Southern California Homes Sales Up 52 Percent

According to the Wall Street Journal, sales of existing homes fell 5.3% in January ‘09 nationwide.  But what does that mean for the South Coast?  The latest sales figures from our area show that savvy buyers are scooping up deals; in fact, according to the LA Times, home sales throughout Southern California were up 52% in January of ‘09 versus January of ‘08!

AREA            % change in no. of sales from Jan. ‘08

 versus Jan. ‘09
LA County        +33.4%
Orange        +40.4%
Riverside        +71.2%
San Bernadino    +127.9%
San Diego        +34.7%
Ventura        +36.6%

While the number of home sales in South Santa Barbara County dipped in January, distressed areas with more short sale and foreclosure inventory, like Riverside and San Bernadino, are sizzling as buyers are stepping up to take advantage of the great prices and low interest rates.

First Time Buyers are Jumping In

While our current housing market is a painful one for many,  there is a group of people that are benefiting:  first time home buyers.  The drop in prices, coupled with low conforming loan rates has created a buying opportunity in many communities for buyers who might have been priced out of the market just a short time ago.  According to the National Association of Realtors, first time buyers made up 41% of home buyers last year, up from 36% in 2006.

Locally, we are seeing the same dynamic.  A good example is entry level Goleta homes, a segment of the our market that has seen significant price adjustments in the last year.  In some cases, homes are actually cheaper to own then they are to rent, a situation we would definitely not seen a short time ago.  At the heighth of the market, mortage payments were as much as 66% more than rent.  Today, that number is 24% and could go lower.

Santa Barbara Real Estate Statistics for Febuary 2009

Final Stimulus Bill Includes Legislation to Help the U.S. Housing Market…

Final Stimulus Bill includes legislation to help the U.S. Housing Market
$8,000 Homebuyer Tax Credit
New $729,750 Conforming Loan Limit

President Obama recently signed the stimulus bill that has been almost the sole focus of his administration since taking office.  The bill, which passed both the House and Senate, includes a number of measures to address the troubled housing market.  Two measures in particular are notable: the $8,000 homebuyer tax credit, and the reinstatement of increased loan limits for FHA, Fannie Mae, and Freddie Mac.  The new tax credit never has to be repaid, and effectively amounts to an $8,000 discount on the cost of a new home.

A few of the key stipulations are:

1. Only first-time homebuyers are eligible. First-time buyers are defined as people who have not  owned a principal residence over the three years prior to purchase.
2. The credit only applies to the purchase of a principal residence (i.e., not a vacation home or investment property).
3. The credit is actually the lesser of $8,000 or 10 percent of the purchase price of the home. This distinction only matters to those who purchase a home worth less than $80,000; everybody else gets the full $8,000.
4. The home must be purchased between January 1, 2009 and December 1, 2009.

The second measure reinstates the $729,750 conforming loan limit offered by FHA, Fannie, and Freddie. This loan limit is the threshold at which a mortgage crosses from “conforming” to the much more expensive “jumbo”.  The increased loan limit is applied in varying amounts on a county-by-county basis depending on the median price of a home in each locality.  The idea is that in more expensive markets, the original conforming loan limit threshold of $417,000 was too low and forced homebuyers into onerous jumbo loans even for homes that were not very expensive by local standards.  Lenders have not yet reinstated the higher conforming loan limit, but will likely do so in the next few days.

For more information regarding these and other important real estate issues, call me today!

The New Rules of Mortgage Lending

Below is an article published by CNN Money on mortgage lending – hope you find it useful!

The New Rules of Mortgage Lending

Current mortgage rates and changes in loan underwriting standards have led some borrowers to make mistakes when applying for a mortgage loan. One old adage that many borrowers fall into is not paying up-front points. In previous real estate cycles, paying one percentage point was equivalent to shaving off approximately a quarter of a percentage point of interest. In today’s market, however, one percentage point can lower the interest rate by as much as 1 percent, changing a 6 percent interest rate into one that is 5 percent.

Another common mistake some borrowers make is not locking in an interest rate, especially when the rates are at historic lows, as they are currently. Many borrowers believe that if a favorable rate is available this week, a lower one will likely be offered next week. Mortgage experts advise clients to lock in a rate if the numbers work and not try to wait for a better rate that may not come.

To read the full story, please look here.