California's Inland Empire Sees Surge in Housing Starts

After visiting several developments last weekend, it's obvious Riverside County growth in former open land is seeing constant price growth. Developers push higher density--bigger houses on smaller lots--in very recent developments compared to those of 4-5 years ago. This is the new housing growth in Southern California. "... -- the second quarter of 2005, 39 percent of the new homes sold in the Inland Empire were priced between $325,000 and $424,000, up from 24 percent in the second quarter of 2004, ... . By contrast the lower price range of $250,000 to $324,000 represented only 13 percent of the market, down from 19 percent a year earlier." This surge in population is not always accompanied by the infrastructure, i.e., new and wider roads, but it will have to come with time. See article for more information.

Long Term Interest Rates Down

According to Inman News, "Long-term mortgage interest rates were lower Wednesday, and the benchmark 10-year Treasury bond yield dipped to 4.01 percent.

The 30-year fixed-rate average fell to 5.26 percent, and the 15-year fixed-rate sank to 4.86 percent. The 1-year adjustable was down at 3.85 percent.

The 30-year Treasury bond yield fell to 4.25 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5."

The Median Home Price is $540,900--and Rising?

The California statewide price increased 1.3 percent compared with one year ago, according to C.A.R. Mortgage rates are still low, in fact have declined slightly from recent weeks, and the home inventory is slightly improved compared to 2004, according to this report. See DataQuick's tables listing median home prices in California cities and counties here. Desert areas are now seeing a "catch-up" compared to one year ago: Desert Hot Springs increased 55.5 percent, Twentynine Palms increased 74 percent. Palos Verdes Estates also jumped up 81.5 percent compared to one year ago. The greatest median home price increase was Reedly at 89.4 percent.

Pressure on Decentralized Markets

The Bay Area and Southern California are two of the highest priced rental markets in the country, and renters need to make 4-5 times the minimum wage to pay their rent. In the future, non-metropolitan markets may expect to see more housing development and population growth because land is cheaper to build on. First-time buyers have an increasingly difficult time breaking into the local market. The line drawn for percent of income spent on housing used to be 25%--it now reaches into 30-50% of the homeowner's income. See the State of the Nation's Housing 2005 from Harvard's Joint Center for Housing Studies for more.

Market Sales Eased in July

While the price of a single family home continued to rise, July sales in Southern California slowed somewhat from June's record-breaking tempo. While there are frequent predictions of a real estate bubble bursting, DQNews isn't making that prediction as of now. Today's article about the slowing of sales in the Los Angeles Times Business Section also talks about pockets of the market that move up or down more slowly than others. All in all, the typical monthly mortgage payment was month in Southern California was close to $2100, up from $1850 a year ago.

California Still #1 Place to Live

A Harris Interactive online poll find that California, Florida and Hawaii are the states U.S. adults say they would choose to live in its sixth consecutive survey. There has been surprisingly little change since the 2003, the time of the last survey. At the same time, the median home price in California requires an income of over $120,000, so are people just wishing and hoping while they are online taking that poll?

Greetings from a summer day in Long Beach. 

Federal funds rate increased

The increase to 3.5 percent is in line with Alan Greenspan's promise to continue raising rates, and will probably continue to do so as long as economic forces continue as they have been. The National Associatino of Realtors also today forecast the national median home price to increase by 10.5 percent. If interest rates increase home prices may slack off, or about a year from now, come "closer to balance." Read here about interest rates.

Pending Home Sales at Record High

The pending homes sales index, recently developed by National Association of Realtors, has risen to the third highest level on record. An index of 100 is equal to the 2001 level of activity, which was the first year to be tracked. ALTA - Industry News

Rates May Continue Upward

Inman News reports: Beware good news...very strong economic data on Friday were pushing mortgage rates higher, fixed-rate 30s still under 6 percent for the lowest-fee packages, but just barely. ARMs are under even more pressure, as the intermediate 5-, 7- and 10-year hybrids are all between 5.5 percent and 6 percent." See more at C.A.R.'sreport.