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In the absence of the federal home buyers tax credit, sales of existing, single-family homes in California declined 4.2 percent to a seasonally adjusted annual rate of 492,000 units in June compared with the same period a year ago, according to the California Association of Realtors (C.A.R.) June sales and price report.  The median price of an existing home in California rose 13.6 percent to $350,911.

“Buyers who scrambled to close escrow in May to take advantage of federal and state tax credits before they expired impacted the number of homes sold last month,” said C.A.R. President Steve Goddard. “Although we expect sales to be lower in the second half of the year because of the absence of the government stimulus, they should remain above the long-run average and be significantly higher than the trough in 2007, when sales bottomed out.

“Although the tax credits are no longer available, it’s important to keep in mind that home prices are substantially below their peaks and interest rates remain at historic lows, making this a very affordable time for many first-time buyers to purchase a home of their own,” he said.

C.A.R.’s Unsold Inventory Index (UII) also rose to 4.8 months in June from 4.2 months in June 2009, but still remains lower than the long-run average of a 7.1-month supply of unsold inventory.

More information at: http://www.car.org/newsstand/newsreleases/junereport/

The U.S. Congress asked Federal Reserve Board chairman Ben Bernanke a key question last week: Where do you and your colleagues believe we’re headed in terms of the national economy?

Bernanke’s reply: There are bumps and potholes on the road to recovery, but the Fed “expects continued moderate (economic) growth, a gradual decline in the unemployment rate (to about 7 percent) and subdued inflation” over the next couple of years.

No sooner had Bernanke delivered his testimony than some of those “bumps” in the road popped up: The Commerce Department reported new housing starts dropped by 5 percent in the latest month, and the National Association of Realtors reported existing home sales down by a similar percentage.

But keep in mind the central point Bernanke was making in his forecast: Troubled though it may look with any single statistical report, the fact is the national economy continues to grow – by about two and a half percent on an annual basis – and many elements of the economy are better off this year than the were the year before.

Take the Commerce Department’s housing starts number: That five percent decline was mainly the result of a big drop in starts of new rental apartment units – not a drop in starts of new single family houses, which were stable.

In fact, the Commerce Department survey found that permits pulled by builders for future construction on single family homes were actually up in three out four of the major regions of the country. Analyzing the government’s data, Bernard Markstein, senior economist for the National Association of Home Builders, was encouraged – and predicted increases in both starts and sales over the coming several months.

The latest sales report for existing homes from the National Association of Realtors also had some bright spots: Sales in June were 10 percent higher than they were in the same month the year before. Even median prices of all homes sold were up slightly, and that’s despite the fact that one third of sales were “distressed” in some way – REOs, foreclosures or short sales.

Meanwhile, hints of a rebound in future sales emerged in the latest report on new mortgage applications to buy homes.

The Mortgage Bankers Association found that purchase applications overall jumped by 3.4 percent – and by 8 percent for FHA loans to buy houses. Those transactions won’t go to closing for two to three months … but they’re a sign of where we’re likely headed.

The number of California homes that entered the foreclosure process during the second quarter fell for the fifth straight quarter, to the lowest level since second-quarter 2007, research company MDA DataQuick reported this week.

The company reported that 70,051 notices of default were filed at county recorder offices in California during the second quarter, down 13.6 percent from the first quarter and down 43.8 percent compared to second-quarter 2009.

Also, the share of resale, foreclosed homes sold in the state dropped to 36 percent in the second quarter, down from 49.9 percent in second-quarter 2009 and 42.5 percent in first-quarter 2010. NODs, which mark the formal entry of a home into the foreclosure process in California, peaked at 135,431 in first-quarter 2009.

The share of foreclosure resales ranged from 9.5 percent in the San Francisco area to 61.7 percent in the Imperial Valley area during the second quarter, DataQuick reported.

“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales,” said John Walsh, DataQuick president, in a statement. “Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves underwater, which is a significant factor in letting a home go.”

200 homes closing escrow last month in El Dorado County. 67 were bank owned REOs and 46 were short sales. It was a record number of monthly sales for both categories. The number of monthly short sales has doubled since last year. Lenders are more receptive to negotiating a discounted payoff of their mortgage rather than foreclosing on the property. Both sellers and their agents are capitalizing on this opportunity. Of the 1,400 homes currently listed for sale, 400 are short sales; 200 without offers and 200 with pending offers waiting for the lender’s approval. REOs account for 157 active listings.

Although no shortage of REOs and short sales, the demand is driving sale prices above the listing price. Last month the $355,000 average selling price of a typical short sale and the $295,000 average selling price for an REO exceeded their average listing price by 101 percent. Multiple offers are common. In contrast, the average selling price of a non-REO, non-short sale home was $425,000, which was 94 percent of their listed price.

Discounting the inflated monthly sales numbers, attributed to one time tax credits, the most significant market change this summer is the number of sellers attempting to sell their home through a short sale process.  At best, negotiating a short sale with the ultimate decision maker, the lender, is a frustrating time-consuming process that can go sideways for a variety of reasons. Currently, more than one of every four listings is marketed as a short sale.

Other information and data for the Placerville, El Dorado County, California areas is available at www.sierraproperties.com

The number of foreclosure sales that were cancelled in California hit an all-time record in June, according to a report released Tuesday by ForeclosureRadar, a locally based company that tracks every foreclosure in the state and provides daily auction updates.

The company characterized foreclosure activity in the Golden State as “mixed” last month, with filings of new foreclosure notices on the rise and foreclosure sales down. That assessment follows two straight months in which ForeclosureRadar reported declines across-the-board at every stage of the foreclosure process.

In total, 10,506 foreclosures were cancelled in California last month before reaching the auction sale phase, according to ForeclosureRadar’s market data. The figure represents a 27 percent increase from May and is 153 percent higher than in June 2009. ForeclosureRadar explained that the increase was primarily driven by just one lender, JP Morgan Chase and its acquisition of Washington Mutual loans.

Notices of Default filed against delinquent homeowners – the first step in the foreclosure process – edged up nearly 7 percent from May to June, ForeclosureRadar reported, but were down more than 45 percent compared to June 2009.

Notice of Trustee Sale filings, which serve as the homeowner’s final notice before the home is auctioned, increased on both a monthly and annual basis in June. Compared to the previous month, filings were up nearly 22 percent, and were nearly 12 percent above year-ago levels.

During the month of June, ForeclosureRadar tracked a total of 25,790 new Notices of Default and 34,261 Notices of Trustee Sale.

“Historically it is very unusual to have more Notice of Trustee Sale filings than Notices of Default,” said Sean O’Toole, founder and CEO of ForeclosureRadar.com. “But with skyrocketing cancellations and the possibility of failing loan modifications, this will be increasingly common, as lenders are only required to file a Notice of Trustee Sale to restart the foreclosure process.”

ForeclosureRadar’s data shows that banks took back 10,506 properties in June, nearly 24 percent fewer than they did in May. The company puts California’s total REO inventory at 85,135 homes, down from 87,964 in May and nearly 20 percent lower than it was a year ago.

The number of properties purchased by third parties at auction dropped significantly in June to 2,983, but they purchased nearly the same percentage of the total properties sold, and at a better discount to market value than ForeclosureRadar says it’s seen in months. Last month, the average bid amount on a home sold at foreclosure auction in California was 18.9 percent below market value. 

By Ken Calhoon, Broker in Placerville, California

Securing Debt Relief Through Using Debt Settlements?

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“It is ironic, but there is a growing consensus that there may be a new housing shortage coming,” said James Gaines, a real estate economist with Texas A&M.

“A housing deficiency isn’t a sure thing, but the potential is certainly there.” says David Crowe, chief economist at the National Association of Home Builders, who paints a rather ominous picture in which house and apartment builders won’t be able to keep pace with demand.

Wishful thinking? Not according to the Census Bureau. The increased demand for new housing will come partly from new household formation, which (pre-recession) typically runs around 1.3 million new households each year. To keep pace, builders need to build 1.5 million new homes since more homes than households are needed to replace those destroyed by fires, floods, teardowns and neglect.  Not surprisingly, builders have not been keeping pace recently. This year builders will finish less than 400,000 new homes, the lowest number in the 47 years of record keeping.  

The worst recession since the depression has temporarily suppressed demand and household formation. In 2007, 600,000 households were formed, in 2008, 500,000, last year only 400,000 new households were formed. Kids are staying longer at home and some are returning to mom and dad’s to weather the economic storm. While new household demand has been stifled, the pent up demand continues to grow and will present huge opportunities when the economy recovers.    

New and surviving builders will also face an increasing regulatory environment which will increase the time to bring a new development on line and more costly to build. An example is the new California state law taking effect January 2011 requiring fire suppressant sprinklers systems installed in each new home. That can add as much as $10,000 to the cost of a new home. Being “green” also has a cost.

The Census vacancy numbers are somewhat misleading. The largest percentage of currently vacant homes and apartments is concentrated where nobody wants to live. Detroit and Chicago are not preferred relocation destinations. There is a reason the inventory is vacant. Some are second or vacation homes.

It may take a couple of years to get through our current inventory. While that’s happening, the population will continue to grow, new household formation will continue to be postponed and fewer new homes will be built. When the economy recovers, as it invariably will, there will be pent up demand for new homes but few available.

Congress passed a bill this week extending the deadline to close escrow and qualify for the federal home buyers tax credit. President Obama is expected to sign the bill extending the deadline to Sept. 30, 2010, instead of its original June 30 deadline.

KEEP THIS IN MIND!

• The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline. First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.

• Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.

• The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline. Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.

• Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction.

To read the full story, please click here:

http://money.cnn.com/2010/06/30/news/economy/homebuyer_tax_credit/index.htm