Advantage Title Blog

August 5, 2010 LA Times, E. Scott Reckard

Record low mortgage rates are still declining, according to Freddie Mac, which said lenders were offering 30-year fixed loans at less than 4.5% this week and 15-year loans at less than 4%.

Freddie’s chief economist, Frank Nothaft, noted that the rate of growth in the gross domestic product had been revised downward, reducing fears about inflation and as a result decreasing pressures on long-term interest rates.

Reporting a seventh straight week of declines, Freddie Mac said the 30-year rate averaged 4.49% for the week ending Thursday, down from 4.54% last week and 5.22% a year earlier.

On home loans with rates fixed for 15 years, the interest rate averaged 3.95%, down from an even 4% a week earlier and 4.63% a year earlier.

The interest rate for the five-year Treasury-indexed hybrid adjustable-rate mortgage — that’s the one that turns variable after five years at a fixed rate — averaged 3.63% this week, down from 3.76% a week earlier and 4.73% a year ago.

Freddie Mac, the giant government-sponsored buyer of home loans, asks lenders about the rates they are offering on mortgages up to $417,000 to borrowers who are good credit risks. The borrowers would have paid 0.7% of the loan balance to the lenders in upfront fees and points, Freddie said.

Solid borrowers who shop around often find slightly better rates than those published in the survey.

August 5th, 2010, posted by Jon Lansner, Lasner on Real Estate Blog

Lots of debate about the quality of the median price as a marker of housing’s health. Investment adviser Clyde Kendzierski of Long Beach argues that math quirks — not economics — are making the homebuying patterns look better than reality …

One clear weak point is the housing market, which crammed two years of sales into six months (in response to tax credits). Even those recent gains in median home prices grossly overstate the reality. Home prices are up from a year ago, but the gains in median prices is a statistical anomaly, driven primarily by the shift in the sales mix.

In early 2009, home loans were only available up to $417,000, which meant almost no homes sold for over $500,000. The return of jumbo mortgages has dramatically increased the sales of higher priced homes while the inventory of lower prices homes evaporated in response to the homebuyer tax credit.

The current combination of low mortgage rates and reasonable prices relative to incomes remains favorable for home prices, but it will take years to work off the inventory of foreclosed properties that resulted from the excess building of the past decade. Put together the outlook for home prices remains neutral.

We decided to check in with a major purveyor of median-styled data, Andy LePage of DataQuick, for his thoughts …

We’ve been stressing all along that the change in the mix of homes selling has impacted the median sale price (e.g. recently there have been fewer low-cost inland foreclosures selling and more high-end coastal homes). Of course that’s going to help tug up the regional median sale price. That is one of the reasons for a rising regional and county median, but not the only reason.

When you slice and dice the stats different ways (by price segments, by neighborhoods, etc.) it’s clear that prices are up off bottom a bit in the vast majority of areas.

The rise off bottom and year-over-year  gains tend to be highest in the lower-cost communities, given a combination of price appreciation and an improvement in the quality of the typical home re-selling (less likely to be a run-down foreclosure this year). The price gains tend to be lowest (or absent) in the high-end areas. At least, that’s what I find for SoCal and California overall.

I have been saying for a long time that we would hit a point where the regional medians would rise in part because the high end would start selling again. That’s what’s happened over the last year, and I think one of the main reasons high-end sales have increased is that high-end sellers have become more realistic and dropped asking prices. There’s more distress in the high end, more motivated sellers. In the low end, the foreclosure inventory has been dwindling and the competition has been stiff between first-time buyers and investors.

I’m not so sure about this characterization of the trend over the last 18 months with regard to jumbo loans (sticking to the old definition of a jumbo; a lean greater than $417,000) . It does indeed look like jumbo loans have gotten at least a little bit easier to obtain over the past 18 months, but it’s not as if there weren’t any buyers getting them in early ’09 … But it’s difficult to know how much of the increase in jumbo loan use is the result of lenders easing up vs. buyers simply finding more worthwhile high-end deals out there.”

August 3rd, 2010 Jon Lansner, Lasner on Real Estate Blog

Perhaps one of the most dramatic Orange County homebuying trends of the first half was a new king of market share of home sales by geography.

Our ZIP-by-ZIP analysis of DataQuick statistics shows that a year ago the county’s mid-section was the busiest geographic slice. Those ZIPs — from Orange to Fountain Valley to Westminster to Anaheim — accounted for 37% of all home sold in 2009’s first six months. Inland communities — north and south — each had roughly a quarter of the market. Beach towns took in the rest of the activity.

This year, the momentum has swung south. South inland ZIP codes added 1,528 sales — growth equal to 77% of countywide homebuying growth in the period. Meanwhile, the county’s mid-section ZIPs lost 416 sales, or an 8% drop.

As a result, south inland ZIPs — from towns like touching to sea from Tustin to San Juan Capistrano — had 30% of the first half’s activity while mid-county slipped to 29.7% share. The other parts of the county were essentially stable, while north inland at 23% share fo sales and beach towns at 17%.

This move southward for real estate shoppers may account, in part, for why the countywide median price was up 10.5% in the first half vs. a year ago. Median selling price in mid-county communities was $352,500 while it ran $520,000 in south inland neighborhoods.

The trend to the south is even more pronounced recently.

For the 22 business days ending July 15 — freshest numbers from DataQuick — our math identified mid-county ZIPs — median selling price $356,500 — with 836 sales. That’s down 16% from a year ago and just 27% of all sales.

But South inland ZIPs — median selling price $507,750 — had 1,018 sales. That’s up 44% from a year ago and 33% of all Orange County actvity.

All told, countywide sales were  up 6% vs. a year ago as the median selling price was up 6% in the period.

OC Register, August 2nd, 2010

Orange County home sales generated nearly $1.6 billion in June, the highest monthly total since June 2007, new figures from the Southern California Multiple Listing Service show.

Homes sold through the MLS generally commanded higher prices. And more of them sold, pushing the combined revenue from sales up almost 18% from June 2009.

For the first half of the year combined, sales revenues totaled $7.7 billion, up 29% from the first six months of 2009.

The overall increase means that broker commissions were up, too. Assuming that real estate brokers all charged 6% commissions (though in reality commissions usually are slightly lower), O.C. brokers would have earned a combined $462 million in the first half of the year.

SoCal MLS figures show further:

• The median price for an Orange County home sold through the MLS was slightly better than the median for all homes, which includes For-Sale-By-Owner deals. The SoCal MLS median was $526,100 in June, vs. $520,000 for all homes, according to DataQuick.
• The median price for an O.C. condo price was roughly the same for MLS deals and the DataQuick count that includes all deals: $300,000.
• The average price for all homes sold through the MLS was $558,976, up 5.1% from the previous June.
• A total of 2,802 homes sold through the MLS. According to DataQuick, 621 additional sales were recorded in June, for a monthly total of 3,423.
• June’s total revenue fell steadily from 2005, when O.C.’s MLS sales generated $2.7 billion. The June total hit bottom in 2009 at $1.3 billion.
• Six-month totals for the first half of the year fell nearly 41% from $13 billion in 2005 to $6 billion in 2009.