Pricing property can be more art than science in today's market. New home builders probably have the easiest time of it -- at least without shocking the buyers -- because everything is new. There are no bare areas in the carpet, fingerprints on the appliances, nicotine stained ceiling tiles in the rec room -- and definitely no cat and dog odors that are promised to be dealt with by installing new carpet after the buyer moves in.
With resale homes, the first weapon to use in the battle to sell the home is to price it correctly. The challenge for sellers is that they want as much as the last sale, however, in today's market that's not as guaranteed as it was a year ago. The seller can still walk away with hundreds of thousands of dollars in gain, but maybe not the absolute highest amount of gain ever in the community.
Thus, pricing is the key. There are only a few ways to price a home for sale and sellers who don't want to wait around on the sale of their home need to adapt to the accepted modes of pricing and get over the fact that their house may not be worth as much as it was 12 months ago.
The first model is probably the most popular -- the comparable. By pulling up only the sales of your particular model, the Realtor can determine a trend price for your home. The challenge in a slowing market is that your particular model may only have three sales in the last year. Such a low number of houses selling does not really create a trend line, especially if the last sale was 6 months previous. Thus, you turn to the second pricing model.
Your home is then dissected to create comparables across a few neighborhoods or even a whole zip code that match your local community. Several aspects of your home will be plugged into the comparable model: style of home (split level, colonial, etc.); number of levels; number of bedrooms and baths; extra rooms; year built; square footage; and more. Then the averages on these parameters are tabulated and you'll have a target price. Keep in mind to remove the highs and lows.
Finally, another way to price your home is to come up with a tax assessment model. This one takes a little bit more homework and data mining. It's tedious, but it can present one of the most accurate pictures of home values in your community. The first step is to pull up all the sales in the community in the last 6 to 12 months. Tabulate the sales price total (let's say it comes up to $10 million) and then tabulate the tax assessment total (our model will use $8 million). Divide the tax assessment into the sales price and you come up with a tax assessment-sales price ratio. In this case, the community ratio is 1.25. Multiply your tax assessment by the ratio figure, and it will determine your target asking price. For example, if your tax assessment is $250,000, multiply it by 1.25 and you'll arrive at $312,500 as a target asking price. Again, be careful to pull out the anomalies that represent overbuilt properties. The largest, biggest house in the community could affect your price, as well as the pre-foreclosure sale.
You're looking for average prices with average situations for average results.
If you're having to use all three models to arrive at a price, then your real estate professional should weigh in with all three models to determine the price.
The biggest challenge in pricing the home is a seller's greed level. Sorry to be so blunt, but sellers always want more than the last sale, regardless of the market condition. My blunt advice is to "get over it." Waiting around for the "right" buyer is just plain foolishness in the world of real estate. If you're putting your home on the market, don't wait around and waste your time, the buyers' time and the agents' time with an unrealistic asking price.
-Realty Times
Monday, April 10, 2006
Friday, March 24, 2006
Ways you can lose your home
There are times and ways that people lose their homes through foreclosure or possession. The way many rags-to-riches seekers pursue the quick buck is through the foreclosure sales. Nevertheless, there are several other ways homeowners or investors can lose property. Below are at least six ways a homeowner can lose their property to the auction block.
*Don't pay your mortgage. Generally, quit paying your mortgage and you'll end up getting past due notices, followed by foreclosure proceedings notices and then a visit from the sheriff's office to "assist" you in removing all your property from the household.
While there may appear to be a lot of foreclosures out there, the Mortgage Bankers Association reports that less than 1 percent of mortgages in 2005 went into foreclosure (down 12 basis points from the year before.) However, the number of mortgagees in default rose the last reporting quarter to 4.70 percent.
The increase comes as no surprise to the group's chief economist, Doug Duncan. "We have been expecting an up-tick in delinquencies due to a number of factors: the seasoning of the loan portfolio, the increased shares of the portfolio that are ARMs and subprime mortgages, as well as the elevated level of energy prices and rising interest rates," he said on the group's website.
*Don't pay your taxes. For homeowners who pay their own taxes, (not paid through a mortgage service provider), a tax sale could be in their future if they fail to pay taxes on the property. Though most tax sales are through local governments, both state and federal revenue agencies can confiscate real estate for not paying taxes.
If this happens, it's not as simple as just paying the back taxes and getting your property back. For some, it includes also paying penalties and interest, which many times can bypass the actual amount of the back taxes balance.
If your local taxing jurisdiction is anything like mine here in good old Fairfax County, Virginia, then the confiscation of your home is a last resort -- first they will have tried various other methods of tax collection, such as garnishing wages, confiscated money from your bank, booting and towing your car, then of course, selling your house on the auction block.
*File bankruptcy. In the past, filing bankruptcy usually gave the homeowner some protection from losing his home to creditors. With the revamped bankruptcy laws passed last year, creditors may now have the upper hand in bankruptcy situations, according to Herbert Addison, co-author of "How to Save Your Home" and a certified housing counselor. He contends on ezinearticles.com that while the new law allows for 180 days for the consumer to work out payment plans with the creditor, it does not stop the foreclosure process, which could be a shorter period of time than the payment workout plan.
*Surety for other debts besides mortgage. Creditors are in business for one thing -- to make money off consumers through interest and fees collected during payback of loans. If the consumer fails to pay off those loans, the creditors can go after assets to satisfy the debts. Your house could be one of those assets.
*Failure to pay homeowners dues. If you get into an argument with your homeowners association, withholding the homeowners dues paid each month should not be one of your strategies. HOAs can also auction your house to satisfy past due homeowners HOA fees.
*Illegal activity. The American Civil Liberties Union contends that 80 percent of homeowners who have had property forfeited by the federal, state or local government have never been convicted of a crime, rather law enforcement officials only need to prove probable cause that the homeowner either used the property in committing a crime or purchased the house through funds created through illicit behavior.
(Realty Times)
*Don't pay your mortgage. Generally, quit paying your mortgage and you'll end up getting past due notices, followed by foreclosure proceedings notices and then a visit from the sheriff's office to "assist" you in removing all your property from the household.
While there may appear to be a lot of foreclosures out there, the Mortgage Bankers Association reports that less than 1 percent of mortgages in 2005 went into foreclosure (down 12 basis points from the year before.) However, the number of mortgagees in default rose the last reporting quarter to 4.70 percent.
The increase comes as no surprise to the group's chief economist, Doug Duncan. "We have been expecting an up-tick in delinquencies due to a number of factors: the seasoning of the loan portfolio, the increased shares of the portfolio that are ARMs and subprime mortgages, as well as the elevated level of energy prices and rising interest rates," he said on the group's website.
*Don't pay your taxes. For homeowners who pay their own taxes, (not paid through a mortgage service provider), a tax sale could be in their future if they fail to pay taxes on the property. Though most tax sales are through local governments, both state and federal revenue agencies can confiscate real estate for not paying taxes.
If this happens, it's not as simple as just paying the back taxes and getting your property back. For some, it includes also paying penalties and interest, which many times can bypass the actual amount of the back taxes balance.
If your local taxing jurisdiction is anything like mine here in good old Fairfax County, Virginia, then the confiscation of your home is a last resort -- first they will have tried various other methods of tax collection, such as garnishing wages, confiscated money from your bank, booting and towing your car, then of course, selling your house on the auction block.
*File bankruptcy. In the past, filing bankruptcy usually gave the homeowner some protection from losing his home to creditors. With the revamped bankruptcy laws passed last year, creditors may now have the upper hand in bankruptcy situations, according to Herbert Addison, co-author of "How to Save Your Home" and a certified housing counselor. He contends on ezinearticles.com that while the new law allows for 180 days for the consumer to work out payment plans with the creditor, it does not stop the foreclosure process, which could be a shorter period of time than the payment workout plan.
*Surety for other debts besides mortgage. Creditors are in business for one thing -- to make money off consumers through interest and fees collected during payback of loans. If the consumer fails to pay off those loans, the creditors can go after assets to satisfy the debts. Your house could be one of those assets.
*Failure to pay homeowners dues. If you get into an argument with your homeowners association, withholding the homeowners dues paid each month should not be one of your strategies. HOAs can also auction your house to satisfy past due homeowners HOA fees.
*Illegal activity. The American Civil Liberties Union contends that 80 percent of homeowners who have had property forfeited by the federal, state or local government have never been convicted of a crime, rather law enforcement officials only need to prove probable cause that the homeowner either used the property in committing a crime or purchased the house through funds created through illicit behavior.
(Realty Times)
Thursday, March 16, 2006
Why St. Patrick's Day Is Important To Americans
Green beer and buckled hats aside, St. Patrick's Day is not a bank holiday, but most Americans celebrate it with gusto anyway. What is St. Patrick's Day and what does it mean to Americans? Here are some ideas, courtesy of research by the U.S. Census.
March is Irish-American Heritage Month, and March 17 is St. Patrick's Day. He was the saint who introduced Christianity to Ireland in the fifth century, and March 17 is the day that St. Patrick is believed to have died.
The day is chosen for many Americans to celebrate their Irish lineage, and although it isn't an official federal holiday, many communities participate in the fun with parades and other celebrations. The reason? About 34.5 million U.S. residents claim Irish ancestry (roughly nine times the population of Ireland itself (4.1 million.)
Here are some of other facts for your "Top 'o the mornin'":
Nearly one in four (24 percent) Massachusetts residents claim Irish ancestry -- about double the national percentage. (Source: American FactFinder)
In three states, Delaware, Massachusetts and New Hampshire, Irish is the leading ancestry. The number one ancestry named by U.S.residents is German. Irish is among the top-five ancestries in every state but two (Hawaii and New Mexico). (Source: U.S. Census)
About 25,870 U.S. residents speak Irish Gaelic at home (Source: U.S. Census)
There are about 128,000 U.S. residents who were born in Ireland, excluding people living in group quarters. (Source: American FactFinder)
Since 1820, the earliest year for which official immigration records exist, there have been 4.8 million Irish immigrants lawfully admitted to the United States for permanent residence. By fiscal year 1870, about half of these immigrants were admitted for lawful permanent residence. Only Germany, Mexico, Italy and the United Kingdom have had more immigrants admitted for permanent residence to the United States than Ireland. (Source: Department of Homeland Security Table 1)
Four places in the United States are named Shamrock, the floral emblem of Ireland. Mount Gay-Shamrock, W.Va., and Shamrock, Texas, were the most populous, with 2,623 and 1,821 residents, respectively. Shamrock Lakes, Ind., had 162 residents and Shamrock, Okla., 126. (Statistic for Mount Gay-Shamrock is from Census 2000; the other statistics in this paragraph are 2004 estimates.) (Source: American FactFinder and Census.gov)
Nine U.S. burbs are named after Dublin, the capital of Ireland. Since Census 2000, Dublin, Calif., has surpassed Dublin,Ohio, as the most populous of these places (36,995 compared with 34,301, respectively, as of July 1, 2004). (Source: American FactFinder and Census.gov)
Corned beef and cabbage is a traditional St. Patrick's Day dish. The corned beef celebrants dine on may very well have originated in Texas, which produced 7.3 billion pounds worth of beef, while the cabbage most likely came from California, which produced 558 million pounds worth. In 2004, the U.S. produced 41.5 billion & 2.5 billion U.S. beef and cabbage production, respectively, in pounds. (Source USDA)
On St. Patrick's Day, you may be able to order green-dyed beer at one of the nation's 48,050 drinking places, some of which may be Irish pubs. See Table 201, Statistical Abstract of the United States: 2006 .
About 93.3 million people planned to wear green last St. Patrick's Day.(Source: National Retail Federation, via Hallmark.)
March is Irish-American Heritage Month, and March 17 is St. Patrick's Day. He was the saint who introduced Christianity to Ireland in the fifth century, and March 17 is the day that St. Patrick is believed to have died.
The day is chosen for many Americans to celebrate their Irish lineage, and although it isn't an official federal holiday, many communities participate in the fun with parades and other celebrations. The reason? About 34.5 million U.S. residents claim Irish ancestry (roughly nine times the population of Ireland itself (4.1 million.)
Here are some of other facts for your "Top 'o the mornin'":
Nearly one in four (24 percent) Massachusetts residents claim Irish ancestry -- about double the national percentage. (Source: American FactFinder)
In three states, Delaware, Massachusetts and New Hampshire, Irish is the leading ancestry. The number one ancestry named by U.S.residents is German. Irish is among the top-five ancestries in every state but two (Hawaii and New Mexico). (Source: U.S. Census)
About 25,870 U.S. residents speak Irish Gaelic at home (Source: U.S. Census)
There are about 128,000 U.S. residents who were born in Ireland, excluding people living in group quarters. (Source: American FactFinder)
Since 1820, the earliest year for which official immigration records exist, there have been 4.8 million Irish immigrants lawfully admitted to the United States for permanent residence. By fiscal year 1870, about half of these immigrants were admitted for lawful permanent residence. Only Germany, Mexico, Italy and the United Kingdom have had more immigrants admitted for permanent residence to the United States than Ireland. (Source: Department of Homeland Security Table 1)
Four places in the United States are named Shamrock, the floral emblem of Ireland. Mount Gay-Shamrock, W.Va., and Shamrock, Texas, were the most populous, with 2,623 and 1,821 residents, respectively. Shamrock Lakes, Ind., had 162 residents and Shamrock, Okla., 126. (Statistic for Mount Gay-Shamrock is from Census 2000; the other statistics in this paragraph are 2004 estimates.) (Source: American FactFinder and Census.gov)
Nine U.S. burbs are named after Dublin, the capital of Ireland. Since Census 2000, Dublin, Calif., has surpassed Dublin,Ohio, as the most populous of these places (36,995 compared with 34,301, respectively, as of July 1, 2004). (Source: American FactFinder and Census.gov)
Corned beef and cabbage is a traditional St. Patrick's Day dish. The corned beef celebrants dine on may very well have originated in Texas, which produced 7.3 billion pounds worth of beef, while the cabbage most likely came from California, which produced 558 million pounds worth. In 2004, the U.S. produced 41.5 billion & 2.5 billion U.S. beef and cabbage production, respectively, in pounds. (Source USDA)
On St. Patrick's Day, you may be able to order green-dyed beer at one of the nation's 48,050 drinking places, some of which may be Irish pubs. See Table 201, Statistical Abstract of the United States: 2006 .
About 93.3 million people planned to wear green last St. Patrick's Day.(Source: National Retail Federation, via Hallmark.)
Monday, March 13, 2006
Selling your home in a shifting market
March 2006
The bidding wars are dying down. Cat fights, heartbreaking personal letters and other strategies employed by desperate buyers are fading into the past. While a freakishly warm winter in the Midwest and East has kept sales hotter than we'd expect to see in January, there have been plenty of signs that things are cooling down. Most economists expect sales of existing homes as well as new construction to sink from last year's record levels. Mix in rising interest rates, and things may start to look grim to anyone pondering a home sale.
But this doesn't mean you have to stay put. You may just need to work a little harder to reel in your buyer. Fortunately, there are plenty of creative, crafty, and just plain logical things you can do to help your home look exceptionally appealing in an inventory-heavy market.
Make a good first impressionYou want potential buyers to fall in love with your home the instant they pull up in front, which is why curb appeal is everything. It's absolutely vital that the yard is immaculate, the flowerbeds are fresh, and the garbage cans are nowhere in sight. Little improvements make a big difference. Freshen up paint, and buy a new welcome mat, doorknocker, and mailbox.
Get lostWhen an agent calls to say they're bringing someone over to see the house, get out. Take a walk, do an errand, get a cup of coffee, twiddle your thumbs, whatever it takes. When the owner is in the home, potential buyers feel uncomfortable exploring and asking questions, and will likely cut their visit short. While you may desperately want to provide a guided tour, listing all of the wonderful things about the house and improvements you've made, that's the agent's job.
De-clutterYou have too much stuff in your house. We're sure of it. We're not just talking about those jeans that haven't fit since college. We're talking big stuff, too. Thinning out furniture will make the home look larger and brighter. Get rid of extra chairs, messy bookshelves, unnecessary end tables, and anything else you can shake loose.
Donate or discard everything you don't need any more, and store the rest in a kindly neighbor's garage, if possible (don't put it in yours—that's what we call cluttershifting, and it doesn't fool anyone). If you need to, rent a storage unit.
De-stinkA less-than-pleasant odor—or really any odor at all—can make your home an instant no-thank-you. If you smoke, do it outside. If you have pets, take them with you during showings. Clean litter boxes religiously. Even the idea of animals is enough to make some buyers flinch.
Throw in a perkEven a small freebie can turn a ''looky-loo'' into an ''offer-loo,'' and make them feel really good about the deal they're getting. In the long run, it's sure to cost you less than the stigma of having your home sit on the market another month. While you'll want to work with your agent on the details, here are a few ideas to get you started:
Got a large yard? Offer to cover your buyer's landscaping fees for a year.
Kitchen hopelessly dated? Have a kitchen designer draw up some plans, and place them in a notebook on the kitchen counter. Provide a ''get started'' bonus for the remodel.
Moving to a smaller home, or one with a different configuration? Grab the opportunity to be generous with your existing furniture. If you won't need that gigantic dining room set in your new place, leave it behind.
While nobody knows exactly what the market will do, those mythic folks in the know feel fairly confident that we're headed for a dose of reality. But an impending slowdown doesn't mean you can't get a fair, or even favorable, price for your home. A little ingenuity, mixed with a bit of elbow grease can put you on the road to a successful sale.
(Courtesy of Washington Mutual)
The bidding wars are dying down. Cat fights, heartbreaking personal letters and other strategies employed by desperate buyers are fading into the past. While a freakishly warm winter in the Midwest and East has kept sales hotter than we'd expect to see in January, there have been plenty of signs that things are cooling down. Most economists expect sales of existing homes as well as new construction to sink from last year's record levels. Mix in rising interest rates, and things may start to look grim to anyone pondering a home sale.
But this doesn't mean you have to stay put. You may just need to work a little harder to reel in your buyer. Fortunately, there are plenty of creative, crafty, and just plain logical things you can do to help your home look exceptionally appealing in an inventory-heavy market.
Make a good first impressionYou want potential buyers to fall in love with your home the instant they pull up in front, which is why curb appeal is everything. It's absolutely vital that the yard is immaculate, the flowerbeds are fresh, and the garbage cans are nowhere in sight. Little improvements make a big difference. Freshen up paint, and buy a new welcome mat, doorknocker, and mailbox.
Get lostWhen an agent calls to say they're bringing someone over to see the house, get out. Take a walk, do an errand, get a cup of coffee, twiddle your thumbs, whatever it takes. When the owner is in the home, potential buyers feel uncomfortable exploring and asking questions, and will likely cut their visit short. While you may desperately want to provide a guided tour, listing all of the wonderful things about the house and improvements you've made, that's the agent's job.
De-clutterYou have too much stuff in your house. We're sure of it. We're not just talking about those jeans that haven't fit since college. We're talking big stuff, too. Thinning out furniture will make the home look larger and brighter. Get rid of extra chairs, messy bookshelves, unnecessary end tables, and anything else you can shake loose.
Donate or discard everything you don't need any more, and store the rest in a kindly neighbor's garage, if possible (don't put it in yours—that's what we call cluttershifting, and it doesn't fool anyone). If you need to, rent a storage unit.
De-stinkA less-than-pleasant odor—or really any odor at all—can make your home an instant no-thank-you. If you smoke, do it outside. If you have pets, take them with you during showings. Clean litter boxes religiously. Even the idea of animals is enough to make some buyers flinch.
Throw in a perkEven a small freebie can turn a ''looky-loo'' into an ''offer-loo,'' and make them feel really good about the deal they're getting. In the long run, it's sure to cost you less than the stigma of having your home sit on the market another month. While you'll want to work with your agent on the details, here are a few ideas to get you started:
Got a large yard? Offer to cover your buyer's landscaping fees for a year.
Kitchen hopelessly dated? Have a kitchen designer draw up some plans, and place them in a notebook on the kitchen counter. Provide a ''get started'' bonus for the remodel.
Moving to a smaller home, or one with a different configuration? Grab the opportunity to be generous with your existing furniture. If you won't need that gigantic dining room set in your new place, leave it behind.
While nobody knows exactly what the market will do, those mythic folks in the know feel fairly confident that we're headed for a dose of reality. But an impending slowdown doesn't mean you can't get a fair, or even favorable, price for your home. A little ingenuity, mixed with a bit of elbow grease can put you on the road to a successful sale.
(Courtesy of Washington Mutual)
Thursday, March 09, 2006
Homeowners anticipate further home price appreciation
HOMEOWNERS ANTICIPATE FURTHER HOME PRICE APPRECIATION
Americans believe home prices will continue rising in the coming years, according to a recent "Los Angeles Times"/Bloomberg poll. Nearly 50 percent of respondents believe their home values will increase by 5 to 15 percent in the next three years, while 25 percent expect home prices to rise 16 percent or more over the same period. "I think the 'bubble' talk is hyped," said Diane Harvey of Foster City, Calif., one of the participants in the poll.
Though the majority of respondents showed optimism about future home price growth, the poll revealed some concern about the impact of rising mortgage interest rates on adjustable-rate mortgages. Roughly one in seven respondents have an adjustable-rate mortgage, and more than 25 percent stated they are "not too confident" or "not at all confident" about their ability to make their mortgage payments if adjusted higher.
The "Los Angeles Times"/Bloomberg poll also found that 16 percent of respondents had tapped into their home equity in the last two years. Completing home improvements, paying off other debts, and buying new cars were among the top uses for the cash obtained.
Americans believe home prices will continue rising in the coming years, according to a recent "Los Angeles Times"/Bloomberg poll. Nearly 50 percent of respondents believe their home values will increase by 5 to 15 percent in the next three years, while 25 percent expect home prices to rise 16 percent or more over the same period. "I think the 'bubble' talk is hyped," said Diane Harvey of Foster City, Calif., one of the participants in the poll.
Though the majority of respondents showed optimism about future home price growth, the poll revealed some concern about the impact of rising mortgage interest rates on adjustable-rate mortgages. Roughly one in seven respondents have an adjustable-rate mortgage, and more than 25 percent stated they are "not too confident" or "not at all confident" about their ability to make their mortgage payments if adjusted higher.
The "Los Angeles Times"/Bloomberg poll also found that 16 percent of respondents had tapped into their home equity in the last two years. Completing home improvements, paying off other debts, and buying new cars were among the top uses for the cash obtained.
Monday, February 27, 2006
Home Repair Scams
Fight Back: Home Repair Scams
Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
Get references and call them.
Visit other job sites to review work previously preformed by the contractor.
Watch out for bait-and-switch tactics and shady financing schemes.
Source: National Consumer Law Center
Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
Get references and call them.
Visit other job sites to review work previously preformed by the contractor.
Watch out for bait-and-switch tactics and shady financing schemes.
Source: National Consumer Law Center
Thursday, February 23, 2006
REMODELING ACTIVITY SLOWS
REMODELING ACTIVITY SLOWS
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
Wednesday, February 08, 2006
30-year U.S. Treasury bonds - why is it coming back now and who wants it.
**The last sales of 30-year bonds, known as the "long bond," were made in August 2001. On Oct, 31, 2001, then-Treasury Under Secretary Peter Fisher announced: "We do not need the 30-year bond to meet the government's current financing needs, nor those that we expect to face in the coming years."
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
Monday, February 06, 2006
30 Year bond is back after 5 years.
After nearly a 5-year hiatus, the United States Department of the Treasury will reintroduce 30-year Treasury Bonds. On February 9th, 2006 the Long Bond will be up for auction. But many interest rate followers are fearful that the added supply of paper will cause overall bond prices to decline and home loan rates to rise. Are those fears justified? Let’s take a closer look.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Thursday, February 02, 2006
Fed raised Fed Funds rate
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.
Tuesday, January 24, 2006
The Appraisal Process
The appraisal process often baffles consumers. They may feel their home is worth a higher dollar amount, and the appraised value doesn't always make sense to them. It is important to know that appraisal guidelines are dictated by the lenders, and in some states, it is a requirement to also disclose what the appraisal will be used for because there are different rules to follow depending on the purpose.
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
Friday, January 20, 2006
Reverse Mortgages
This was an interesting article from "Market Watch"The number of Americans over age 65 is expected to double in the next 30 years to 70 million. And those older Americans will be living longer. But with one of the lowest savings rates in the world, just what will they live on?
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
Wednesday, January 18, 2006
Good Heating system advice
Experts advise that you hire a licensed professional to give your home heating and cooling systems the once over at least once a year.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
Monday, January 09, 2006
The new Federal estate tax exclusion for 2006
Some good news – the new Federal estate tax exclusion increased in 2006 to $2 million per person. In the past ten years, that amount has increased over 230 percent, as the figure is up from $600,000 in 1996. Count on this tax exclusion figure to remain in effect until 2009, then the amount is scheduled to increase one more time to $3,500,000 per person. After 2010, it will supposedly be repealed altogether.
Estate tax differs from income tax in that income tax is owed every year on any revenue. Estate tax is owed on the net value of your estate at the time of your death if you leave your assets to any beneficiary other than your spouse. To break this down, let’s say you pass away and leave your entire estate to your children. Your estate is made up of everything you own and includes such items as residential property, life insurance proceeds, IRAs, automobiles, jewelry, cash accounts, etc. If you total the amount of all assets and subtract any debts that you may owe against property or automobiles, the remaining value is known as your "net estate value" and that is the “net value” that could be subject to estate tax.
Important: Your C.P.A. is the best person to educate you about estate taxes.
Estate tax differs from income tax in that income tax is owed every year on any revenue. Estate tax is owed on the net value of your estate at the time of your death if you leave your assets to any beneficiary other than your spouse. To break this down, let’s say you pass away and leave your entire estate to your children. Your estate is made up of everything you own and includes such items as residential property, life insurance proceeds, IRAs, automobiles, jewelry, cash accounts, etc. If you total the amount of all assets and subtract any debts that you may owe against property or automobiles, the remaining value is known as your "net estate value" and that is the “net value” that could be subject to estate tax.
Important: Your C.P.A. is the best person to educate you about estate taxes.
Thursday, January 05, 2006
2005 California housing market stats... FYI
2005 California housing market eclipses previous records
LOS ANGELES (Dec. 28) – The California residential real estate market in 2005 will be one for the record books, eclipsing the annual sales and median home price records set in 2004, according to the California Association of REALTORS® (C.A.R.).
Here are some highlights from 2005 and a look ahead to 2006: - Sales of detached, existing single-family homes are expected to reach 635,000 in 2005, an increase of 1.8 percent over last year’s record sales of 624,700. Sales are anticipated to decline by 2 percent in 2006. - 2005 will be a record year for home prices. The median price of a single-family home in California crossed the $500,000 threshold for the first time in April 2005. The annual median is expected to reach $523,150 in 2005 and increase 10 percent to $573,500 in 2006. - The median price of a single-family home increased by double-digits for the fourth consecutive year in 2005, though the pace of price appreciation slowed from the 18 to 21 percent annual gains of the previous three years to 16 percent in 2005.- C.A.R.’s Unsold Inventory Index averaged 3.3 months in 2005. Inventory levels are expected to rise moderately in 2006 but will remain low by historic standards, fueling continued price appreciation in the California market. - The interest rate for a fixed-rate mortgage (FRM) remained below 6 percent for much of 2005, only surpassing 6 percent in the last months of the year. For all of 2005, the FRM averaged 5.8 percent. In 2006, the interest rate for the FRM is projected to increase but remain low by historic standards in the low- to mid-6 percent range. - The interest rate for a one-year adjustable-rate mortgage (ARM) averaged 4.5 percent in 2005, finishing just over 5 percent at year-end. The interest rate for the one-year ARM is expected to remain within the low- to mid-5 percent range during 2006. - With home prices reaching record levels, more homebuyers extended themselves financially in 2005 by utilizing alternative loan products. The share of homebuyers who used adjustable-rate and hybrid loans increased from 11 percent in 2003 to 43 percent in 2005, while the share of fixed-rate loans dropped from 89 percent in 2003 to 57 percent in 2005. The last time more than 40 percent of homebuyers used adjustable-rate loans was in 1994. - Fannie Mae and Freddie Mac increased the single-family conforming mortgage loan limit from $359,650 this year to $417,000 in 2006, which could benefit more than 28,590 families in California. However, the increase in the loan limit is still far too low to benefit most homebuyers in California, as the median price of a home in California is 29 percent higher than the new loan limits. Nineteen counties in California have a median home price above the new limit. - Internet use by homebuyers and sellers continued to climb in 2005. Based on C.A.R.’s “Internet Versus Traditional Buyers Survey,” the percentage of homebuyers using the Internet increased from 56 percent in 2004 to 62 percent in 2005. - The share of sellers who used the Internet in their homeselling process surpassed 50 percent for the first time, rising from 47 percent in 2004 to 57 percent in 2005, according to C.A.R.’s “Survey of California Home Sellers.”
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
LOS ANGELES (Dec. 28) – The California residential real estate market in 2005 will be one for the record books, eclipsing the annual sales and median home price records set in 2004, according to the California Association of REALTORS® (C.A.R.).
Here are some highlights from 2005 and a look ahead to 2006: - Sales of detached, existing single-family homes are expected to reach 635,000 in 2005, an increase of 1.8 percent over last year’s record sales of 624,700. Sales are anticipated to decline by 2 percent in 2006. - 2005 will be a record year for home prices. The median price of a single-family home in California crossed the $500,000 threshold for the first time in April 2005. The annual median is expected to reach $523,150 in 2005 and increase 10 percent to $573,500 in 2006. - The median price of a single-family home increased by double-digits for the fourth consecutive year in 2005, though the pace of price appreciation slowed from the 18 to 21 percent annual gains of the previous three years to 16 percent in 2005.- C.A.R.’s Unsold Inventory Index averaged 3.3 months in 2005. Inventory levels are expected to rise moderately in 2006 but will remain low by historic standards, fueling continued price appreciation in the California market. - The interest rate for a fixed-rate mortgage (FRM) remained below 6 percent for much of 2005, only surpassing 6 percent in the last months of the year. For all of 2005, the FRM averaged 5.8 percent. In 2006, the interest rate for the FRM is projected to increase but remain low by historic standards in the low- to mid-6 percent range. - The interest rate for a one-year adjustable-rate mortgage (ARM) averaged 4.5 percent in 2005, finishing just over 5 percent at year-end. The interest rate for the one-year ARM is expected to remain within the low- to mid-5 percent range during 2006. - With home prices reaching record levels, more homebuyers extended themselves financially in 2005 by utilizing alternative loan products. The share of homebuyers who used adjustable-rate and hybrid loans increased from 11 percent in 2003 to 43 percent in 2005, while the share of fixed-rate loans dropped from 89 percent in 2003 to 57 percent in 2005. The last time more than 40 percent of homebuyers used adjustable-rate loans was in 1994. - Fannie Mae and Freddie Mac increased the single-family conforming mortgage loan limit from $359,650 this year to $417,000 in 2006, which could benefit more than 28,590 families in California. However, the increase in the loan limit is still far too low to benefit most homebuyers in California, as the median price of a home in California is 29 percent higher than the new loan limits. Nineteen counties in California have a median home price above the new limit. - Internet use by homebuyers and sellers continued to climb in 2005. Based on C.A.R.’s “Internet Versus Traditional Buyers Survey,” the percentage of homebuyers using the Internet increased from 56 percent in 2004 to 62 percent in 2005. - The share of sellers who used the Internet in their homeselling process surpassed 50 percent for the first time, rising from 47 percent in 2004 to 57 percent in 2005, according to C.A.R.’s “Survey of California Home Sellers.”
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
Monday, January 02, 2006
Patriot Act extended.
With the U.S.A. Patriot Act set to expire at the end of 2005, the Senate decided on December 21 to extend the Act for six months so the House and Senate could make revisions to the Act next year. The House voted to reauthorize the Patriot Act for four years before it adjourned for the holidays the prior week.
Tuesday, December 27, 2005
Inverted Yield curve...
The Yield curve has just inverted!
An "Inverted Yield Curve" means the 2-Year Note Yield moves above the 10-Year Note Yield. But more importantly, history has shown this to be a recessionary signal. We don't see an Inverted Yield Curve signaling a recession this time. Why? Our Fed Funds rate has risen 325bp since June 2004. The 2-Year Note Yield moved higher with the Fed hikes since it is short-term paper. But, the 10-year Note Yield actually moved sideways to lower during this timeframe because of the inflation-fighting mechanism behind the hikes. Longer-term paper is more concerned with inflation rather than actual Fed moves. Bottom Line...Things are different this time because the Fed moves have pushed the 2-Year Note Yield higher, while foreign buying and contained inflation have helped reduce the 10-year Note Yield. The economy is and will continue to be strong and a recession is not in the cards.
Stocks may be set for a "Santa Claus Rally" and a run at the 11,000 mark this week. But first the Index has to break through the 10,940 barrier. This pesky level has been a solid ceiling of resistance for stocks many times during 2005. Each failed attempt to break this level has resulted in stocks dropping and bonds improving. It is no coincidence that mortgage bonds are near a ceiling in their range as well at this time. Bond traders will closely watch stocks to see how they react. If stocks bust above the ceiling, bond prices will drop. But if stocks again fail to break through, mortgage bonds should improve nicely. Remember, stocks and bonds often compete for the same investment dollar.
An "Inverted Yield Curve" means the 2-Year Note Yield moves above the 10-Year Note Yield. But more importantly, history has shown this to be a recessionary signal. We don't see an Inverted Yield Curve signaling a recession this time. Why? Our Fed Funds rate has risen 325bp since June 2004. The 2-Year Note Yield moved higher with the Fed hikes since it is short-term paper. But, the 10-year Note Yield actually moved sideways to lower during this timeframe because of the inflation-fighting mechanism behind the hikes. Longer-term paper is more concerned with inflation rather than actual Fed moves. Bottom Line...Things are different this time because the Fed moves have pushed the 2-Year Note Yield higher, while foreign buying and contained inflation have helped reduce the 10-year Note Yield. The economy is and will continue to be strong and a recession is not in the cards.
Stocks may be set for a "Santa Claus Rally" and a run at the 11,000 mark this week. But first the Index has to break through the 10,940 barrier. This pesky level has been a solid ceiling of resistance for stocks many times during 2005. Each failed attempt to break this level has resulted in stocks dropping and bonds improving. It is no coincidence that mortgage bonds are near a ceiling in their range as well at this time. Bond traders will closely watch stocks to see how they react. If stocks bust above the ceiling, bond prices will drop. But if stocks again fail to break through, mortgage bonds should improve nicely. Remember, stocks and bonds often compete for the same investment dollar.
Monday, December 19, 2005
Tax Planning Thoughts...
Many people start seriously thinking about tax season after the start of the New Year…which is actually a bit too late. Ideally, taxes should be planned two years at a time to save the most tax money. So before the year is over, it’s wise to look at the acceleration or postponement of deductions and income between years. For example, many taxpayers want to minimize the current year’s tax bill, so making sure your state income tax is paid in December rather than January can help. Additionally, you can pay Real Estate taxes and even January’s home loan payment in December to beef up your deductions. In fact, you are eligible to take the deduction if the checks are mailed in December…even if they are not cleared until January.
But watch out for AMT, Alternative Minimum Tax, which can erase your deductions. Testing to see if you fall into this trap may cause you to do the opposite – pushing some deductions off until next year, paying them in January rather than December. The same holds true for income. It is sometimes possible to accelerate or delay commissions, bonuses, billings, etc…and that can help you maximize tax savings.
You should always consult your tax pro on the strategy that is best for your own situation, but you can start by visiting www.irs.gov/newsroom. This link contains a list of the new inflation adjusted dollar amounts for many important tax figures for 2006. Comparing the allowable deductions for 2006 versus 2005 will help you choose in which year to take advantage of certain deductions. And remember, the time to consult with a CPA is now, not after the New Year begins…so if you need a referral for a qualified tax planner, please contact me.
But watch out for AMT, Alternative Minimum Tax, which can erase your deductions. Testing to see if you fall into this trap may cause you to do the opposite – pushing some deductions off until next year, paying them in January rather than December. The same holds true for income. It is sometimes possible to accelerate or delay commissions, bonuses, billings, etc…and that can help you maximize tax savings.
You should always consult your tax pro on the strategy that is best for your own situation, but you can start by visiting www.irs.gov/newsroom. This link contains a list of the new inflation adjusted dollar amounts for many important tax figures for 2006. Comparing the allowable deductions for 2006 versus 2005 will help you choose in which year to take advantage of certain deductions. And remember, the time to consult with a CPA is now, not after the New Year begins…so if you need a referral for a qualified tax planner, please contact me.
Thursday, December 01, 2005
REVISED CONFORMING LOAN LIMITS FALL SHORT
More than 28,590 families in California will be able to benefit from Fannie Mae's and Freddie Mac's recent announcements that each will increase its single-family mortgage loan limit from $359,650 to $417,000 in 2006, according to an analysis by C.A.R.
"While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation.
"The current median home price in California is $538,770, more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median home price above the national conforming loan limit.
"While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation.
"The current median home price in California is $538,770, more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median home price above the national conforming loan limit.
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