Home Builders Expect Strong Housing Market

Positive trends in the national economy are expected to buoy the demand for housing this year, according to a builders survey done in the last two weeks. They are most confident in the West, even though interest rates and high housing prices may offset affordability after a record year in 2004 for sales and single-family start ups. Click here for more.

Remodel Projects a New Force

Households with incomes of $120,000 and up are part of the home improvement market which has grown significantly since 1995. Major kitchen and bath remodels and room additions are the most popular types of projects, with costs of $25,000 accounting for over a third of the remodeling expenditures. A more diverse population of younger homeowners are increasing the demand for remodels, and rival the baby boomer in per-household spending.

Interest Rates Still Down at Second Lowest Average in 32 Years

According to the American Land Title Association, "mortgage rates in 2004 averaged around 5.84 percent, the second lowest annual rate ever recorded in the history of Freddie Mac’s Primary Mortgage Market Survey", according to Amy Cutts, their deputy chief economist. Mortgage rates are expected to rise in 2005, but not enough to slow the housing industry, although sales may drop off slightly from this 2004's pace.

There have been several projections about 2005 will bring, and there is definitely an increase in adjustable rate mortgages, but fixed rates continue under 6%. The national 30-year rate is just a shade lower than this time last year. This economist's projection is that the housing industry will continue to be healthy into the foreseeable future. Read ALTA - Industry News for more.

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.