Age of inventory rose from 101 to 112 days, and the median list price declined from $197,700 to $194,500.

“As we open the new year, the first-quarter inventory figures are especially crucial as our first barometer into seller confidence for the 2014 home buying season,” said Errol Samuelson, president of realtor.com®. “The market is still showing significant demand, but in order to have a strong home buying season, sellers need to put their homes on the market.”

Other factors could affect consumers when it comes to 2014 housing. The National Association of REALTORS® recently highlighted concern about the effect of the Qualified Mortgage rules that came into effect in January 2014, which may further decrease credit availability. Another fear was the impact that the implementation of the Affordable Care Act this month could have on consumer finances.

Key Market Indicators for December 2013

   December 2013  Year-Over-Year Percentage Change  Month-Over-Month Percentage Change
 Number of Listings  1,731,017  1 percent  -6.2 percent
 Median Age of Inventory  112 days  -5.1 percent  10.9 percent
 Median List Price  $194,500  8.1 percent  -1.6 perce

Information supplied by Realtor.com

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