May Home Sales Increased 35.2%, Prices Declined 30.4%

Home sales increased 35.2 percent in May in California compared with the same period a year ago, while the median price of an existing home declined 30.4 percent, C.A.R. reported last week. “With affordability for first-time buyers at a record high, sales of existing, single-family homes continued to remain above the 500,000 level for the ninth consecutive month,” said C.A.R. President James Liptak. “Buyers are beginning to realize that the combination of favorable home prices, historically low mortgage rates, and first-time home buyer tax credits, may not align again for many years.

“The sales gains over last year have diminished in recent months,” he added. “This trend is expected to continue through the end of the year, as limited inventory at the moderate and low end of the market constrains sales activity,” he said.

Closed escrow sales of existing, single-family detached homes in California totaled 556,590 in May at a seasonally adjusted annualized rate. Statewide home resale activity increased 35.2 percent from the revised 411,770 sales pace recorded in May 2008. Sales in May 2009 increased 2.9 percent compared with the previous month.

The median price of an existing, single-family detached home in California during May 2009 was $267,570, a 30.4 percent decrease from the revised $384,540 median for May 2008, C.A.R. reported. The May 2009 median price rose 4.2 percent compared with April’s $256,700 median price.

1761 Woodscent Lane, Simi Valley, CA

California Housing Market Shows Pockets of Recovery

A surge in home sales that started in some of California’s more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state’s real estate market may be in recovery mode.

Here are some facts...

Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.

Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.

Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.

Although the median price in the state has risen for four consecutive months, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.

Where Does REALTOR.com Get Their Information?

Recently, we've had a number of people contacting us with questions about properties or information regarding those properties they had found online. Sometimes the answers we give are unfavorable because the property in question is off the market or the online site was displaying inaccurate information. How does that happen? Today, we wanted to take a little time to discuss how REALTOR.com and other third party sites like Trulia.com and Yahoo.com receive their information.

When a seller decides to list their home, they contact a REALTOR® to plan out a marketing scheme. Every REALTOR® belongs to a local association that provides a Multiple Listing Service (MLS). The MLS is a database where a REALTOR® can store precise details about the seller's property. This allows other REALTORS® in the association who have access to the MLS know which houses are available for sale and all the details they need to relay to a buyer.

Third party sites like REALTOR.com, Trulia.com and Yahoo.com are NOT an MLS. In actuality, these sites, upon written request (and sometimes for a fee), pull the data directly from the local MLS's database. Just like making a copy from an original, it doesn't always come out exactly the same. The third party sites will have some discrepencies. What's more, these sites are only allowed to pull public information. There is more complete information on the MLS database.

While we think that these third party sites are a great tool to get you started, we urge you to take the information you find with a grain of salt. NOTHING is more complete, accurate and up-to-date than your REALTOR®'s MLS. If you are serious about finding a new home, put your REALTOR® to work!

$10,000 "New" Home Tax Credit Nearly Gone

A couple months ago we discussed that the Franchise Tax Board (FTB) in California has allocated $100 million for tax credits. Buyers that purchase new homes are eligible to receive up to $10,000. Recently, the FTB has announced that the tax credits will soon be gone. The FTB has received more than 9,800 applications, claiming nearly $95 million as of June 17, and plans to accept 12,000 applications to allow for duplicates, revisions, or invalid applications.

This tax credit is available for qualified buyers who, on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. To apply, an application for new home credit must be completed by the buyer and seller within one week after the close of escrow and faxed by the escrow person to the FTB at (916) 845-9754. The FTB will continue to report the certificates issued on a weekly basis until the full $100 million has been used up. FTB expects to complete processing all certificates in August. Each applicant will receive a notification indicating the amount of credit allocated or denied.

California Real Estate Market Snapshot - June '09

Market Report

June, 2009	Current Period	Last Period	Last Year	Month-to-Month Change	Year-to-Year Change
Existing Home Sales	540,360	523,490	362,170	3.2%	49.2%
Median Home Price	$256,700	$253,040	$404,470	1.4%	-36.5%
Unsold Inventory Index	4.6 months	5.0 months	9.8 months	-8.0%	-53.1%
Median Days On Market	48.7	48.8	51.8	-0.2%	-6.0%
30-Year Fixed Mortgage	4.81%	5.00%	5.92%	-0.19%	-1.11%

Source: California Association of REALTORS®

Market Analysis:
The California Association of Realtors First-Time Buyer Housing-Affordability Index measures the percentage of households that can afford to purchase an entry-level home in California. The index is the most fundamental measure of housing well-being for first-time buyers in the state. The First-Time Buyer Housing-Affordability Index stood at 69% in the first quarter of 2009, compared with 46% in the first quarter of 2008. To give you a comparison of how significant a 69% index is, you only have to compare the 2009 index with the 2007 index, which stood at 26%. The formula for the index takes into account the median price of homes, current interest rates, and average income. Simply stated, only about 1 in 4 California households could afford an entry-level home in 2007, but, today, almost 7 out of 10 households can afford an entry-level home. The current index is the highest ever recorded. The 69% Housing-Affordability Index is one positive outcome resulting from the sub-prime mortgage crisis. A few years ago, many first-time home buyers were having to go out of state to find affordable housing, but, today, California is now offering affordable housing. The California housing market today offers low prices, low interest rates, and ample inventory (especially in the middle and upper price ranges). The high California taxes and a double-digit unemployment rate will keep the housing market from overheating in the near future.

Information provided by: Wright Brothers Communications

Tips For Selling Your Home to a First-Time Buyer

Favorable home prices, low mortgage rates, and tax credits are luring many first-timers into the market. Although favorably priced foreclosures and short sales may be the most appealing option to first-time buyers, traditional sellers also are able to compete and attract these buyers.

Here are some tips...

· If you are a seller that has not defaulted on your loan, your transaction, in this market, is very welcoming. Currently, over half of all sales are foreclosures or short sales. With those transactions the seller's lender has to approve all offers. This can be a very long and complicated process. Short sales can last up to a year in escrow. The appealing traditional sale is a transaction only between buyer and seller and usually lasts between 30-45 days in escrow.

· One advantage traditional sellers have is that lived-in, well-maintained homes are easier for buyers to imagine themselves living in compared with vacant foreclosed homes. Lived-in homes have great appeal to first-timers for practical and financial reasons.

· A survey conducted last year found that 81 percent of first-time buyers said move-in conditions were very important, while only 7 percent reported they were looking to purchase fixer-uppers.

· Lived-in homes offer warmth and emotion, a sentiment that some agents say can go a long way in selling a property. Additionally, these properties likely have well-maintained lawns and landscaping, as opposed to vacant, foreclosed homes, often which have dead or overgrown lawns.

· Extra touches like a fresh coat of paint, decluttering, and the removal of unpleasant odors will help to make a good first impression with buyers.

· Offering to help pay closing costs or buy down a mortgage rate also can help traditional sellers compete in today’s market. These may be enticing options to buyers, especially those who plan to live in the home for more than a few years.

· To help buyers more easily transition into homeownership, sellers may want to consider offering a home warranty that covers major systems in case problems arise after the sale closes. This practice is highly recommended and traditional in our market.

· Most buyers know that home prices have declined in many markets, so they’re being more aggressive in their offers. Sellers are advised not to quickly write off low-ball offers. As one agent advises, every offer deserves a counteroffer to get the conversation started.