First-time buyer housing affordability improves slightly in Q3

Here is an article I read today from C.A.R. The median home price drop in Q3 has provided first time buyers with a great opportunity. according to "C.A.R.'s first-time buyer housing affordability index," the LA county saw a 5% increases in affordability over the past year. Here is the article:

For release:
Monday, Nov. 15, 2010

C.A.R. reports first-time buyer housing affordability improves slightly in third quarter 

LOS ANGELES (Nov. 15) -- Housing affordability among first-time home buyers improved slightly in the third quarter of 2010, both on a quarter-to-quarter and year-to-year basis, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.  The percentage of first-time buyers who could afford to purchase an entry-level home in California stood at 66 percent in the third quarter of 2010, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI).  In the second quarter of 2010, the Index was a revised 65 percent and was 64 percent in the third quarter of 2009. 

C.A.R.’s FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California.  C.A.R. also reports first-time buyer indexes for regions and select counties within the state.  The Index is considered the most-fundamental measure of housing well-being for first-time buyers in the state. 

“With interest rates at historic lows, which have led to lower monthly mortgage payments, affordability continues to remain at near record-high levels in California,” said C.A.R. President Beth L. Peerce.  “Another high point for first-time buyers is the current ratio between the California median price and the California median household income.  During the third quarter, the ratio stood at 5 to 1 and was at a level we haven’t seen in the last 10 years.  This is opening many doors for potential first-time buyers.” 

First-time buyers, who tend to purchase homes equal to 85 percent of the prevailing median price, needed to earn a minimum annual income of $42,300 to qualify for an entry-level home of $266,620 during the third quarter of 2010.  The monthly payment, including taxes and insurance, was $1,410, assuming a 10 percent down payment and an adjustable effective interest rate of 3.66. 

“Nearly every region in the state experienced an increase in first-time buyer housing affordability,” added C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “Much of the increase in affordability can be attributed to the slight decrease in the state’s median home price during the third quarter.” 

At 85 percent, the High Desert region was the most affordable area in the state.  The San Francisco Bay region was the least affordable in the state at 51 percent, followed by the Santa Barbara area and the Santa Clara County regions, both at 53 percent.  

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

C.A.R. First-time Buyer Housing Affordability Index

 

C.A.R. Region	Q3 2010	Q2 2010		Q3 2009
California	66	65	r	64
California - Condos	73	70		68	r
United States	79	78		76
High Desert	85	84		85
Los Angeles County	57	56		52
Monterey Region	64	62		66
Northern California	70	68		63
Northern Wine Country	62	61		58
Orange County	56	54		51
Palm Sprgs/Lwr Desert	75	72		74
Riverside/SBernardino	78	77		78
Sacramento County	82	80		78
San Diego County	60	58		56
San Francisco Bay	51	49		49
San Luis Obispo County	54	48		47
Santa Barbara Area	53	50		52	r
Santa Clara County	53	51		53
Southern California	65	63		64	r
Ventura County	63	61		56
County
Alameda	53	51		52
Contra Costa	44	43		42
Fresno	79	77		76
Marin	42	38		37
Merced	84	83		83
Riverside	77	75		78
San Bernardino	81	81		81
San Francisco	41	36		35
San Mateo	42	41		40
Santa Cruz	49	46		43
Sonoma	64	62		60

* -- percentage of California households that can afford to purchase an entry-level home
r – revised

Source:  CALIFORNIA ASSOCIATION OF REALTORS®

C.A.R. Region	Housing Affordability Index	Entry-Level Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
California	66	$266,620	$1,410	$42,300
California - Condos	73	$218,310	$1,150	$34,500
United States	79	$151,220	$800	$24,000
High Desert	85	$108,230	$570	$17,100
Los Angeles County	57	$297,500	$1,570	$47,100
Monterey Region	64	$295,040	$1,560	$46,800
Northern California	70	$210,050	$1,110	$33,300
Northern Wine Country	62	$312,450	$1,650	$49,500
Orange County	56	$432,170	$2,280	$68,400
Palm Sprgs/Lwr Desert	75	$152,920	$810	$24,300
Riverside/SBernardino	78	$161,590	$850	$25,500
Sacramento County	82	$157,280	$830	$24,900
San Diego County	60	$329,470	$1,740	$52,200
San Francisco Bay	51	$500,600	$2,640	$79,200
San Luis Obispo County	54	$311,010	$1,640	$49,200
Santa Barbara Area	53	$373,060	$1,970	$59,100
Santa Clara County	53	$534,400	$2,820	$84,600
Southern California	65	$271,420	$1,430	$42,900
Ventura County	63	$377,090	$1,990	$59,700
County
Alameda	53	$428,330	$2,260	$67,750
Contra Costa	44	$576,610	$3,040	$91,200
Fresno	79	$129,020	$680	$20,410
Marin	42	$685,360	$3,610	$108,400
Merced	84	$100,580	$530	$15,910
Riverside	77	$167,260	$880	$26,450
San Bernardino	81	$143,730	$760	$22,730
San Francisco	41	$573,500	$3,020	$90,710
San Mateo	42	$650,250	$3,430	$102,850
Santa Cruz	49	$442,530	$2,330	$69,990
Sonoma	64	$317,090	$1,670	$50,150

Source:  CALIFORNIA ASSOCIATION OF REALTORS®

http://www.car.org/newsstand/newsreleases/q3hai/

"Sellers: Don't Let Emotions Rule"

An article from Reality Times:

Sellers: Don't Let Emotions Rule

It can be easy for the selling experience to become clouded by emotion. A homeowner may have years of memories stored within the walls of a home. They look at a room, and instead of resale potential, they see a baby's first steps and early Christmas mornings. When the time comes to sell, however, the time has also come to sever emotional ties with a house. 

Emotions can cloud your reasoning. And they can misguide you during a very expensive and important business transaction. Sellers sometimes overvalue their homes, adding in sentimental value on top of property value. They refuse offers that, while reasonable, don't add up to the value of their memories. Or they turn down a potential buyer, because they don't garden and won't "leave the rose bushes," or aren't the "type" of person they'd like living in their home. 

For a smooth transition, hire an experienced real estate agent. Once you've turned yourself over to their guidance, you can then turn your focus onto the new phase of your life. And agent can help you establish a fair, and unbiased, asking price. They find the sellers. They show the house. And they help you sign on the dotted line. The middle man is extremely beneficial in separating from your emotions.
Your emotions may surface as soon as you list the house for sale, since many agents will suggest you remove many of your personal items from the house for staging. This is neither a personal attack on your decorating nor your memories. Staging is a wonderful way for homeowners to see the house as their future home, instead of seeing your house and your home. 

Don't fret over lost memories; take pictures of your home and make a scrapbook. Channel your emotions into the joy of moving. And have fun imagining the new memories you'll make in your new place. This is not a time for mourning, instead it's a time for celebrating!

Published: November 11, 2010
by Carla Hill
http://realtytimes.com/rtpages/20101111_emotions.htm

Foreclosure Limbo Grinds Down Potential Buyers

An article on RSMEDIA explains why foreclosure suspensions are discouraging to home buyers:

 

RISMEDIA, November 9, 2010—(MCT)—Josh and Tayla Thomforde thought they had a deal to buy a three-bedroom house with a fenced-in backyard and room for their family to grow. But the nation’s latest foreclosure quagmire scuttled their plans.

Three days before closing on their first home, they learned that the house was being taken off the market. The house is a foreclosure, and banks are suspending or at least slowing down foreclosure sales as regulators examine whether banks filed foreclosure documents without confirming their content.

Now Tayla and Josh aren’t sure what they’ll do when their apartment lease runs out at the end of November. “We’re a little discouraged,” Tayla said. “All the homes in our price range were foreclosures.”

Measuring the consequences of the foreclosure limbo is difficult at this juncture. Although the banks paint it as a temporary, paperwork glitch, no one is sure how long it will last or how many home sales will be affected. Meanwhile, the pause is upending plans of potential buyers like the Thomfordes and adding another layer of anxiety to the still-fragile real estate market.

“Everybody wants to know, can we believe the banks, and the problem is something they can handle, or is this something that’s going to mushroom and become the next big crisis?” said Bill McConnell, a mortgage consultant with Cunningham & Co. and a board member of the Charlotte Regional Mortgage Lenders Association. “Even if it’s not a huge problem, the ripple effect is significant.”
Housing industry groups estimate that foreclosure sales now account for 25-30% of home sales.
“We’re going to see a sharp drop in October home sales as a result of foreclosure sales being put on hold,” said Guy Cecala, publisher of Inside Mortgage Finance. “And as you know, we’re already at anemic levels.”

The pause in foreclosure sales will be especially hard on first-time home buyers, who are the most likely to purchase foreclosure properties, Cecala said. “And basically, first-time home buyers are the No. 1 buyers you need for a recovery,” he said.

Twenty-three percent of Realtors say they have at least one client who is no longer interested in purchasing a foreclosure, according to a survey this month by the National Association of Realtors.
“The housing crisis is not over,” said Rochdale Securities analyst Dick Bove. “It has been extended.”
But Sam Barnett, at Barnett Real Estate in Charlotte, said he doesn’t think the foreclosure delays will have much effect on the market. “There are tons and tons of foreclosures,” Barnett said. “So the fact that there’s not any more coming on the market wouldn’t make a whole lot of difference.”

Regardless of the foreclosure freeze and its effects, parts of the nation, including Mecklenburg County, will still have a record number of foreclosures this year. A foreclosure sale is when a house is actually repossessed and the borrower has to leave; there are many more foreclosure starts, where the bank files initial paperwork to begin the foreclosure process.

Banks are still proceeding with foreclosure filings, though some have put a pause on final sales. Ally, JPMorgan Chase, Wells Fargo and Bank of America are among the banks that have stopped or at least slowed foreclosure sales in the past month as they resubmit documents and tighten controls on their foreclosure processes.

Attorneys general in all 50 states are also probing their practices. The banks maintain that no one has been wrongly foreclosed on, and that they foreclose on homes only as a last resort.
David Millsaps, the Thomfordes’ mortgage lender, said he knows of other families who wanted to buy foreclosed properties but lost out when the freezes were put in place. “We’ve been getting e-mails from Realtors who are saying, ‘We can’t close,’” said Millsaps, who works for New American Mortgage in Charlotte.

As an added problem, real estate lawyers are speculating whether the foreclosure freeze could hurt people who have already bought foreclosure properties, if the previous owners come back with a lawsuit saying the foreclosure wasn’t processed correctly.

A title insurance policy should help protect a buyer who finds himself in that situation, said G. Martin Hunter, a Charlotte attorney who represents borrowers in foreclosure cases. Title insurance is supposed to guarantee that the closing attorney made sure that the seller owned the title to the deed.
Cecala, at Inside Mortgage Finance, said it’s difficult to predict how long the foreclosure-documents controversy will persist. Federal regulators and the White House could decide to give the banks a measure of liability protection as they redo paperwork, to prevent the foreclosure freeze from dragging on and crippling the housing market. Things might also calm down after the midterm elections, he said.

“It’s certainly delayed things for the past two or three weeks,” Cecala said. “Now, is it going to be much more than that? The mortgage industry will tell you no. The lawyers will say, ‘This is going to drag on as long as we can make money.’”

The Thomfordes, who were trying to buy their first house through a foreclosure sale, say they’re not angry, just frustrated. Foreclosure properties are some of the only houses they can afford, but they’re not comfortable looking at any more because of what happened with the house they were about to buy. The house, in the RiverGate community of Charlotte, had a tax value of about $140,000, but the Thomfordes had a contract to buy it for about $107,000, they said. It’s currently listed as “temporarily out of the market,” said Mitch Muller, their buyer’s agent at ProStead Realty.

The Thomfordes had made a to-do list of painting and home-repair projects for the house and were excited about moving. But they say they can’t wait forever to find out if it will come back on the market, especially with their lease running out. They’d saved carefully to pay for the appraisal and inspection and were worried they wouldn’t get the money back.

I don’t have a whole lot of wants,” said Tayla. “I just want a place where we can have people over, and for our daughter Astaire to play in the yard, and our family can come from out of town.”

(c) 2010, The Charlotte Observer (Charlotte, N.C.).
Distributed by McClatchy-Tribune Information Services.

By Christina Rexrode
http://rismedia.com/2010-11-08/foreclosure-limbo-grinds-down-potential-buyers/

9 Simple Things Can Help Sell Your Home