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Home buyer affordability continues to be pushed higher due to mortgage rates remaining at record lows, Freddie Mac reports in its weekly mortgage market survey. 

“Mortgage rates ended the year hovering near historic lows in an already affordable housing market,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.  With affordability so high, Nothaft notes “it’s not surprising then that over 5 percent of households in December plan to purchase a home over the next six months, the highest share since May,” according to The Conference Board. 

For the ninth consecutive week, 30-year fixed-rate mortgages, the most popular choice among home buyers, have been at or below 4 percent. In fact, only twice this year did 30-year rates average above 5 percent, Freddie Mac reports. 

Here’s a closer look at rates for the week ending Dec. 29.

• 30-year fixed-rate mortgages: averaged3.95 percent, with an average 0.7 point, inching up from last week’s all-time record–a 3.91 percent average. A year ago at this time, 30-year rates averaged 4.86 percent. 
• 15-year fixed-rate mortgages: averaged 3.24 percent, with an average 0.8 point, also up slightly compared to last week’s record 3.21 percent average. Last year at this time, 15-year rates averaged 4.20 percent.
• 5-year adjustable-rate mortgages: averaged 2.88 percent, with an average 0.6 point, increasing from last week’s 2.85 percent average. Last year at this time, the 5-year ARM averaged 3.77 percent. 
• 1-year ARMs: averaged 2.78 percent, with an average 0.6 point, slightly up from last week’s 2.77 percent average. A year ago, 1-year ARMs averaged 3.26 percent. 

 Source: Freddie Mac

 More news from the “Sierra Foothills” of El Dorado, Placer, Amador and Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com

The latest monthly data shows total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, increased 4.0 percent to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2 percent above the 3.94 million-unit pace in November 2010.

Full article at: http://bit.ly/trTuv9 via @AddThis

More news from Placerville and the El Dorado, Placer, Amador or Sacramento Counties regions of California at: www.sierraproperties.com or www.dougandbudzeller.com

Economic growth, an improving job picture, greater consumer spending, and slight improvements in the housing market are all recent indicators that 2011 is ending on a much brighter note, Fannie Mae reports in its fourth-quarter report. 

“It’s important to recognize that we’re ending 2011 on a stronger note than we’ve seen throughout the year,” Fannie Mae Chief Economist Doug Duncan said in a statement. “Unfortunately, however, our 2012 outlook is not as rosy as our forecast for the fourth quarter of 2011.”

Fannie Mae’s Economics & Mortgage Market Analysis Group predicts that despite recent improvements, the housing market will remain “subdued next year — a reflection of the winter season, an expected slowdown in economic activity, and a potential increase in distressed sales.” The nation’s fiscal problems as well as the European debt crisis are also expected to threaten the nation’s economic recovery in 2012.

Source: Fannie Mae

We hope your activity has picked up like ours has here in the Sierra Foothills regions of Placerville, El Dorado County, California.

At its Tuesday meeting, the Federal Reserve reaffirmed its pledge to keep interest rates low and opted to not take any new measures to bolster the economy, saying the economy has already been showing signs of “expanding moderately.” The economy has shown some improvement in employment and consumer spending in recent weeks. However, the Fed cautioned at Tuesday’s meeting that the “housing sector remains depressed.”

In reaffirming a pledge it first issued in August, the Fed said the federal funds rate — which serves as a benchmark rate for many types of loans, including mortgages — will remain near zero until mid-2013. The Fed said it will continue with plans to move $400 billion of its bond portfolio into longer-term securities, which ultimately could send long-term interest rates even lower.

Overall, the Fed said the economy has steadily been showing signs of improvement and is on track to post its strongest gains of the year in the final months of 2011. But the Fed said that the European debt crisis will continue to pose a major threat to recovery with “strains in global financial markets continue to pose significant downside risks.”

Let’s hope this helps your market and ours in Placerville, El Dorado County, CA.

 Source: “U.S. Fed Leaves Rate Unchanged, Says Economy Expanding Moderately,” Bloomberg News (Dec. 13, 2011)

Recent home buyers are staying well within their means with notably higher incomes and modestly higher down payments than buyers in the previous year due to the restrictive mortgage credit environment, despite historically favorable housing affordability conditions, according to 2011 NATIONAL ASSOCIATION OF REALTORS®’ Profile of Home Buyers and their Sellers Housing Survey.

The share of first-time buyers declined to 37 percent in 2011 compared with 50 percent in the 2010 study.  The study shows the median age of first-time buyers was 31, and the median income was $62,400, up from $59,900 in the 2010 study. The typical first-time buyer purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794.

The typical repeat buyer was 53 years old and earned $96,600, notably higher than the $87,000 median reported in the 2010 profile. Repeat buyers purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006.

“Tight Credit Conditions” like this exist in your region just like ours of Placerville, CA.  

More information at: http://www.realtor.org/press_room/news_releases/2011/11/home_buyer_and_seller

Appraisals continue to hamper deals. In the first six months of the year, one-third of real estate professionals say appraisals have caused a delay or canceling of contracts — that’s up from 29 percent for all of last year, the National Association of REALTORS® reports. Rural areas where similar comparable sales may be hard to find seem to experience more delays. At least we find this in foothill areas like the Placerville, California region.

Lenders are requiring more thorough appraisals, which appraisers are saying requires them to pull more comparable sales, which sometimes may include foreclosures or short sales that sell at discounted prices. Appraisers used to cite about three recently sold homes but now lenders require two to three times that, David Stevens, president of the Mortgage Bankers Association told SmartMoney. 

When the appraisals come in lower then the accepted offer — which more frequently is what is occurring — the seller either has to lower their price or the buyer has to pay the difference. From the three months ending September, 13 percent of real estate professionals say contracts were renegotiated to a lower sales price due to a low appraisal, according to NAR data.

Housing experts recommend that buyers add a statement in their contracts that says they’ll receive their initial down payment back if financing doesn’t come through the agreed price or the appraised value is below the offer in the contract, according to the SmartMoney article. 

Source: “How Appraisals Are Derailing Home Sales,” SmartMoney (Nov. 4, 2011)

Living near an occupied property in foreclosure can bring down home prices nearly twice as much than just living next door to a vacant home, according to a new study by the Federal Reserve Bank of Cleveland, which analyzed sales data of nearly 10,000 homes in the Cleveland area. This data seems to be in line with our Placerville, CA. regions.

“The impacts of homes with multiple indicators of distress are larger than the impacts of homes that are only vacant, delinquent, or recently foreclosed,” the researchers found.

Some findings from the study:

• Homes within 500 feet of at least one vacancy sold 0.8 percent lower. 
• Occupied home that had recently entered the foreclosure process lowered the sales price of nearby homes by 1.8 percent.
• Sales within 500 feet of a home where a delinquent borrower abandoned the home saw, on average, a 3.1 percent drop to home values. 
• The largest drop was from homes that were tax delinquent, vacant, and foreclosed: Home sales prices within 500 feet were found to be 9.6 percent lower. 

Source: “Study Finds Foreclosures Harm Home Prices More Than Vacancies,” HousingWire (Oct. 20, 2011)

U.S. Sens. Barbara Boxer (D-CA), Johnny Isakson (R-GA), and Robert Mendendez (D-NJ) have joined 13 of their colleagues in urging the Obama administration to quickly implement administrative reforms to help responsible homeowners refinance and take advantage of today’s record low interest rates.

With interest rates at an all-time low of 3.94 percent, the Senators encouraged federal housing regulators to take immediate steps to lower the barriers that have kept borrowers as well as to address other hurdles that have limited the success of current refinance programs.

In a bipartisan letter to top administration officials, the senators wrote, “Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates.”

Here’s hoping they will keep rural regions like Placerville, CA. in mind!

To read more of the letter, please visit:  http://boxer.senate.gov/en/press/releases/101111.cfm

Buyers are still looking for homes, but they won’t settle for anything less than a great deal, say real estate professionals. 

Regardless of buyers’ high desires these days, the homes that are selling tend to be the ones where sellers price their homes the most competitively. 

“When you have realistic sellers, then we have competitive bidding on houses and you might even see that price go up,” Batterton told WBAL-TV. “When you have an unrealistic seller, then you have a house on the market for a long time, and it just depends.”

Full article at source: “Realtor: Realistic Sellers Can Find Buyers,” WBAL-TV.com (Oct. 11, 2011)

Other Placerville, El Dorado County, California information at: www.dougandbudzeller.com

Short sale transactions are becoming less popular among first-time home buyers. Buying a home in a short sale transaction may offer a huge bargain—sale prices average 27 percent lower than non-distressed properties—but more first-time home buyers say the processing delays aren’t worth the trouble.

Among first-time buyers, their short sale purchase share dropped to 39.7 percent of all short sale transactions in August—posting a three-month drop and reaching its lowest share ever recorded for first-time home buyers, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In November 2009, first-time home buyers’ share of short sales had reached a peak of 54.1 percent of all short sale transactions. 

With bargain deals, why are short sales losing their appeal? Buyers are complaining that short sale transactions take too long to close, with approval times often taking several months after a buyer even submits an offers. Some buyers frustrated at the delays are placing offers on multiple properties, planning to close on whichever one is approved the fastest. The average time on market for short sales is 16.6 weeks, and the majority of that time is spent waiting for short sale approval, the HousingPulse Tracking Survey found.

Source: “First-Time Buyers Losing Interest in Short Sales,” RISMedia (Sept. 26, 2011)

Other Placerville, El Dorado County, California information at: www.dougandbudzeller.com