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Both the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® (NAR) released monthly housing reports this week. However, each report told a different story about the housing market. Nationally, home sales declined but in California home sales rose 14.1 percent in May compared with April and 1.2 percent compared with April 2009.

KEEP THIS IN MIND

• The median price of existing single-family homes in California in May was $324,430, a 23.2 percent increase compared with a median price of $263,440 in May 2009, C.A.R. reported. The May 2010 median price increased 5.9 percent compared with April’s $306,230 median price.

• While home prices are rising month-over-month and year-over-year, affordability continues to remain at near-record highs. In the first quarter of 2010, 66 percent of first-time home buyers in California could afford to purchase an entry-level home in the state, according to C.A.R.’s First-time Buyer Housing Affordability Index.

• Many first-time home buyers timed the opening and closing of escrow to capitalize on both the federal and state tax credits, resulting in a rise in home sales in May. Although home sales rose, the number of home buyers signing sales contracts declined nearly 17 percent compared with April, which C.A.R. Chief Economist Leslie Appleton-Young attributes to the ending of the federal tax credit. “Although there may be a lessening of demand compared with the first half of this year, the number of escrows opened on a year-to-date basis is about the same as last year, and sales for all of 2010 will be on a par or slightly below last year,” said Appleton-Young.

• Despite the number of foreclosures listed for sale, the inventory of homes for sale still is below the long-run average of 7-months, according to C.A.R. In May, C.A.R.’s Unsold Inventory Index for existing, single-family detached homes was 4.6 months, unchanged from the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

To read the full story, please click here:

http://www.sgvtribune.com/ci_15353779#ixzz0rht9SqsU

There is an increasing amount of opposition to the new home appraisal rules as many mortgage brokers and real estate agents are serving up criticism that the Home Valuation Code of Conduct (HVCC) guidelines adopted in 2009 are resulting in inaccurate and low-ball appraisals.

The main argument amongst critics is that the new rules have undesirable affects where appraisers are now being overextended, underpaid and forced to churn out appraisals in a hurried fashion. Conversely, many mortgage lenders, including J.P. Morgan and CitiGroup, have vested interests in the appraisal management companies that now play the role of divvying up appraisal assignments, so they naturally are against revamping the current appraisal guidelines.

Implemented last spring by Fannie Mae and Freddie Mac, the Code of Conduct bans mortgage brokers and loan officers from selecting appraisers to valuate homes in the deals which they are brokering. The purpose is to prevent the inflated and sometimes fraudulent appraisals which were partly responsible for an artificial surge in home prices during the past decade.

According to a recent article by Jessica Holzer in the Wall Street Journal , realtors and mortgage brokers have succeeded in inserting language into a House-passed financial-regulation bill that would end the new protocols. The measure would direct federal regulators to come up with an improved set of rules.

Under the new system, appraisal management companies now solicit out appraisal assignments for a fraction of the cost of what the work used to pay - in some cases less than half of the industry’s former compensation rate. As a result, many appraisals end up in the hands of the lowest bidder, and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods.

“More and more people are leaving the appraisal business than ever before because appraisals are now going out to the lowest bidders, commanding lower pay and fees,” says Bill Schettler, Vice President of Sales at Total Mortage Services, LLC.

Mr. Schettler, who worked six years as an appraiser himself, added, “Unfortunately, because of what the appraisal management companies are paying, many people are no longer able to make a living in the industry and there are more inexperienced people now doing the job. What is happening now is that appraisers have to travel further and further to cover more territory, so they can’t be as familiar with the homes as they were before”

National Association of Mortgage Brokers CEO Roy DeLoach told the Journal that out-of-town appraisers hired by vendors are diminishing homeowner equity through home valuations that aren’t credible: “It’s basically hollowing out the equity in communities whether you intend to sell or not.”

Interesting take by Bradley Markano with first tuesday blogs the news

National occupancy rates for senior housing, which change in response to different factors than those that affect the rest of the residential housing market, registered a small drop in the first quarter of 2010, according to the National Investment Center for the Seniors Housing and Care Industry (NIC).

This increased housing availability reflects a decline of approximately 0.3% in occupancy for both independent living and assisted living facilities nationwide. Rental prices continued to grow, but at a slower rate than before, undoubtedly influenced by the increased availability of space.

The NIC expects the decline in occupancy rates to reverse in the near future, as reduced construction puts a cap on the supply of senior housing. [For more information on current construction in California, see first tuesday’s Market Chart, CA Single- and Multi-Family Housing Starts.]

first tuesday take: The demand for senior housing is primarily determined by one single factor: the number of senior citizens. Unlike factors affecting demand for other forms of real estate, this factor is always both quantifiable and predictable.

As a result, the senior housing market is rarely subject to the violent rises and falls that beset the housing market at large. As this news item shows, however, even the senior housing market is influenced by the state of the economy. The drop in occupancy rates is a temporary setback for a constant market, but you can expect it to be quickly reversed by the unstoppable forces of demographics.

The boomers are on their way to these facilities, and their dis-savings to pay for assisted living with be felt more by a stock market decline than a real estate sales decline. Savvy agents will be on hand to get those listings from the boomers as they shed their current residences and move to be closer to their grandkids.  Anticipate that trend correctly, and you may get rich on broker fees.

Re: “Seniors housing occupancy falls, rent growth continues,” from the National Investment Center for the Seniors Housing & Care Industry

Bradley Markano • Jun 10th, 2010  first tuesday Realty Publications, Inc.

Taxes, like life, can be like riding a roller coaster. Sometimes it’s up and sometimes it’s down. This is definitely the case when speaking about the Federal capital gains rate for individuals. In the past 20 years, this tax has been as high as 28% and is currently at its low point of 15%. But, this too shall change as of January 1, 2011, when the rate is scheduled to go back to 20%.

As part of the 1986 Tax Reform Act, the capital gains tax rate was raised from 20% to 28%. President Clinton reduced the capital gains tax from 28% to 20% in 1997. In 2003, the Bush administration passed The Jobs and Growth Reconciliation Tax Act of 2003, which lowered the capital gains tax from 20% to 15%. This reduction was due to sunset on December 31, 2008. But, in May of 2006, Congress passed and the President signed H.R. 4297, which extended this reduction in capital gains until December 31, 2010.

To complicate matters further, the Health Care and Education Affordability Reconciliation Act of 2010 was signed by President Obama on March 30, 2010, and it includes a number of revenue-raising provisions. One of these provisions, impacting high income individuals, is a 3.8% tax increase starting in 2013 on any unearned income. Gain from the sale of real estate falls within this category.

If Congress takes no action on the existing tax rates, the maximum capital gains tax rate will increase from the current 15% level to 20% in 2011 and then to 23.8% in 2013. This would be the highest rate for long-term capital gains since 1997.  No matter what the tax, it can be deferred by completing a 1031 tax-deferred exchange. It doesn’t matter if you are in Placerville, California or anywhere in the USA!

The presence of real estate owned (REO) properties held by lenders and not yet on the market, known as the shadow inventory, is a constant reminder to those in the real estate business that the real estate market still has a way to go before it normalizes. To build a market and get out of this real estate limbo, REOs must first be resold to owner-occupants or income property investors, not speculators, even though the possible REO deluge will likely have an observable but temporary adverse effect on home prices.

However, with so many banks, speculators, trusts and government-controlled entities holding REOs using different methods to report their foreclosed home holdings, it’s difficult to ferret out the exact number of REOs that remain to be placed on the market. This wildcard creates a quandary for brokers and agents looking forward to the day real estate prices finally stabilize and then begin their annual upward rise — probably limited to the rate of inflation for the next few years into 2015.

What reports do exist indicate that REO inventory is rising as banks are beginning to initiate more foreclosures on those homebuyers who are not eligible for loan modifications or who re-default after modification. So where are the REOs taken in by lenders on foreclosure, and how long will it take them to show up to the party?

The “missing REO” phenomenon is a symptom of a bigger problem, and it’s not the destabilization of prices by putting the REOs on the market immediately after foreclosure. Here’s what the banks aren’t talking about when explaining the slow trickle of REOs onto the market: when they sell an REO, they must then for the first time report the loss (as all REOs currently are supporting an unreported loss) on the lender’s books. It doesn’t take a mathematician to figure out that these massive losses could topple the solvency of any bank that may be on shaky ground — and many of them, even the largest ones, are.

Thus, we probably won’t see a flood of REOs any time soon. Banks are biding their time, holding onto the REO losses and waiting for the economic recovery to see them out of their difficulty. 

By Giang Hoang-Burdette • Apr 29th, 2010,  first tuesday Realty Publications, Inc.

Great advise in post by Dan Steward

Those who missed taking advantage of the first-time buyer tax credit but who are still planning the purchase of their first home, continue to have a wealth of opportunities in today’s marketplace. A few smart steps can save first-time buyers thousands of dollars. Here is a look at some of the ways how:

1. Don’t buy if you don’t plan to stay
If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner – even in a rising market. When prices are falling, it’s an even worse proposition.

2. Start by shoring up your credit
Since you probably will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Choose carefully between points and rate
When picking a mortgage, you usually have the option of paying additional points- a portion of the interest that you pay at closing- in exchange for a lower interest rate. If you stay in the house for a long time- say three to five years or more- it’s usually a better deal to take the points. The lower interest rate will save you more in the long run.

4. Hire a home inspector
A home inspector can let you know if you’re about to buy a lemon of a house or warn you about potential problems. At best, you can move into the house confident that it’s in good shape; at worst, the inspector’s report can let you back out of the deal if the house has major, unexpected problems. Most typically, the home inspection can allow you to negotiate the home price to account for necessary repairs.

5. Get professional help
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

6. Bonus Tip: Be patient
Buying a home is one of the largest purchases most people will make in their lifetime. The key to avoiding buyer’s remorse is to be completely comfortable before signing on the dotted line.

Dan Steward is president, Pillar To Post. For more information, visit www.pillartopost.com.

The overall number of El Dorado County area home sales continues to increase. The 198 April sales were the most in a single month since June of 2006. Home sales were 13 percent above March and 50 percent better than a year earlier.

Some housing economists believe the worst is over and positive forecast are coming from a variety of sources. The “National Association of Realtors” also reflects encouragement. Please view and share their new economic forecast VIDEO: 

ttp://link.brightcove.com/services/player/bcpid21418263001?bclid=4937830001&bctid=89312847001