With interest rates still near 30  year lows and home prices still low, many home buyers that have been on the sidelines are entering the market. We would expect to see an increase in activity this time of year, however as I toured homes over the last couple weeks, I've seen many homes open with one or two other agents showing the home at the same time. I haven't seen that in some time. It seems that cities that have been hit the hardest in this downturn are  attracting many of the buyers today. Buyers looking for a bargain. With cities like Brentwood and Livermore seeing the biggest increase of pending homes sales, inventories are beginning to level off and sellers are starting to see a light at the end of the tunnel. The next 4 weeks should be a very interesting time.

Homeowners’ debt on their houses exceeded their equity for the first time since the Federal Reserve Board began tracking it in 1945, falling below 50 percent.

MAKING SENSE OF THE STORY FOR CONSUMERS



• Today’s low equity is a result of lax lending standards during the housing boom, when many buyers were able to obtain mortgages with little or no money down. Although some of those buyers could not afford their homes and lost them to foreclosure, some could afford houses—with help from alternative loan models—and but for those loans would have found homeownership beyond their reach.

• The statewide median price of existing single-family homes for January 2008 was $430,370.  The last time we had a comparable median price was in March 2004, when the median was $428,060. Homeowners who bought their homes before 2004 will likely have more equity than those who purchased since 2004.

• The median home price in January 2003 was $336,210. Comparing the current median to five years ago, it is now 28 percent higher. People who buy a home and hold onto it at least five years will usually come out ahead.

• A house is not a stock. It’s always been first and foremost a place to live, to raise a family or to retire. Even when prices were falling, home buyers who pursued a buy and hold strategy—retaining the property at least five years—have almost always come out ahead in the long-run. Historically, the value of single-family homes in California has increased about 9 percent a year.

Although the national foreclosure rate rose 79 percent between December 2006 and December 2007, the rate was still only 1.033 percent of all homes. This is a regional problem, not reflective of the overall real estate market.



MAKING SENSE OF THE STORY FOR CONSUMERS



• Foreclosure statistics are rarely presented in context. Because about 30 percent of homes are owned free and clear, only seven-tenths of 1 percent of all homes were in foreclosure last year.

• If you rank the top 100 foreclosure areas identified by RealtyTrac as reported by MSN Money, only 34 areas had foreclosure rates above the group average.

• Fifty-one areas had foreclosure rates of 1 percent or less.

• Foreclosure rates actually fell in 14 of the top 100 foreclosure areas.

Even in today’s market, homeowners needn’t have a stratospheric down payment and the squeakiest of credit histories to get into a house.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Clients who don’t have 20 percent to put down will find a 10 percent down payment is often acceptable with good credit.
  
  
• Loans for 100 percent of the purchase price are extremely rare but are still available for a conforming loan of $417,000 or less and for consumers with a credit score of 700 or higher.
  
  
• Congress is considering loosening rules on the Federal Housing Administration’s mortgage-insurance program, which gives buyers with imperfect credit better odds of approval.

The number of households in foreclosure who lost their home soared in 2007 to about 405,000 households. For the year, total filings—which include default notices, auction sale notices and bank repossessions—grew 75 percent, according to RealtyTrac, an online seller of foreclosure properties.

"There are parts of the country where we're seeing many more bank repossessions," said Rick Sharga, a spokesman for RealtyTrac. "People are flat out losing their homes."

MAKING SENSE OF THE STORY FOR CONSUMERS

• While these numbers on the surface might sound alarming, a little perspective is in order. Foreclosures were lower prior to last year, and that causes the numbers to appear to be soaring only when looked at purely in terms of percentage gains.
  
  
• RealtyTrac reports defaults on loans, not on properties, so one household that defaults on a primary loan and an equity line will be counted as two defaults, even though both loans were for the same house. This could artificially inflate foreclosure statistics.
  
  
• A foreclosure filing includes default notices, auction sale notices and bank repossessions. One home may fall into each of these categories as it moves through the long foreclosure process. RealtyTrac counts each step along the way separately. This also skews foreclosure statistics.
  
  
• The overwhelming majority of homes are not in danger of foreclosure. If slightly more than 1 percent of U.S. homes were in some stage of foreclosure last year, then 99 percent of homes were not. Although some of the hardest hit communities with high concentrations of defaults are suffering, those communities do not reflect California overall.
  
  
• There are tremendous differences between counties and cities as well as neighborhoods in the same town—all the more reason consumers need a REALTOR® who is a local community expert.