Some Increased Loan Costs Starting in 2012

There was a time just a few years ago when PMI (mortgage insurance premium), that cost for putting less than 20% down towards a mortgage, was not tax deductible. Then, with the upswing in the housing market, came the good news in 2006 that it was deductible, so there seemed at least some return on what seemed like an extra cost because you couldn't afford the higher cost (the 20% down payment). 

But, unfortunately for people who need every break possible now, that deduction has expired at the end of December. This will affect potentially millions of homeowners, who probably don't even realize its disappearance at this point. It could mean a difference of several hundred dollars a year, at a minimum, for the first-time and mid-income buyer. Congress failed to renew this, as well as many other benefits in the Tax Code.

In addition, there are new mortgage fee hikes for Fannie and Freddie Mac loans, fees which will undoubtedly get passed along to the consumer, and may mean about 1/8% of a 1 point increase in interest rates. Why?

"Unlike standard guarantee fees, which are used by Fannie and Freddie to defray loan-default expenses, the new funds will be sent directly to the Treasury to help pay for the $36-billion cost of the temporary payroll tax cut. FHA loans also will be hit with a fee increase by the payroll bill, raising the annual premiums the FHA charges new borrowers by one-tenth of a point."

More information on these costs from Ken Harney.

Residential Sales in Long Beach CA -- Very Busy in 2011!

Just a quick look at this chart for pending sales of single family homes in Long Beach shows the trend:
more properties in escrow with almost every passing month in 2011--December was the highest month of pendings since June of 2010. (This data includes both standard equity sales and all types of distressed and special condition properties, at all price ranges.)

One of the busiest months was June, when the average days on market time was under 60 days, the highest number of new listings came on the market, the number of houses sold was second highest for the year, and the median price was the highest for the year, at over $370,000. August and December, however, were the two highest months in number of houses sold (202 each) for the year.  The median sold price for 2011 did not reach the median high of $380,000 of 2010.

Overall, the number of houses sold from December 2010 is 9% higher in December 2011, while the number of properties for sale is down 24%. In fact, the months' supply of inventory (how much time it would take to sell all the existing inventory at the current rate of sale) shows a definite downward trend for single family homes for the entire year and is at the lowest level since December 2009.

Interest rates are projected to stay lower throughout 2012, making a great time to take advantage of Long Beach market activity, especially in the under-$400,000 market, where standard sales are moving quickly.