The Real Estate Market: It Depends on What You're Talking About

A 3rd quarter report based on a federal survey of Fannie Mae and Freddie Mac mortgages basically reflects several scenarios which have all been tackled in the media--the market is up, down, way down, or still there. Depending on which scenario you're looking for, you can find one (but various analyses of the West Coast bear this out repeatedly):

Without question the most impressively documented scenario is that many large metropolitan markets -- including some that experienced high gains during the boom years -- are still hanging in there and registering net appreciation, albeit at lower rates.

Examples include Fort Lauderdale (10.3 percent annualized quarterly gain), Naples, Fla. (10.8 percent), Los Angeles (7.4 percent), metropolitan Washington (3 percent), New York City and its northern New Jersey suburbs (3 percent), Seattle (14.8 percent), Miami-Miami Beach (14.7 percent), Chicago (5.2 percent), Orlando, Fla. (6.5 percent) and San Antonio (9.9 percent).

Click this article for a look at all scenarios.

Why Are Interest Rates Staying Low?

In a word, more or less, it's foreign investors in bonds. Mainly from Japan and Hong Kong, who comprise about 52% of all Treasury values. The demand for U.S. Treasury bonds has kept their prices up, and mortgage interest rates down (the first affects the second). Foreign investors find stability here they don't find in their own countries, and for you the buyer, that means your 30-year interest rate is about 30 percent lower than it might be otherwise. Read the article for more on this relationship, and remember that it's giving you still a very great opportunity to buy as mortgage interest rates stay much lower than predicted for the last few years.
See a property search at my other website.

More Consensus That Worst May Be Over

Investment firm analysts and the Federal Reserve Chairman Ben Bernanke are among those that are ready to think about an improvement in the market. All the bad news in the media may have helped to create a self-fulfilling prophecy about the market, and so now good news in the media may help to get buyers and sellers into a better mode. To be sure, some properties have been overpriced, but a healthy economy does not usually create the setting for a bad housing market. Click on the link for the Los Angeles Times article.

California Median Home Price Up

The October report from Dataquick puts the California residential median home price at an increase of .2 percent from September and 2.9 percent from one year ago. Remember, Dataquick's median home prices combine single family houses and condominiums, which results in a lower median price than the California Association of Realtors figures which separates the two categories and results in a higher median price. But the figures show that while sales volume is down, prices are holding with stable down payments and a slight decrease in the monthly mortgage payment compared to what buyers committed to last month. For a property search, got to www.juliahuntsman.com.

The Housing Market Slump

Long and short term mortgage rates went down last week on average of .5 point. When buyers understand they're getting more breaks on their rates, they'll decide now is a good time to act. More housing inventory has taken pressure off, but at some point, in the not-too-distant future, buyers will suddenly come alive and if they do it all at once, they may be wondering what happened to a certain property. The answer will be, somebody already bought it. Don't get fooled by the slow times, they won't last forever in a strong economy.

"Big Decline" In Sales is How Big

Compare '70s to now and compare housing cycles.
The current drop in housing sales volume might look a little different when you put it in the perspective of previous real estate markets. Nationally, the 1970's-80's had a 48% decline in sales and a 2% decline in jobs, compared to today's 9% decline in housing sales and 1% gain in jobs. This information from David Lereah of the National Association of Realtors (now having its annual conference in New Orleans)takes a look at the national market, but download the entire Powerpoint presentation for the complete story.

Los Angeles and San Francisco: Bubbleproof?

CNN/Money rates these 2 California cities as good for investors. Take note of the average annual appreciation--3.7% annually for Los Angeles since 1949. High end development is the draw now, while current homeowners are still seeing plenty of equity in their properties.

Mortgage Rates Move Up

Employment figures, or news about it, usually are a confidence measure that has immediate impact on interest rates. While the construction industry has had problems selling its houses and has lost some jobs, other job figures for the last 3 months went upward. In the meantime, California shoppers report that in spite of high gas prices and a drop in house prices, they're going Christmas shopping anyway. With the basic "upbeatness" of the economy, National Association of Realtors' economist David Lereah today predicted 2007 homes sales will continue at about the same rate as 2006, but homes prices may have a "modest gain" on the national level. Low mortgage rates allowed a huge wave of first time buyers into the market, which took up the slack in the last 2-3 years. The rate of sales is now at a more "normal" level, while mortgage rates are still low overall.

Three Reasons to Buy

Six blocks to ocean for $649,000
Interest rates have fallen seven months in a row and are near 40-year lows, inventories of existing homes are higher than they have been in decades, and prices have stabilized. Search Long Beach area properties at
www.juliahuntsman.com.

Conditions Optimal for Buyers Now

The National Association of Realtors says, "Home sales will remain stable in the months ahead, according to NAR's most recent Pending Home Sales Index (PHSI). In September, the PHSI stood at 109.1, down 1.1 percent from the previous month and down 13.6 percent from September 2005. The index gauges home sales activity for upcoming months based on the number of transactions that have signed contracts but are not yet closed. A PHSI of 100 or more generally indicates a high level of homes sales activity. ... In the West, the index fell 15.2 percent to 112.5."

"The present level of home sales is relatively high in historic terms, and we can
expect generally minor movements around this level. We don't expect to see any changes of note until early next year when we're likely to see a modest lift to home sales," said NAR Chief Economist David Lereah. "The market currently is a little lower than expected as buyers try to time their entry. In the meantime, there's some buildup in demand that will move when consumers realize that conditions are optimal for them."

Calif. median home price - September 06: $553,050 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 06:
Santa Barbara So. Coast $1,025,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region September 06:
High Desert $329,040 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Second Quarter 06:
23 percent (Source: C.A.R.)

Mortgage rates - week ending 10/26:
30-yr. fixed: 6.4%; Fees/points: 0.4%
15-yr. fixed: 6.1%; Fees/points: 0.4%
1-yr. adjustable: 5.6%; Fees/points: 0.7%
(Source: Freddie Mac)