Original Price vs Sold Price

Very interesting chart. On december of 2015, sold prices are higher than original prices. January & February sold prices are lower than original prices.Results calculated from approximately 320,000 listings.Time frame is from Mar 2015 to Feb 2016. 

Data are as follows: 

Month Original Price, Median Sale Price, Median Mar 2015 $469,900 $435,000 Apr 2015 $475,000 $436,000 May 2015 $479,200 $435,000 Jun 2015 $487,000 $442,500 Jul 2015 $499,000 $450,000 Aug 2015 $485,000 $457,000 Sep 2015 $488,000 $455,000 Oct 2015 $484,900 $450,000 Nov 2015 $470,000 $459,900 Dec 2015 $440,000 $465,000 Jan 2016 $479,900 $450,000 Feb 2016 $499,157 $450,000

MARKET UPDATE FOR JANUARY 2016

View from above!

Photo by Amir Zee, View from Lafayette
building 11th floor Long Beach, CA 

The natural ending point that is each December gives way every year to the optimism of January. This is particularly pronounced when the economy is strong and economists across the land are predicting increases in both prices and home sales. Granted, there has been some measured language surrounding the positive thinking. Although we are looking forward to a mostly decent year in real estate, it should be the kind of activity akin to a sure and steady life being lived rather than the jolt of a lottery win, which is just the way we want it.

New Listings were down 6.9 percent for Single Family homes and 1.4 percent for Townhouse-Condo properties. Pending Sales increased 4.9 percent for Single Family homes and 19.4 percent for Townhouse-Condo properties.

The Median Sales Price was up 7.3 percent to $590,001 for Single Family homes and 7.4 percent to $376,000 for Townhouse-Condo properties. Months Supply of Inventory decreased 30.0 percent for Single Family units and 37.9 percent for Townhouse-Condo units.

Other than the change of another month and year, little else is changed in residential real estate both nationally and locally. Unemployment is solidly about the same, housing metric trends are running about the same for now and the sunny outlook is still at about high noon. Same is the sound of 2016, so get curled up and comfy with the song, because we are likely to sing it a lot this year.

SHOULD YOU BE WORRIED IF YOUR MORTGAGE IS SOLD?

Dear Friends

This article is well written by Andrea Murad and I like to share it with you. It was one of article at my newsletter this month. 

pic by Amir Zee,Long Beach, CA

SHOULD YOU BE WORRIED IF YOUR MORTGAGE IS SOLD?

By: Andrea Murad

Do you ever wonder why your mortgage statements sometimes come from different companies? There’s a reason for that, and it’s called the secondary mortgage market.

The process of applying for and maintaining payments on a mortgage can be complex — primarily because of what happens behind the scenes. To make it even more confusing, the company that originally lent you the money to buy your new home will likely sell your mortgage in the secondary mortgage market to an investor.

What’s the secondary mortgage market?

This is where investors — such as Freddie Mac, Fannie Mae, pension funds, hedge funds, other mortgage companies, and banks, for example — purchase assets or loans, including mortgages, as well as the bonds that finance these assets.

While lenders tend to hold high-balance loans in their portfolio, they usually sell most mortgages because that’s the easiest way a lender can generate cash to make new mortgages. Without the secondary mortgage market, lenders wouldn’t be able to originate as many mortgages as they do.

Investors like snapping up mortgages because they’re backed by a tangible asset that you can see and touch, and that builds value over time — your home. Generally, house values go up, but in the event that they don’t and a borrower defaults, the equity in the home, or your down payment, is intended to cover this loss. This is why most lenders restrict a mortgage’s loan-to-value ratio, or LTV, to 80% of the house value.

Does this sale affect me, the borrower?

Yes, and it starts at the application process. But you shouldn’t be worried; it’s nothing you haven’t probably already heard about, especially if you’re been doing your homework. (And law protects you from abuses by the new owner of your loan).

For a lender to be able to sell in the secondary mortgage market, the loans need to meet the requirements of the investor buying them; it makes sense that investors are willing to pay more for higher-quality mortgages.

In essence, mortgages are underwritten so that they can be sold for the best possible price. This is why underwriting guidelines can be strict and why lenders want to see proof of employment and income to make sure you can afford to repay the loan without stretching your budget.

The interest rate you’re offered also reflects the price that investors will pay for your mortgage — and lenders use all kinds of info such as credit score and debt-to-income ratios to determine your overall mortgage-worthiness (read: likelihood of repayment). It’s easier to sell a mortgage in the secondary market when an investor is confident the borrower is unlikely to default.

What happens to borrowers who can’t repay?

The Consumer Financial Protection Bureau (CFPB) works to protect someone who is struggling to pay the mortgage. Even though a new company now owns the loan, this company still has to follow standards to collect on a delinquent mortgage. To prevent servicer abuses, servicers are required to reach out to borrowers to help them solve the problem through options such as a loan modification or short sale before foreclosing on a loan. Servicers are also required to inform borrowers about interest rate changes and balances, for example, so that there are no surprises.

Will the terms change once my mortgage is sold?

Mortgages can be modified, but not unless the borrower and lender both agree on the new terms. The Real Estate Settlement Procedures Act, which also is enforced by the CFPB, prohibits lenders and servicers, as well as any subsequent companies that own your loan, from changing the terms of your mortgage without your consent.

Unless you ask that the interest rate or another term on the note be changed and the lender or new owner agrees, or you agree to a change the lender or new owner proposes, the new owner of your mortgage can’t make any changes.

Andrea Murad is a New York-based writer. Having worked on both Wall Street and Main Street, she now pursues her passion for words. Her work can be found on BBC Capital, FOXBusiness.com, InstitutionalInvestor.com and AmericanBanker.com. When she's not writing, she's exploring the city, taking photographs, and strumming her guitar.

Why the Federal Reserve Matters

We spend a good deal of time talking about the Federal Reserve, and we do so for a good reason: The Federal Reserve is the most important economic planner in the country. The Fed is charged with promoting employment, stabilizing prices, and regulating the financial sector. Not surprisingly, it holds tremendous sway over both the housing and mortgage markets.

We frequently monitor the Fed to get an idea where lending rates are headed. Last week, we mentioned that we thought lending rates would hold today's lower levels. We've become more convinced that the Fed won't step back from quantitative easing or raise short-term rates soon. We say that because the Fed has targeted a 6.5% unemployment rate and a consumer-price inflation range of 2% to 2.5%.

On the former, the goal isn't close to being reached. Unemployment still runs well over 7%, and it's only that low because of a falling labor participation rate. As for consumer-price inflation, it still runs well below 2%. Much of the new money the Fed has pumped into the economy, instead of flowing into the consumer sector, is finding its way into asset. It's no coincidence that stocks are at an all-time high.

In short, the Fed has plenty of room and plenty of incentive to keep pumping money and to hold mortgage lending rates low. We don't see that changing in the near future.

Keeping you updated on the market! MARKET RECAP For the week of November 11, 2013

The U.S. Census Bureau reported that the homeownership rate hit an 18-year low of 65.1% in the third-quarter of 2013. The rate had climbed steeply in the 10-year period from 1994 through 2003 – topping 69%. From there, it has been downhill ever since.

At the same time, residential rents continue to rise. The Census Bureau also reports that the median residential rental rate rose to $736/month in the third quarter to hit an all-time high.

Home prices also continue to rise, which is mostly positive. The negative is that the strong rise in home prices over the past two years has made it more expensive to buy a home. Home-price increases have helped drive the National Association of Realtor's affordability index down to a five-year low.

Rising rents and rising home prices are pressuring household formation – where a person moves into his or her own housing unit. For decades, new household formation averaged roughly 1 million per year. In the third quarter of 2013, the rate dropped to 380,000 on an annualized basis.

New households are, not surprisingly, associated with first-time buyers – both categories are overwhelming young in age. The percentage of first-time buyers in the market has fallen this year. These buyers historically account for 40% of home sales. But the latest NAR data show these buyers accounted for only 28% of homes bought in September. 

The news appears bad for the housing market, but it really isn't. It's important to emphasize that all markets are forward looking. Where we're going is more important than where we've been. Quite frankly, we like where we are going.

Current household formation at lows and rents at highs point to growth in homeownership rates. Surveys from Fannie Mae still show 75% of us prefer to own a home. Yes, homes are more expensive than they were a few years ago, but the good news is there is pent up demand for a home, particularly when the cost of owning that home is juxtaposed to the cost of renting.

Rising home prices, though lowering affordability, are also positively impacting the mortgage market. Excessively tight lending standards has been a recurring criticism, but there are signs of change.

Rising home prices are putting more homeowners into positive equity positions, which means more homeowners are motivated to service and maintain their mortgage. In fact, the delinquency rate for mortgage loans decreased to 6.4% of all loans outstanding at the end of the third quarter. This is the lowest level since the second quarter of 2009.

Rising home prices and lower delinquencies, in turn, are making lenders less risk averse. Today, we see more loans in the conventional market being originated with down payments as low as 5%. In other words, private lenders are competing with the FHA, and many are even offering better deals when all costs are factored in.

So don't be put off by today's cloudy negative news, because silver linings can be found. The future is what matters, and we see a positive future based on the likely reversal of several negative trends.

New Home Loan Program Summaries

CalPLUS with ZIP

CalPLUS is an FHA-insured, first mortgage loan featuring a fully amortized fixed

interest rate with a maximum 30-year term and is combined with the CalHFA

Zero Interest Program (ZIP). ZIP is a deferred, zero-interest second loan up to

3.5% of the CalPLUS first mortgage loan amount and can only be used in

combination with CalPLUS for down payment assistance. CHDAP or ECTP can

also be combined with CalPLUS.

 

Extra Credit Teacher Home Purchase Program (ECTP)

ECTP is a deferred payment, forgivable interest subordinate loan for eligible

teachers, administrators, classified employees and staff members working in high

priority schools (API ranks 1-5), county schools or continuation schools

throughout California. ECTP can only be used for down payment assistance with

an eligible CalHFA first mortgage loan. See attached summary sheet for more

information.

 

Program Highlights for All Programs

・ Maximum Combined Loan-to-Value (CLTV) up to 103%

・ Borrower Minimum Required Investment based on credit score

・ Credit Score 640-679 $1,500

・ Credit Score > 680 $1,000

・ Required two-year home warranty protection policy

・ Required homebuyer education from CalHFA-designated provider

・ Ability to layer multiple programs

 

Let me know if you have any questions.

 

 

OC & LA Real Estate Monthly Indicator PWR report May 2013

photo by : Amir Zee

According to Pacific West Association of Realtors " PWR" Monthly Indicator report which all data comes from CRMLS, so it’s real, current and relevant information which buyer or seller  want to know " The Median Sales Price was up 23.4 percent to $506,000 for detached homes and 33.9 percent to $329,400 for attached properties. Months Supply of Inventory decreased 62.8 percent for single-family units and 64.1 percent for townhouse-condo units.

Please look at this  Monthly Indicator PWR report which cover Orange county and Los Angeles county at Southern California.

Low property inventory and risk of higher mortgage interest rate pushing the asking price for properties higher.  The Federal Reserve Bank is considering decreasing its $85 billion a month bond asset purchases, which have been holding interest rates at or near historic lows. This is mostly the result of an improving jobs market, which is a good thing for real estate.