Jim Guido's Blog

California home sales fell in July but were up from the previous year, as reported today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R).

The report states that closed escrow sales of existing, single-family detached homes in California dropped 4.1 percent to a seasonally adjusted 458,440 units in July which was gathered from more than 90 local REALTOR® associations and MLSs statewide.  July home sales were up 4.5 percent from the 438,850 units sold in July 2010.  The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the July pace throughout the year. Adjustments are made to account for seasonal factors that typically influence home sales.

Even though July sales improved over last year, they were somewhat weaker than expected, given current prices and mortgage rates.  Their is Economic uncertainty and recent developments in financial markets have caused hesitation among buyers. We must see sustained job and income gains along with an increase in consumer confidence before we can expect to see consistent improvement in the housing market.

The statewide median price of an existing, single-family detached home sold in California dipped 0.3 percent in July to $294,230 from a revised $295,210 in June.  July’s median price was down 7.6 percent from the $318,550 recorded in July 2010.

Other aspects of C.A.R.’s resale housing report for July 2011 include:

• The Unsold Inventory Index for existing, single-family detached homes was 5.5 months in July, up from 5.0 months in June, but essentially unchanged from July 2010’s 5.6-month supply. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
• Thirty-year fixed-mortgage interest rates averaged 4.55 percent during July 2011, virtually unchanged from 4.56 percent in July 2010, according to Freddie Mac.  Adjustable-mortgage interest rates averaged 2.97 percent in July 2011, compared with 3.73 percent in July 2010.
• The median number of days it took to sell a single-family home was 52.1 days in July 2011, compared with 42.4 days for the same period a year ago.
• View Unsold Inventory by price point.

Realty Trac is reporting that Foreclosure filings dropped once again in July and hitting their lowest level since November 2007. This drop was helped by processing delays and foreclosure prevention measures  that enabled a larger number of delinquent borrowers to remain in their homes.

Filings were down 4% compared to June and were 35% lower than July 2010, marking the tenth straight month of year-over-year declines.

RealtyTrac reported that 212,764 U.S. homes received some kind of foreclosure filing — notice of default, notice of auction sale or completed foreclosure — during the month. Bank repossessions totaled 67,829 which is down 33.6% from the peak month of September, 2010 — when banks took back 102,134 homes, and off 27% from 12 months earlier.

This downward trend in foreclosure activity appears to be related to processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts that may be allowing more distressed homeowners to stave off foreclosure.



Zillow has reported that the  percentage of Bay Area homeowners who are underwater — which means their mortgage is higher than the home’s value — edged up from a year ago, as the housing market continues to struggle to get out of its long slump.

It reported that some 22.8 percent of single-family houses with mortgages were in negative-equity territory during the second quarter, up from 21.1 percent a year ago, according to their report released Tuesday.

Negative equity is still growing because we still have foreclosures happening so the housing values are still declining and as home values decline, negative equity will increase.

In Alameda County, 20.2 percent of homes were underwater, up from 17.7 percent, and in Solano County, 55.4 percent of homes were underwater, up from 51.5 percent.

Some areas saw improvement. In Santa Clara County, 12 percent of homes were underwater, down from 12.8 percent a year ago. San Mateo County had 13.7 percent of homes with negative equity, up from 10.7 percent.

And in Contra Costa County, 33.3 percent of homes were underwater, down from 36.6 percent a year ago. In San Joaquin County, 54.4 percent of homes were underwater, down from 55.9 percent.

As a note Bay Area home values for the second quarter fell 6.2 percent from where they were a year ago, but rose 0.8 percent from the first quarter, said the Zillow report.

Zillow expects there will be many ups and downs in home values before this is over, and they continue to expect a true bottom in 2012, at the earliest.

A newly proposed rule by federal regulators to impose a minimum 20 percent down payment, stringent debt-to-income ratio requirements and rigid credit standards will most likely deny millions of Americans access to safe, low-cost mortgages, according to the National Association of Realtors®.

In a comment letter submitted recently, NAR expressed dissatisfaction over the unduly narrow definition of qualified residential mortgages (QRM) that would be exempt from risk retention requirements. Non-QRM mortgages will have higher interest rates and fees, making home ownership more expensive or unattainable for many of today’s aspiring home owners. NAR urged regulators to withdraw the proposed risk retention rule and go back to the drawing board.

As the leading advocate for home ownership the NAR firmly believes Congress intended to create a broad QRM exemption and strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk The proposed rule should be withdrawn, revised and republished for public comment. If this does not happen then millions of hard-working, creditworthy consumers will not be able to achieve their dreams of owning a home.

NAR has criticized the proposed rule to require a 20 percent minimum down payment requirement saying it ignores strong evidence that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk. The low foreclosure rate among Federal Housing Administration and Veterans Administration loans, which have the lowest down payment requirements and relatively low default rates, is further evidence that the key to safe lending is sound underwriting and documentation rather than high down payments.

Based on NAR estimates, it would take more than a decade for a family with a median household income to save enough for a 20 percent down payment. A 10 percent down payment would take a family more than eight years to save. The impact on minority and first-time home buyers would be even worse.