California Market Continued Its 2004 Increase

We thought it couldn't get any higher, but it has. Will 2005 bring us the same in pricing? Hard to say, but see this for more: "The median price of an existing, single-family detached home in California during November 2004 was $473,260, a 23.1 percent increase over the revised $384,470 median for November 2003, C.A.R. reported."

Increase Your Policy Coverage

A Harris Interactive Survey conducted last June reveals that the participants believed their homeowner's policy was adequate. But with the rising home values, your policy may not be giving you full coverage. The recent fires in California are an example of policy coverages coming up short for those owners. Is your coverage what it should be? Click here to review.

Your Free Credit Report as of December 1, 2004

A recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months. Starting December 1, 2004, consumers in 13 Western states including California will be able to begin making requests by visiting www.annualcreditreport.com, or by calling 877-322-8228, or by mailing a standardized form, to obtain their once-a-year free report. Other states are phased in at later dates throughout 2005.

To inform consumers about their state’s eligibility and help answer questions they may have about the consumer reporting companies’ new service, the Federal Trade Commission has published a new Facts for Consumers brochure, “Your Access to Free Credit Reports.” The alert explains why it is important for consumers to monitor their credit history, how to request a report and how to dispute any errors.

The FTC’s alert is available at http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm. For more information,visit www.ftc.gov/credit.

New loan interest rates

Buyers will have a little more leeway on their new loans. Conforming loan limits for conventional loans have been raised from $333,700 to $359,650 for 2005 for single family homes. Conforming loan limits for 2 to 4 units range from $460,400 to $691,600. What this means to the buyer is that an adjustment was made to last year's average home price as calculated by the Federal Housing Finance Board for Fannie Mae and Freddie Mac loans so that the higher interest rate for a jumbo loan would not be in effect until loan limits higher than those above are reached. Click on MBA Residential Finance Updates for more.

Continued Increase in Median Home Price

Sales continued to climb as of the end of October, 2004, and the most rapid appreciation occurred in the lowest priced regions in the state: the desert areas and San Bernardino/Riverside counties. The median price decreased slightly for October to $460,370, according to the California Association of Realtors. This is a statewide median and figures for individual counties vary. Click here to read more.

Reverse Mortgages A Trend for the Future?

The number of reverse mortgages endorsed by the FHA during 2004 has so far doubled the 2003 production of over 18,000. Reverse mortgages account for over 3% of FHA's single family 2004 production. The Home Equity Conversion Mortgage for homeowners over the age of 62 began in 1987, but since 2000, has grown dramatically from about 6600 in 2000 to over 37,000 in 2004. Not surprisingly, California has the greatest number of reverse mortgages under this plan. Mortgage lenders have become increasingly familiar with this program, and more homeowners are seeing it as a financial planning tool where a homeowner over the age of 62 may borrow against the equity in their home and not repay it until they move out. Here is more on reverse mortgages.

Highest U.S. Homeownership Reached in 2004

According to a report released by the U.S. Census Bureau, the United States now has 73.8 million homeowners -- a historical high. This is approximately 1.6 million more homeowners than recorded one year ago. The Census also reported the rate of homeownership increased 0.6 percent to 69 percent in the third quarter of 2004 compared with the same period one year ago but remained unchanged from second quarter 2004.

During the third quarter of 2004, homeownership rates by region were highest in the Midwest and South, at 73.8 percent and 71.0 percent, respectively. The Northeast recorded a homeownership rate of 64.4 percent, while the West experienced a similar rate of 64.7 percent.

The Census also reported an all-time high of 15.2 million minority homeowners, though the homeownership rate among minorities continues to be lower than that of non-Hispanic whites. In addition to the 73.8 million housing units occupied by homeowners, there were 33.1 million housing units occupied by renters during third quarter 2004.

"These numbers combined with news that sales of previously owned homes jumped 3.1 percent in September, show that housing continues to lead the way in our rapidly recovering economy," said Housing and Urban Development Secretary Alphonso Jackson.--Courtesy of California Association of Realtors.

Heritage Gardens

Although the rainy season may have started, you won't want to miss this site. Southern California consumes and depends on water from outside our locale, and water conservation is more important than ever as desert areas also draw more population and water demand is higher than ever. Not only is consuming less water through a less thirsty garden featured, you can also learn about plants that are more fire resistant and protect hillsides from slipping. By using this site you can see real people's gardens and their choices of planting; you can learn about the plants that were native to So Cal and save them to consider for your own selection later. An extremely useful site for much of California. Go to Be Waterwise here.

More Info on Market Cooling

(October 14, 2004) -- With real estate sales sliding 7.8 percent last month in Los Angeles County from a 15-year high in September 2003, prices appear to be flattening out.

The median price of a home in the county held at about $407,000 for its third consecutive month, signaling to real estate and economic experts that the sizzling Los Angeles property market finally may be returning to more normal levels.

Still, John Karevoll of DataQuick Information Systems, which complied the statistics, warns that with appreciation still over 20 percent, no 'significant' price drops have emerged. He does, however, expect home-price growth to fall back into the mid-teens by year's end.

Source: Los Angeles Times (10/13/04); Haddad, Annette"

Home Prices in L.A. Flatten

This Los Angeles Times article (10/13) will only stay online for a couple of days, it draws largely from Dataquick's stats on Los Angeles County/Orange County home sales for the last three months. Home sales have slowed, in some areas more than others, partly a sign of the time of year, partly due to the upcoming election, and a lot due to .... what? Interest rates are still fantastic, but may rise to as much as 7% by the end of 2005 (a CAR prediction by economist Leslie Appleton-Young), but home prices have remained where they are throughout the summer. However, as this article points out, there is no great decline in the median price for the area. Read here while you can:Home Prices in L.A. Flatten

U.S. Homeownership: What Makes It Work

Peruvian President Alejandro Toledo wants to encourage homeownership in his country. He has his work cut out for him.

Millions of Peruvian households have been living in their homes for generations, but, as renters, they've accumulated no wealth. Here, on the other hand, homeownership has just topped a record 69 percent. That success hasn't come by accident. Our public and private sectors have worked together to make the buying and selling of real property not only a priority but also a safe and efficient process. To start with, we have a commitment to private property rights, and we believe in the professional brokering of property.

Other characteristics of our housing sector that others might learn from:

Mortgage financing. Backed by supportive government policies, our lenders have developed a wide variety of mortgage loan products. But just as important, residential mortgage loans are nonrecourse, which means lenders can foreclose property but they can't go after personal assets.

What's more, most loans here come without prepayment penalties. That encourages refinancing when rates drop.

The backbone to our mortgage finance sector, though, is our highly efficient secondary market. Fannie Mae, Freddie Mac, and the Federal Home Loan Banks provide liquidity by guaranteeing and purchasing conventional mortgage.

Risk intermediaries. Private mortgage insurers and other companies—title insurers, appraisers, credit bureaus, and hazard insurers, to name a few—mitigate lending risk. Without them, lenders would make loans only at exorbitant fees.

In the public sector, the FHA and VA provide insurance or guarantees to encourage home mortgage financing to low- and moderate-income households and veterans, respectively.

Taxes. As a society, we show our commitment to homeownership through accommodative provisions in our tax code, such as mortgage interest and property tax deductions, large allowances before estate taxes, and capital gains relief.

from REALTOR MAGAZINE, Oct. 2004.

Highest Annual Value Growth since 1980

Freddie Mac's home mortgage index shows by region the growth in home values. California, part of its Pacific Division, is included in this analysis: Pacific Division (AK, CA, HI, OR, WA): increased 3.9 percent (16.6 percent, annualized) in the second quarter of 2004. Over the last 12 months, home values increased 17.1 percent, and during the last five years, home values have increased 74.2 percent. This is the highest regional increase in the country--six New England states are a close second with almost 72 percent increase.

The next question is, and has been for some time now, is this sustainable? According to Freddie Mac economist Amy Cutts, only to a point: "Thus far, the annual growth rates are consistent with the market fundamentals of declining interest rates, a lack of buildable land that restricts the amount of new supply hitting the market, and despite job losses, the strength of consumer spending. That said, anyone thinking about investing in a house should probably consider whether it would still be a good investment if the value only increased at one-third or one-half of the rates we've seen recently. I don't think home values will come down, but their rate of growth will likely slow back closer to average levels over the next year or so." A rise in interest rates will surely bring lower home prices to correspond to the buyer's ability to carry monthly payments at the current dollar amounts.

August Sales in Long Beach

Long Beach had 457 sales in single family homes and condominiums during August with a median price of $387,364. This is up from the August 2003 median price of $319,250, an increase of 21.34%. Click here to see Dataquick's statewide chart for California cities for August.

Higher Property Tax Revenue - How Much? A Lot

I don't think we've been seeing this printed in the media, but counties are getting a boost in revenues from increased property tax revenues. Ventura County's tax bills are up 9.2 percent from 2002. In Ventura County, 17,000 homes changed ownership in 2003. Read Daily News for more.

Calif. Assoc. of Realtors: August Median Home Price Over $474,000

Year-to-date sales are up compared to 2003, but so is the median home price. Unsold index for August was 4.3 months, compared to two months for August, 2003. The areas seeing the most activity are those that are more affordable. That median price is statewide and does not take into account specific areas or seasonal slowings. See this report from California Association of Realtors. Dataquick, which does not draw from the MLS but from county statistics, reports the median price of Los Angeles County homes as $407,000: "Mixed August for Southland Home Market".

Money Magazine: Bubble trouble - Sep. 18, 2004

Californians have witnessed a real estate market boom, but how much longer can we expect gains of 40% annually?

CNN/Money's current article Money Magazine: Bubble trouble - Sep. 18, 2004 : says, "At the current rate of sales in Orange Country, there are now five months' worth of homes on the market, compared with just one month's worth earlier this year." The hot market of early 2004 when each listing created a new frontier in pricing is cooling off. In Southern California there are some multi-thousand dollar reductions, and even those priced at market are waiting 30 days or longer with fewer showings.

July Affordability at 18% of Home Buyers in California

The good news is that this week's 30-year interest rate went down a little more: 5.625% at no points, and also the affordability index was unchanged from June. This is a statewide index, the one for Los Angeles County is a little higher because the median priced home here is lower than the statewide median of $463,000. Read this article on July 04 Housing Affordability Index at CAR's website.

Rise in Apartment Rents?

Substantial rent increases may lie ahead according to Anderson School of Management at UCLA. The demand for urban housing will remain strong, even though new apartment construction is in the Inland Empire. Rents may well be 2-3 percent above inflation as interest rates rise and only 18 percent of Californians can afford to buy. Clickhere for the CAR article.

More Home Sales than Last Year Predicted

The national home price is predicted to be slightly higher than last year as the housing supply begins to meet the demand. Low interest rates have also fueled the demand, but here in Long Beach we are seeing somewhat of a slowing as shell-shocked buyers get used to the idea that they might actually have a choice. See CAR's article here.

Rates drop dramatically

Just when we've been hearing they've gone up, they're down. While local rates don't match Bankrate's report exactly, the dip is there. Check with your financial officer for local information. And did you every wonder why internet-based companies seem to offer such a good deal? Look further, loans involve more than a rate, they involve service, experience and knowledge, fees (no, they aren't all the same), and closing on time on that date you negotiated and contracted with the seller. Perhaps you had a successful experience with a refinance with such a company, but keep in mind that a new purchase loan requires far more extensive ability, teamwork and know-how. You may get your best loan with a full-service independant broker who discloses all fees up front. It's a good idea to compare loan scenarios. See this for the article on Rates dropping dramatically.

Brad Inman's Comments on A Realtor's Everyday Risks

Not pleasant but true: Realtors DO work hard and risk much in the ordinary course of their business. Click here http://inman.com/blogger/bradinman.aspx for his comments of August 20, 2004:

"Murder and Realtors
This summer, Garland Taylor in New Mexico and Deede Keller in Southern California were both murdered. It is ridiculous to come to any conclusions or connections between the industry and these two senseless acts.
However, it has always been intriguing to me how the average Realtor is fearless compared to other types of professionals. They put their home phones and their pictures on their business cards. They stand watch alone at well-advertised open houses, often in expensive homes with costly stuff lying around.
Why?
They are independent contractors who must fight for their money. No one supports them.
Plus, homebuyers expect Realtors to be 24/7 servants in the home buying process, always accessible and ready to respond.
The every-day agent is not murdered but they take their share of abuse, just doing their job.
-- Bradley Inman"

See My Site For Open House This Weekend

Julia's website.

Unsold inventory increases

Buyers can breath a little easier, more inventory on the market and more price reductions in some areas. The price reductions may be seen as a "market correction", not necessary as a huge drop in teh future of the median price. In July, the unsold inventory index increased to 3 months on a statewide level, meaning it would take that long to deplete the current housing supply on the market. For more, click on the CAR article here.

Los Angeles County Home Sales Cooled a Little in July

The last two weeks in June the inventory dramatically increased in certain local markets, Long Beach being one of them. Consequently, homes are sitting on the market longer as buyers have more to choose from, as long as 60 days or more, depending on the property. Southern California overall has had about a 5% decrease in sales from June to July, 2004. California overall has fewer foreclosures but they also are resorting to adjustable mortgages and 100% financing as the buyer index lowers to 18% statewide. As of November, 2003, more than 50% of the buyers were turning to adjustable mortgages. See this chart for more information on Dataquick, as well as links to more information.

Rates Are Lower - Again

Bankrate.com says according to their 8/18/2004 national survey that the 30-year fixed is 5.82%. That makes the monthly payment for a $165,000 loan about $9.50 lower than it was last week. "Rates on 30-year fixed mortgages didn't drop below 6 percent between February 1966 and January 2003, according to Federal Housing Administration and Bankrate data. That should put into perspective the rarity of today's low long-term mortgage rates." Read more about how the current tame inflation leads to lower mortgage rates.

Does A 0% Down Mortgage Cost You Less?

In a hot market which is pretty much what we've been having for quite a while, sellers are more apt to carefully review the buyer's down payment, loan source and interest rate. After all, the seller wants to make sure the buyer IS getting the loan and closing escrow. If you're a buyer, is a zero down loan a good idea? It's probably not if the property you're interested in is turnkey and just came on the market. A property like that will attract a lot of interest, and your 100% financing offer won't stand up next to a buyer who has 20% down or more.

Also, do you understand all the terms of your loan? A "no-cost" mortgage does not include payments by the lender for: Per diem interest, which is interest from the closing date to the first day of the following month, isn’t included because it is not known until the exact closing date is set; Escrows for taxes and insurance, which are borrower funds set aside to assure payment of the borrower’s future obligations, are not covered because they are not a cost of the transaction; Homeowners’ insurance is not covered because, while required by the lender, it also benefits the borrower; Owner’s title insurance is not covered because it is optional or paid by the seller; Transfer taxes, if any, are not covered because the amount is sometimes uncertain, and it is set by a governmental entity. The following article explains much more about this type of loan.

Why Is There More on the Market Right Now?

If you're driving around your area, you've probably noticed a lot more open house signs. If you've been trying to buy, that may be a welcome sign, but why didn't that happen earlier in the year when you kept getting outbid on everything, especially when the median price of a home keeps going up in California? The statewide median price of a single family home for June was $469,000, a 25.3% increase from June 2003, but sales also increased. To find out about the increase in inventory in June, read about the changing interest rate.

Difference in Mortgage Rates-Then and Now

By now many of us know that yesterday the interest rates were raised. Banks have already anticipated this raise in a lot of cases and raised their 30-year rates a short time ago. Rates on adjustable mortgages will be the most sensitive to yesterday's action by the Federal Reserve. Depending on your credit score and other loan factors such as your debt ratios, your loan rate will vary, but generally it's around 6% for a 30-year fixed. In 2001, that same rate was at 7%, and some analysts are projecting we will again be close to that rate by the end of the year.

So if you have a mortgage of $180,000, let's say, take a look at the difference between getting a 6% rate now and a 7% rate in the future:
6%, your monthly P&I payment is $1079.19; at 7% it's $1197.54. See the difference? This chart shows key interest rate moves since 2001. A 30-year fixed is not your only loan option, for example, on an interest-only loan, that $1197 would be reduced to $1050.

To put things in a 10-year perspective, view this chart.

Will Rates Go Up or Not?

It's hard to tell, whether lagging job growth and a drop in consumer spending will impact rates. Some believe that deflation has waned, in spite of recent slow activity. Click here for more.

Interest Rates Are Still Very Good

According to this article the 30-year fixed is at 5.99 percent with a partial point, but a local lender is reporting conforming loan rates to the $333,700 amount at 5.750% at 0 points.

California's New Home Growth Not Enough

According to the National Home Building Industry, the current supply of new homes in California is not enough. The industry is still trying to catch up to the deficit from the mid-90's when fewer housing permits were issued. The total building permits issued as of June, 2004 is the first time production has reached that level since 1989. Besides providing more home ownership opportunity, "a recent study determined that homebuilding generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide", according to this NHBI article. Other housing studies in recent months discuss that one of the reasons California's market is the one of the highest in the country is also due to the limited supply of housing in light of the current need. A lot of information about what created the housing demand is in this 44-page lengthy article (you get the main points by reading the first few pages) on the State of the Nation's Housing.

Highest Home Ownership Rate

We're reading a lot about the unaffordability of housing, but 73.4 million Americans own their own homes, the highest rate recorded. The Midwest has the highest rate and the West has the lowest rate, and rates also differ among groups of people, however all rates by race are higher than a year ago. Click on this California Association of Realtors article to read more.

Lower Rates But Not For Long

People who wait will probably pay for it ... it's better to buy or refinance now rather than outguess the market. These are still historically low rates, and waiting shows every indication of ultimately costing you more. This article, Mortgage rates trickle down, shows a small chart on the effect of rate changes vs. your monthly mortgage. So if you're wanting to buy, don't miss out on an opportunity to save money.

Vacation Homes--What to Do About Taxes

This is the time of year for taking a vacation, or at least thinking about it if you haven't already. Buying a second home has a practical side to it: The IRS says it does not qualify for 1031 tax exchanges because it's a personal use property, not an investment, particularly when any income from it is less than the fair rental market, and if you rent it more than 14 days a year, you must pay taxes on the income. To minimize your capital gains tax consequences when selling, first move into it and convert it to your principal residence. For more on vacation homes, click and read the article.

Interest Rates May Rise Quickly?

Expect Alan Greenspan to measure his words, but the message overall is that there will be no more cuts and they will only go up. How much they will go up and how quickly is not known--that depends on inflation, jobs, and the economy. Read here for more.

L.B. Airport Runway Repair Changes Flights For A While

A $35 million runway repair at the Long Beach Airport is rearranging some flights for a while. Flight noise is not unusual for those who live in the scheduled flight path, but is giving a new learning opportunity for those living under the temporary paths. Most of the work is scheduled at night after 11 p.m. for minimal impact. Just click here to read more about this extensive rehabilitation.

If You're Considering Relocation . . .

Buyers ages 55 to 74 are looking to living just outside of major metropolitan areas. Sumter County, Florida, received the greatest growth, according to 2000 Census data, and also Sumter topped the list for recent home buyers ages 55 to 74. Nye County, Nevada (Las Vegas suburb) was second, with Salt Lake City, Phoenix and Savannah, GA, areas coming in next. Read more here about some additional information on these and other areas attracting the older homebuyer market.

Not All Loans and Lenders Are Created Equal

Buyers tend to overlook the importance of comparing loans when starting to home shop, or loan officers. If your FICO score is in the low 600's, don't expect to get the same deal your friend with a 700 FICO just closed on. If your loan rep is a relative or a friend, that's all the more reason to compare loans, it's possible to get taken for granted, or worse, find out your friend isn't very experienced. Here are 10 questions to ask when applying for a mortgage, always ask for an upfront good faith estimate. If the loan rep isn't in a hurry to provide you with one, keep shopping. Don't underestimate the important of providing all documentation on time or taking care of other loan conditions as soon as possible.

Printers and Cartridges costing you a fortune?

Freelance writer Mike Antoniak writes about affordability in color laser printers, and more good news about standardization in those little ink cartridges that quickly cost more than the price of the printers.  With the introduction by Hewlett Packard of the first color laser model to break the $500 price point, a color laser printer is finally an affordable option for many.  If you can justify the added expense, you can now get an entry-level color laser printer for $500, roughly half of what it would have cost two years ago. Visit the vendors' Web site for detailed specs and ordering information.

• Hewlett Packard: At $499, the new HP Color LaserJet 2550L sets a new threshold among entry-level color laser printers. For the home/small office, HP has also added two new inkjet models, the HP Office jet 4215 printer/fax/scanner/copier, at $149, and the HP PSC 1315 printer/scanner/copier, at $99. 

• Dell: Its latest entries include a new multifunction inkjet printer and three new monochrome laser models, at $129 Photo All-in-One 922; the Dell Laser Printer 1700, $199, a network-ready version, the 1700n, is available for $100 more. The company also adds a multifunction laser unit with the new 1600n for $399. Designed for work groups, this combination printer/scanner/fax/copier is rated at 22 ppm at 1,200 dpi.

• Lexmark: The company has just announced a family of five upgradeable monochrome laser printers targeting the needs of home and small offices. Users will have an option of 2,500-page or 6,000-page toner cartridges. At $199, is the basic model, E 232, and for $100 more, you can get the E232t with its 550-sheet paper tray. The E330, for $399, offers a faster print speed of 27 ppm and its own 200MHz processor for processing print files. Step-up models include the E332n, network ready for $499, and the E332tn, for $599.

• IBM: The company's newest entry-level laser printer is the Infoprint Color 1334, available for $1,113 on Big Blue's Web site, with maximum print speeds of 30 ppm black and 8 ppm color at 1200 dpi. IBM has also added an entry-level monochrome laser printer—the InfoPrint 1412 delivering 27 ppm at 1,200 dpi. Both units are network ready.

The real expense of owning any desktop printer is determined by the cost of its consumables—the ink or toner cartridge required for printing. Each manufacturer has its own formula for determining cartridge life and cites the numbers that make its printers look best.  Fortunately, that's about to change. Working with printer makers Canon, Epson, Hewlett Packard, and Lexmark, the International Organization for Standardization has just established the first industry-wide standards for determining printer cartridge yield. The initial methodology outlines how tests should be conducted as well as how results should be interpreted for monochrome laser cartridges. The companies will continue to work with the ISO to develop standards for measuring the life cycle of color toner cartridges and monochrome and color inkjet cartridges. Those standards are expected to be announced in 2005.

Interest rates lower

Rates actually lowered, a great opportunity for buyers to keep their payments lower. In case you didn't know, rates vary according to local markets, so if you see a rate quoted on a website it might actually be a national average, not what you would get locally. In Los Angeles area, you can expect a 30-year fixed conforming loan (under $333,700) to be around 6.11% with about .5% in points. But if you have a FICO score over 700, you might find a 30-year fixed at 5.875% at 0 points. See this for a report.

Remodeling? Remember Your Neighbors Too

While you may be excited about your upcoming changes, it's important to remember that your neighbors may have a different experience. Whether you live in a traditional neighborhood or a more closely knit homeowner association, remodelling activity can disturb everyone due to trucks, contractors coming and going, or noise from power tools. Keep your neighbors informed and let them know how long your project is supposed to last. Click here for more about how to show appreciation for their patience. Also, keep in mind that your municipality may have regulations about construction and you should check with your city and/or county before you begin and make sure your contractors are advised as well. Read more about Long Beach's city code.

Interest Rates Up Over Time

Rates increased yesterday by 1/4 point, but mortgage rates actually went down a little because the banks had already anticipated the Federal Reserve's increase. According to this article on Bloomberg.com and other sources in the industry, rates will continue to rise, but will be gradual over time. How much time? Only the economy and time will tell.

Web Links to Local, State and Federal Governments

Here it is all in one place: How to contact your state and congressional senators, the Governor's office, district maps, electoral information. This is a very handy collection of links: Web Links

Another No-Bubble Report

The New York Federal Reserve Bank's study says the widely cited "bubble evidence" doesn't take into account other housing issues over the last decade: Article here.

Housing Forecasts for Southern California

The annual economic report from UCLA Anderson School of Management is out as of yesterday in a series of reports given at a conference. Southern California has job growth, adding 30,000 jobs in six counties, and increase in tourism, but state budget may have reductions in local government and real estate prices are high (not news). Solid employment growth should continue. Northern California is a different story and the disparity between the two regions will continue for years. Read more here.

But in other indepth views, and further deflating the bubble market opinion, a major annual academic study says the housing industry is poised for yet more growth -- 10 more years worth, at least. Citing greater roles among women, minorities and immigrants, Harvard's Joint Center For Housing Studies' "2004 State of the Nation's Housing Report, says, while fast appreciating home rates have made it more difficult for some to buy, shifting demographics will increase the pressure on the low-end starter home and rental markets as well as move-up and second home markets.

And Harvard's study is followed by a similar 10-year forecast offered by Homeownership Alliance, an association of 18 national housing organizations.

From Harvard's Joint Center come new projections that suggest household growth between 2005 and 2015 will be at least 10 percent higher than previously projected -- bringing the total increase to more than 13 million households, due to demographic factors (immigration) which propel housing production even higher. This includes demand for second homes and replacement units if immigration continues at the present rate. Important to repelling bubble market arguments is the fact that even with fast appreciating home prices, incomes have kept pace as low interest rates helped stretch household dollars. But affordability issues have increased and rising interest rates could make matters worse.

However, certain markets in several states, including California's, may be overheated, concedes director Nicholas Retsinas.

How High Will Rates Go in June?

With a quiet economic calendar for the early part of the week, mortgage bonds and home loan rates will likely move in response to stocks, geopolitical events and technical factors. Remember that money usually flows back and forth between stocks and bonds, and when one is higher, the other is usually pushed lower and vice versa. Geopolitical events of terror will generally push bonds higher, due to what is called a "flight to quality", as money is pushed into the safe haven of stable bonds. In recent weeks, geopolitical and terrorist activity has not been as influential on market trading as has been seen in the past, as traders are becoming toughened to the continuing news.

Looking ahead, traders now have their minds focused on the Fed's next meeting on June 30, coincidentally the same date as the official hand-over of sovereignty to the new Iraqi government - this will be a very big day. Because inflation is bad for Stocks and bonds, the whole market really wants to "take their medicine", see the Fed raise interest rates, and get it over with. This Fed action will send a clear and strong signal to the markets that they are on top of inflation-related concerns. But will they stick to an expected .25% increase, or make a more aggressive .50% increase? A smaller increase is much more likely, but as we have seen in the past, anything can happen. Prices will likely continue their sideways move until the end of the month when the Fed releases it's decision on interest rates. -- The Mortgage Market Guide, June 21

The West Nile Virus is not just at a distance, it is and has been in the Southern California area, including Long Beach, Cerritos, and San Bernardino. Residents and homeowners should take certain precautions, no need to panic, prevention goes a long way, like wearing insect repellant containing DEET. It is a mosquito-borne virus, and removing and cleaning sources of water in and around your property and neighborhood is important. Very few mosquitos are actually infected, however there is local evidence that the virus has spread since 1999. For starters, please see the following information at the City of Long Beach and City of Cerritos websites at Long Beach and Cerritos. Find additional information at Los Angeles County's site here.

Southern California Median Home Price at $396,000 in May

Record high levels were reached in home sales last month, and according to DataQuick Information Systems it's the result of high demand for home purchases by buyers who wanted to make a move before interest rates move higher.

The median price paid for a Southern California home was $396,000 last month, up 2.3 percent from $387,000 in April, and up 26.9 percent from $312,000 for May 2003.

A total of 31,151 homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in May. That was down 5.4 percent from April's 32,916 and down 0.8 percent from 31,387 for May last year. More information is at http://www.dqnews.com/ .

Gradual Rate Hikes

Alan Greenspan said Federal Reserve officials still believed they could begin boosting short-term interest rates at a "measured" pace. The first increase is widely expected when the Fed's policymaking Open Market Committee meets June 29 and 30, and rates may be raised by about .25 percent. This is part of the "gradual rate hike" that's been referred to in recent weeks, and bear in mind that banks usually anticipate these increases in advance of action by the Federal Reserve, but you may well continue to see more increases before the end of the year.

Trade Show and Other News

Every year we have an opportunity to see new product demonstrations and attend sessions at Pacific West Association's annual trade show and expo. This year, as it was last year, it was held June 15 at the Disneyland Hotel in Anaheim. This is always a time to hear from others in the real estate industry, learn about new developments and tools available to us as Realtors. It's always about how to increase our service to our clients and what we can offer to do our job better, and with over 100 exhibitors and several industry speakers, there were plenty of opportunities, not the least of which was the legal update offered by our Association counsel. There are also many software products and internet-related methods for doing business that we always get excited so that our clients will eventually know that this translates into improved service for them. 

 

Talking about increased opportunities, maybe you've noticed more open house signs recently?  The inventory has about doubled during June, to a more normal level of inventory. If you got frustrated in past months because of the hot and heavy competition with other buyers, take a look again.