Have Rates Risen High Enough?

The overnight lending rate between banks was raised yesterday for the 13th time since June 2004, to 4.25 percent. The Federal Reserve may now be indicating "rates have risen to a level that doesn't spur economic growth", and that monetary policy for the first time in 2 years is not described as providing "accommodation" to the nation's economy. Banks typically raise their rates in anticipation of an upward movement by the Federal Reserve, so those changes have already occurred for now. Credit card rates, home equity line rates, and adjustable mortgages will be the most sensitive to upward rate changes. CD's & fixed-rate mortgages benefit or are not affected by an upward rate change. However, other language in their report hints at leaving the door open to increases in the future.

Interest Rates Edge Up at Year's End

The 30-year mortgage rate climbs up to an average of 6.32 percent, and another rate increase by the Federal Reserve is expected tomorrow.

Nationwide Decline Unlikely: Freddie Mac CEO

Few people realize how much of a driving force housing is in this economy, or that mortgages available in the U.S. are not available in other countries. California's (and the eastern) coastal markets have seen stronger prices than elsewhere, but overall, the CEO of Freddie Mac said yesterday that incomes are keeping up with the price increases, and a housing bubble is not where we're at. Certain markets will slow, but a nationwide decline is unlikely. Click on the link for yesterday's speech.

Will Incomes Catch Up with House Prices

The market is not in a bubble; even a modest downturn in housing would be felt throughout the economy, and a nationwide decline in housing prices remains highly unlikely. These points were covered in today's speech by the CEO of Freddie Mac, an institution which competes with the banks and is designed to help consumers obtain their mortgages. While the East and West Coasts have climbed steeply in housing prices, across large areas of the country incomes have kept up with prices. Richard Syron believes a spike in interest rates would be bad for the housing industry, a major driving economic force in the entire country, helped significantly by government sponsored Freddie Mac. Housing bubble vs. soft landing is the question for the 2006 future, and many feel that there will be no "crash" in prices, but various soft or somewhat harder landings depending on geographic region.

Mortgage Rates Holding

Rates did not move as much this week; the 30-year fixed is at 6.25 percent with an average .5 point. Consumer confidence is up more with a decline in gas prices. With the increase in conforming loan limits, buyers gain on the other end what they lose slightly with rate increases.

New 2006 Loan Limits

Freddie Mac announced its new single family mortgage loan limit will increase from $359,650 to $417,000 on January 1, 2006. This means a possible mortgage interest savings may be $24,700 over the life of a 30-year fixed-rate loan. Loan rates over the conforming limits are usually at 1/4 point higher (known as jumbo rates). In California where there are about 19 counties over the state's current median price, this means even more individuals can qualify for the median price home.

California Median Home Price Drop

The California median home price decreased 2.8 percent compared with the same period a year ago. Now at $538,770 for October, 2005, it has decreased 1 percent from September's $543,980 price. Overall, year-to-date sales were 3.1% above last year's level. The current inventory index is 4 months--compared to last year's 3 months at the same time. Interest rates are over 6%, compared to last year's at 5.72% for the 30-year fixed mortgage rate. It's taking slightly longer to sell a home compared to last year, and time periods vary by neighborhood and region.

NAR's Economist: Winding Down to an Expansion

As inventory builds in many parts of the country, and rates may continue upward in the next few months, the National Association of Realtors indicates that the housing sector may have reached its peak. Elsewhere, it's predicted that nationally, 4%-5% may be the new annual appreciation rate, especially in California where the percentage of buyers has declined to 14%. Nationally, sales were down in October in the West by 1.2%, which was a smaller decline than all other areas of the country. Weather and time of year are also typical factors which keep buyers out of the market temporarily. But does it mean the "bubble is bursting"? Stay tuned.

Southern California Median Home Price Down Slightly in October

At $454,000, the Southern California median home price was down .2 percent in October, but up 14.9 percent from October of 2004. Overall sales for October for condos and single family homes are lower as well, not unusual for the time of year, but also slightly lower than October 2004. Long Beach inventory is taking longer to go into escrow for some areas, and longer overall. This median home price should not be confused with the statewide median price which was $543,980 as of September according to the California Association of Realtors.

Bankrate's Top 10 Causes of Debt

Sometimes things happen out of our control, but the end result may be very much within our control. How well you do comes into play when you want to qualify for a loan--these days there are so many loan options that a buyer has a lot more opportunity than ever before. Gambling is listed as #5 on this list, and in California, there are plenty of places to get into trouble. While divorce, job loss and medical problems can happen seemingly without our consent, there are still money management, financial communcation and educating ourselves about financial management which can lessen the impact. Many people don't make any effort, where just some effort could lessen financial crises. Only you can do this for yourself. Take a look at this article, and think about saving money, paying down more debt, and avoiding unnecessary expenses.

1920's Spanish Bungalow -

This is in move-in condition with beautiful hardwood floors; over 9700 sq. ft. lot; 3 bedrooms; large RV carport plus 2 separate garages. $645,000 in Long Beach, CA. Contact me for more information about the property and about financing.

The 2006 Forecast -- In a Nutshell

We are already on the way to the interest rate forecast in this selection from C.A.R.'s 2006 forecast -- but again, the median home price is predicted tol continue to rise up a little further to $575,000, nothing like the 20% gain in prior years.

Ninth Consecutive Increase in Mortgage Rates

Wages increased more than expected in October, so now the rates are up again to ward off fears of inflation. That means your mortgage rate in the So Cal region is now well above the low 6 percent range, with points averaging .5, instead of 0. So, to quote this article, the monthly payment on a $165,000 loan was $968 in September at 5.8 percent, but now at 6.42 percent it's $1034.

Press-Telegram Building - More Lofts for Downtown

The growing trend for residential re-use of older office buildings now includes the long-time offices of Long Beach's Press-Telegram newspaper. This site has yet to complete the approvals needed for the conversion process and will not complete escrow for several months. Downtown Long Beach and Los Angeles offer more and more opportunities for loft living, a newer form of affordable housing and the preference of those who like the ambiance of residential living near shopping and transportation. These lofts are scheduled to range starting at $200,000 for a 700 sq. ft. one-bedroom to $500,000 or more for a 1500 sq. ft. unit. Considering that in nearby neighborhoods one-bedroom condos are now selling for more than $350,000 and up, it's a breaking opportunity for the first time buyer.

Still Going Up

Long-term interest rates up on Friday for the sixth straight day. According to what part of the country you're in, you'll see slightly different numbers ranging from 5.89 percent to over 6 percent. The rate you'll get on a loan depends on several factors, including your FICO score. Stay tuned for the rate trend.

The Changing Landscape: Calif.'s Housing Demand

What do the 2006 housing market forecast and poinsettias have in common? Scroll down this article to see. California is about 50,000 units short every year on its supply of housing units, for many years--there are not enough being built. The current housing boom in Riverside County provides affordable housing, but the demand continues, not just in Riverside, but in Ventura, San Diego, anywhere there is open land, the housing development will carry on until the supply is caught up with. This obviously creates a lot of issues about remaining open land, energy use, and other local infrastructure issues. Interest rates will probably jog up in 2006 and prices will be affected to the degree that the rate of appreciation will slow on a statewide level.

Fed raises key funds rate to 4%

The 30-year mortgage rate dipped to 6.06 percent, and the 15-year mortgage rate dropped to 5.57 percent last week. Today's increase in the federal funds rate is what the banks charge other other overnight, and does not have a direct impact on mortgage rates.

Long Beach September Median Price

At $457,000 for both single family homes and condos, Long Beach compares favorably to warmer inland areas which have had rapid growth. This is an increase in median price of 14% over Sept. 2004. compared to the much greater increase in median price many areas. At 454 closed sales for the month, this is as much activity as some traditionally lower priced areas such as Palmdale, Moreno Valley and Murrieta, and more activity than any one city in Orange County for the same time period. See this California city chart.

The Place to Live in Southern California

There are plenty of luxury homes on the market right now, whether you’re looking for single family or condos with an ocean view. Prices over a $1,000,000 are not the target of many buyers, but if you’re from the Bay area, Santa Barbara or Carmel and need to relocate or looking for a second home, the opportunity is here in Long Beach. It’s hard to find another coastal location in California with as many residential neighborhoods that are very close to or border the shoreline which feature both older historic styles as well as newer luxury condos. Contact me for a customized list of properties currently available at ocean@surfside.net.

Reduced Tax Deductions?

Current suggestions to reform and simplify the tax code by the President's Advisory Panel on Tax Reform include elimination of deductions or possible increase in tax rates. These include reducing the mortgage interest deduction, reducing capital gains exclusion on principal residences, and eliminating deductions for the interest on home equity loans. At a time when, nationwide, housing costs have never been greater, and tax deductions never more significant, the path these suggestions take should be of a lot of concern to a lot of homeowners. To read the Panel's statement, click here.

L.A. County Median Price at $494,000

Home prices have increased more than 20 percent since this time last year in Los Angeles County. But, according to Dataquick, the median price declined in September by .02 percent for Southern California as a whole compared to August. Appreciation in San Diego County, for example, is far less than elsewhere. And adjusting for inflation, buyers' monthly payments are slightly below their 1989 level. Strong demand, however, continues to fuel the rate of selling and pricing in Southern California. See today's release for more.

Rates poised to rise through 2006

As rates rise, so does your monthly payment. The 30-year fixed could rise as predicted to 6.7 percent by the end of 2006, as energy prices change the inflation picture. First time buyers will feel the pinch first, as they look to 0% down and low down payment products. The non-traditional mortages will become more difficult to obtain as rates rise. This rise in interest rates is and has been abnormally low for the present business cycle, and is seen as a correction. So if you're looking at a national median price home of $219,400 (remember, I said "national", not "California"), with a 30-year mortgage at the current average of 5.98 percent, a home buyer would have to make monthly payments of $1,312. At a mortgage rate of 6.5 percent, that figure rises to $1,387 a month. See more about this here.

2006 California Market Forecast

C.A.R's current forecast for 2006:

"The rate of home price appreciation will moderate next year following four years of steep increases, while sales in 2006 will decline slightly from this year's record pace, according to the California Association of REALTORS® (C.A.R.) "2006 Housing Market Forecast". The forecast was presented during the C.A.R. Centennial REALTOR® EXPO running from Sept. 20 - 22 at the San Diego Convention Center.

"The median home price in California will increase 10 percent to $575,500 in 2006 (my NOTE: $568,000 is the current median price statewide) compared with a projected median of $523,150 this year, while sales for 2006 are projected to reach 630,610 units, falling 2 percent compared with 2005. The double-digit gain in the median price of a home, which California has experienced for most of the past five years, will again be fueled by the continuing shortage of housing across much of the state, according to C.A.R. economists. California typically gains nearly 250,000 new households, yet only will build about 200,000 new housing units this year, creating a shortfall of about 50,000 units.

"We expect the fixed mortgage interest rate to rise to 6.4 percent next year, and the adjustable rate to hit 5.1 percent, which will make it more difficult for many families in California to be able to afford a home," said C.A.R. President Jim Hamilton. "While still near their historic lows, up-ticks in interest rates coupled with the continued increase in the median home price will push affordability in California to a new all-time annual low of 15 percent next year.”

"The economic fundamentals at both the state and national level continue to support a strong housing market in the Golden State for the foreseeable future,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, we also expect that the wave of new loan products that have flooded the market over the past several years have injected a higher level of risk into the market, while affordability barriers to homeownership will continue to push residents inland and even out of state.

“Declining affordability will constrain sales in 2006 at a greater rate than we’ve previously experienced, especially in markets where there are higher price points compared with the state as a whole,” she said. “Not all areas of the state will continue to experience the unprecedented double-digit median price increases of the past five years. Some high-cost areas, especially those in the more costly coastal regions, face a potential leveling off of median price gains compared with the 10 percent gain we expect for the state as a whole.”

"Home sales for California in 2005 are expected to reach a record 643,480 units, surpassing the prior sales record of 624,740 set in 2004, according to C.A.R. economists."

Coastal Markets May Gradually Cool

Home-builder companies operate in 25 states, but half of their revenue is from California, Florida and Texas. While the demand for housing continues in California, long-term interest rate increases could lead to a leveling-off of prices in this and other markets resulting in a "decleration" in building production. The debate over the housing bubble and its demise has raged for some time, but Standard & Poor's has joined the circle of moderates on predictions of stabilization rather than crashes.

Rates Climbing Upward

"Freddie Mac reports a boost in the 30-year mortgage rate to its highest level in five months, as the benchmark bumped up to 5.91 percent from 5.8 percent over the past week. " REALTOR Magazine, 9/30/2005. Do not be surprised if this trend does follow through, as it's been threatening to do for sometime.

Another 2006 Forecast for So. Calif.

The Anderson Forecast (UCLA) has released today its latest picture of the local economy and real estate, and as elsewhere, it sees a slowing in market pricing, interpreted by some as the dreaded bubble. According to the Daily Bulletin, "It will happen with time and result in smaller rates of appreciation. But it probably won't be a repeat of the early 1990s, when the local economy took a blow from falling real estate prices and widespread job losses," and "The economists say that the real estate bubble won't deflate with the kind of whoosh that comes with a popping stock market bubble in which equity values suddenly plunge." The Forecast is not online as of this post, but click here for an article about it.

Six Mortgage Myths--or Facts

Depending on how long you stay in a home, a 30-year mortgage may not be the yardstick to use on which mortgage is best, so a five-year-fixed-to-adjustable could be appropriate and you could save money too. Try a lender second of 10% if you have only 10% to put down, you won't be paying PMI which is not tax deductible, you will be paying loan interest which IS tax deductible. Read Bankrate's article on more tips.

Still A Moderate Price Increase in 2006

California Association of Realtors is forecasting continued home price appreciation next year, but the huge increases of the last seveal years will decline, as will the number of homes sold. The shortfall of available housing units, in C.A.R's 2006 forecast, about 50,000 annually, will continue to fuel California's housing economy. The median price statewide is expected to rise to $575,000, although certain areas will not experience as much of a price climb as others. Declining affordability has led to the development of new buyer assistance programs, and also a wave of loan products that inject more risk into the market for some buyers. Read here for more.

Long Beach Median Price

In August 2005, 453 single family residences and condos sold at the median price of $470,000, up from the median price of $388,632 in August 2004. See this city chart for more California city information. Breakdown by zip code is a different story: the median price in 90803(close to the shoreline) was $900,000 for a single family residence, and $519,000 for a condo--90813's median price was $360,000 for a single family home. See Dataquick's chart for all areas.

11th Rate Increase

The federal funds rate went up again, but mortgage rates are usually raised in advance of that increase. The rate on the 30-year mortgage varies slightly by region, but the average rate at 5.72 percent, according to the Morgage Bankers Association survey, is still low compared to rates in the last 10-40 years. While some thought that the Hurricane Katrina disaster might keep the Federal Reserve from taking this action, the Federal Reserve may well be raising rates again according to their own perspective.

Southern California Market Not Slow in August

Record prices and near-record sales pace ended the summer of 2005 in August. The median price in Los Angeles County rose to $494,000, up from $407,000 in August of 2004, the greatest percentage increase in Southern California counties. San Bernardino County's median price was the lowest at $344,000 for a single family home, while Riverside County rose from $344k to $388k from August, 2004. Interest rates are still low, despite several times showing an upward trend before slacking off. Click here for Dataquick's article.

Slowing Economy?

The 30-year fixed rate mortgage held around 5.8 percent, and rates on other mortgage products took a slight drop as recovery from Hurricane Katrina begins. In Los Angeles area the average was 5.84 percent for 30-year-mortgage rates. It is yet to be seen how much the flow of money into damage areas will affect housing costs in the rest of the country, but new home costs could rise a few percentage points, putting downward pressure on interest rates in the future.

New Homes Construction in Long Beach Marina

The site of the Seaport Marina Hotel at where Second St. meets Pacific Coast Highway may turn into 425 new homes by Lennar Homes. A lot of traffic mitigation, parking and city infrastructure impacts are up for community discussion. The addition of retail commercial in the 11-acre site will obviously be very significant at the already impacted intersection. Other commercial developments proposed for one of the last remaining open areas in Long Beach are also currently proposed. Read more about local development.

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.

If You Buy From Lennar, You Donate to Charity

Lennar Corp., a Southern California housing group, is requiring new-home buyers to pay $50 for every $100,000 of the home price as an endowment fee for their charitable housing foundation. This fee must be paid by future buyers as well when the residence is resold. Lennar is currently seeking to build a new project in downtown Long Beach. Read more about the charity fee.

Calif. Median Home Prices Still Rises

Statewide home resale activity is up 3.6 percent from the 633,660 recorded in June 2004, as reflected in records from MLS systems. The median home price, statewide, is $542,720, up 16 percent from a year ago. Interest rates are lower than this time last year, and the inventory is greater, which help to increase the pace of sales; the number of days to sell a single family home was a few days longer than in June 2004. In cities covered by DataQuick, which uses county records, 396 of 406 cities showed an increase in their median home prices from a year ago. June 05 sales/price report

30-year fixed rate vs. HELOC

The 30-year fixed mortgage rate is still under 6%, while the average home-equity loan is over 7%, which makes this still a good time to cashout.

Alan Greenspan and Loans

The West Coast market has been identified numerous times as a market of faster and greater appreciation than other national markets. Alan Greenspan has once again stated his concerns about some banks taking risks on unsafe lending practices in order to make loans in extreme markets which may be part of a local market bubble. Elsewhere, this market is not considered a bubble that will "burst" but one that will slow with lower appreciation over a longer period of time than seen in the recent past.

30-year Fixed Rate Still Lower

Compared to this time last year when the 30-year fixed rate mortgage averaged 6 percent, interest rates are still lower, according to ALTA's Industry News article.

MBA's Economic Forecast

Find the Mortgage Bankers Association's forecast on their site, saying 2005 will be the third biggest year in mortgage production behind 2002 and 2003. Long-term interest rates are predicted to increase to 6.25 percent for 30-year fixed interest rates by 2007, still low compared to more recent history. Home prices are expected to increase in the more moderate ranges of 5-7% compared to much higher gains in 2004.

Southern California Economy vs. The Bubble

Another Chapter: The FDIC tells us California grew to 1.7 percent in job growth this year. But their state profile chart also shows Southern California has much lower job growth than other parts of California--excluding the Bay Area--and is also lower than the rest of the nation. However, home price growth in So Cal outpaced income growth.