Housing and Economic Recovery Act of 2008 signed by President Bush

I received this email this morning from the California Association of Realtors President William E. Brown anouncing the signing of the "Housing and Economic Recovery Act of 2008" and outlining how it will impact the real estate world. I thought you might be interested in this, so here it is.

Mark Bruno


William E. Brown wrote:

President Signs Historic Housing Bill!!

Thank You to Everyone Who Has Worked So Hard to Increase Loan Limits!

This morning President Bush signed the "Housing and Economic Recovery Act of 2008." For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.

Thank you to all of you who responded to these Calls-for-Action. Your efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.

The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.

The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

C.A.R. also supports the following bill provisions:

• A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
  
• New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
  
• First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
  
• Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
  
• Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
  
• The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system.
• The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
  
• The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.
  
  Other provisions in the legislation:
  
• The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
  
• The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.
  
• The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.
  
  C.A.R. wishes to thank those California Members of Congress who supported the bill:
  
  Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard "Buck" McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.
  
  Thank you everyone for your efforts in support of this bill!

Feed Shark

Monterey County Home Sales Explode in June, Up 103.1% Year-over-year

Contrary to the doom and gloom in the national media about falling sales, home sales in Monterey County rose 32.3% in June from May. Year-over-year, sales of single-family re-sale homes rose an astounding 103.1%. This is the third month in a row yearover-year sales have been up.

Year-to-date, home sales are up 23.2% over 2007. Inventory fell 0.3% from May, and was down 20.2% yearover-year. The sharp rise in sales and concomitant decline in inventory has driven our Days of Inventory indicator down 88 days to 271. That is its lowest level since March 2006, and it is a very positive number.

The median price rose 1.8% from May, but it was off 49.3% year-over-year. This is the tenth month in a row the median price has been lower than the year before.

The average price jumped 30.7% from May, but was down 20.1% year-over-year. The sales price to list price ratio fell 0.1 of a point to 95.8%. Days on market gained 16 days to 92.

Condo sales were up 77.9% in June from May, but they were down 1.3% year-over-year. The median price for condos gained 46.9% from May, $470,000. This was off 21% compared to June 2007.

The sales price to list price ratio gained 0.9 of a point to 93.7%. Days on market rose six to 106.

Around our great state:
The median resale price of a single-family detached home in California for May was $384,840, a decrease of just over 35 percent from May 2007 and almost 5 percent from last month. Unsold resale inventory represented an 8.4-month supply, compared to 10.7 months for the same period a year ago. Median number of days till sale was 50 in May, almost unchanged from 51 in May 2007.

Alameda County:
Though down from December, median held up for the month of May. This market may be reaching a price point that’s attractive to the general prospect, since May sales almost equaled April’s surprising surge and are more than double the recent low in January.

Contra Costa County:
Median lost a sliver this month and continues at less than two-thirds of its recent record in June 2007. Sales are at levels not seen in the last year, driven by sales of steeply depreciated homes in attractive neighborhoods.

El Dorado County:
Sales have exceeded the August 2007 peak of 185 and seem poised to crack 200. Median has lost roughly $100,000 in the last year but has more or less stayed stable since the beginning of this year.

Marin County:
Sales seem to have shaken off winter doldrums and returned to the level of fall 2007. Some constraint is exerted by the region’s lowest proportion of foreclosure sales, about 6%, and by still-restricted availability of jumbo mortgages. Median has surged to within a hair of $900,000, but we must remember that Marin’s median has been relatively bulletproof in the current crisis; historical low of $750,000 came in January 2006, and since then it’s scarcely been below $800,000.

Napa County:
Sales have recovered from January’s scary low of 37 and are now flirting with the triple-digit levels of last summer.

Nevada County:
Sales have a way to go to match last summer’s levels, but have been increasing without pause since January. Median was holding up well as recently as April, but then declined by $70,000 in May.

Placer County:
Consistent sales of almost 500 demonstrate a welcome recovery from last September’s 216. Median, after being essentially flat for the last half of 2006 and first half of 2007, has declined steadily for the last year and lost a little over $80,000—possibly converging on a new price stability along with the rest of the Sacramento Region.

Sacramento County:
Current median of $225,000 is the lowest we’ve ever seen, but the resulting affordability seems to be provoking a recovery. From a low of 751 in January 2007, sales have nearly tripled as of last month and doubled in the last four months. Perhaps prospects and buyers (largely investors) will push Sacramento out of its slump.

San Benito County:
After a recent sharp rise, sales have regained the levels of 18 months ago, though median has fallen by a third in the last year.

San Francisco Bay:
The Bay Area enjoyed a $660,000 median all last summer, but has fallen $150,000 since then. On the other hand, sales have risen by 50% since February.

San Francisco County:
May sales declined about 20% from an April peak but are still at last fall’s levels, even with relatively few foreclosure sales. Median has been climbing steadily since December and is now, again, happily knocking on the door of $800,000.

San Mateo County:
Median is down by about $100,000 in the last year. One figure or the other may improve in the near future, but the market must recover more generally for both to improve at once.

Santa Clara County:
Even after a slight retreat in April, sales are double what they were in January. As jumbo loans become more available, this situation will improve further. Median has only dropped by about 10% in the last year.

Santa Cruz County:
Sales almost doubled between March and April, then built on that gain in May. But a decline of $60,000 in median for the month means a loss of $180,000 for the year. This county is looking a lot better than it did over the winter and there’s hope it will regain the eminence it enjoyed when the market was hot.

Solano County:
Sales have nearly doubled in the last three months, driven by foreclosure resales accounting for almost 60% of transactions. On the other hand, median has declined by a third since March 2007. Like many rural counties, Solano will probably participate strongly in the general recovery when it comes.

Sonoma County:
Three months of increases have at least brought the median back above $400,000 and a sustained increase in sales has brought activity back to the levels of last summer. Sonoma, together with Solano and Contra Costa counties, is an affordability champ for the region this month. (And incidentally, Sonoma city took CAR’s Most Improved Median in May with a 61% improvement year-over-year.)

Yolo County:
Yolo’s loss of over $110,000 in median for the year makes it look superficially like a lot of other counties—but exciting things are happening in the shorter term; since January, sales have doubled while median has actually increased. Happily, this county will have its share in the greening of greater Sacramento.

Interest Rates:
30-year fixed, 6.26%; 15-year fixed, 5.78%; 30-year nonconforming, 7.32%. A spread of more than 1% between 30-year fixed and 30-year jumbo underscores the difficulty of finding loans appropriate to California’s coastal markets. 5/1 ARM is exactly the same percentage as 30-year fixed, which is one reason (the other being borrower wariness about resetting loans) that the proportion of new 5/1 ARMs in the market is dropping.

During the third week in June, Freddie Mac was deeply concerned that if rates rose even slightly on conforming loans, sales would slow drastically as prospects had less incentive to look for bargains. Since then, pressure has eased as 30-year fixed has backed off about 20 basis points, but we all know that’s only a breather. Affordability in Northern California is still so fragile that if inflation—or, for that matter, Federal Reserve conservatism—kicks rates higher, the market’s current guarded optimism may collapse again. Cross your fingers.

Inventory:
What you see is what you get. Availability now is unpredictable depending not only on location, but on the type of buyer (first-time, move-up, rental property, overseas) who may be interested in the specific area. Foreclosures are flooding some neighborhoods with properties, but hardly touching others. Overall, inventories still won’t be one of your major concerns, but they’re bound to figure into your calculations more than they did six months ago.

Overall Assessment:
Optimism feels so good and for the first time in months, we’re feeling optimistic! Bargains abound, especially in areas away from the coast. The Bay Area’s average monthly mortgage amount has shrunk by 30% since its recent peak two years ago. Thirty year fixed mortgage rates were inching up for a while, but now seem to be retreating towards 6% rather than lunging for seven. In many parts of Northern California, for the first time in years, an attractive home can be called affordable. Right now you may be facing a very brief opportunity to purchase a home that will suit you for a very long time.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home's worth, give Lynda or I a call or send us an email.