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RightArrow.gifFast Facts
Calif. median home price: June 2012: $320,540 (Source: C.A.R.)
Calif. highest median home price by region/county June 2012: San Mateo, $825,000 (Source: C.A.R.)
Calif. lowest median home price by region/county June 2012: Merced, $107, (Source: C.A.R.)

Calif. Pending Home Sales Index: June 2012: 121.4, down 3.8 percent from May's 126.1.

Calif. Traditional Housing Affordability Index: Second quarter 2012: 51 percent (Source: C.A.R.)

Mortgage rates: Week ending 8/9/2012 30-yr. fixed: 3.59% fees/points: 0.6% 15-yr. fixed: 2.84 fees/points: 0.6% 1-yr. adjustable: 2.65% Fees/points: 0.4% (Source: Freddie Mac) 

The Wall Street Journal

Finally, it is time to buy a house
Buying real estate is a good long-term investment for many reasons, some of which have only become apparent in recent weeks.

Making sense of the story

  • Housing prices rose sharply in May compared with April. The S&P/Case-Shiller Index, a closely watched real estate index, rose 2.2 percent in 20 of the nation’s big cities. Prices rose more than 3 percent in Chicago, Atlanta, San Francisco, and Minneapolis.
     
  • Nationally, the increase was the first in seven months. More importantly, the increase matched other data and evidence this spring that foreclosures slowed and inventories were shrinking. Economics suggests that as the supply of distressed property slows, buyers will be forced into higher-price properties.
     
  • In addition, interest rates on 30-year fixed mortgage have tumbled below 3.5 percent. For those who can get credit, these aren’t just historically low rates; they are one-sided deals tilted toward borrowers.
     
  • Housing starts also rose in June, and for those who can afford to invest in property, rents continue to rise. Prices are at a 10-year high. Real estate website Trulia found that it is cheaper to buy than rent in each of the nation’s 100 biggest
RightArrow.gifShort Sale Soundoff: Citi launches rental effort for distressed borrowers
Citigroup is starting a program to allow 500 homeowners in trouble with their mortgages to rent back their homes if they sign over the deed, a step some lenders are taking to help people avoid foreclosure.
 
The homeowners, who live in Arizona, California, Texas, Florida, Nevada and Georgia, will be offered the chance to rent the homes at market rates if they can no longer afford their mortgage payments, even with a modified loan. The pilot effort could be expanded if it is successful.
 
Under the program, borrowers would agree to a “deed-in-lieu” of foreclosure, in which they sign over ownership of the property to the lender. This is less costly to the bank and does less damage to a borrower’s credit than a foreclosure.
 
Homeowners are not required to accept the deed-for-lease program. The leases are expected to be signed at market rates but are likely to be lower than the borrower’s current mortgage payments.
 

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RightArrow.gifMortgage delinquencies increase in Q2
The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the second quarter of 2012, an increase of 18 basis points from the first quarter, but a decrease of 86 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
 
The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent, unchanged from last quarter and from one year ago. The percentage of loans in the foreclosure process at the end of the second quarter was 4.27 percent, down 12 basis points from the first quarter and 16 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.31 percent, a decrease of 13 basis points from last quarter and a decrease of 54 basis points from one year ago.
 
The combined percentage of loans in foreclosure or at least one payment past due was 11.62 percent on a non-seasonally adjusted basis, a 29 basis point increase from last quarter, but a 92 basis points decrease from the same quarter one year ago.
 
 
 
RightArrow.gifHigher home prices reduce California housing affordability in second quarter 2012
Higher home prices offset record-low interest rates and lowered housing affordability in California in the second quarter of 2012, C.A.R. reported last week.
 
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 51 percent in the second quarter of 2012, down from 56 percent in first-quarter 2012, but matched the 51 percent recorded in second quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
 
C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
 
Home buyers needed to earn a minimum annual income of $62,390 to qualify for the purchase of a $316,230 statewide median-priced, existing single-family home in the second quarter of 2012. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,560, assuming a 20 percent down payment and an effective composite interest rate of 3.92 percent. The effective composite interest rate in first-quarter 2012 was 4.16 percent and 4.85 percent in the second quarter of 2011.
 
 
RightArrow.gifAsking prices rise for sixth consecutive month
Asking prices on for-sale homes – which lead sales prices by approximately two or more months – increased 0.5 percent in July compared with June, according to Trulia’s Price Monitor. This marked the sixth consecutive monthly gain. Meanwhile, asking prices rose nationally 1.2 percent quarter over quarter. Year-over-year, asking prices rose by 1.1 percent; excluding foreclosures, asking prices rose 2.7 percent year over year. For the first time, a majority (62 out of 100) of large metros had year-over-year price increases.
 
Comparing the yearly gains with the most-recent quarterly gains, the housing price recovery has clearly shifted from Florida to Arizona, California and Nevada. Although Miami and other Florida metros had large year-over-year price increases, Las Vegas and other Southwestern metros had faster gains in the most-recent quarter. Tucson, San Jose, and Phoenix had the largest quarter-over-quarter price gains, and no Florida market made the top ten list for the quarter. Meanwhile, tighter vacancies and stronger job growth pushed up prices in Las Vegas, San Jose, San Francisco, and Omaha on a quarterly basis.
 
 
RightArrow.gifCoreLogic releases August MarketPulse report
CoreLogic’s August MarketPulse report found that this fall the housing market may avoid the slide that has occurred each of the last three years as a result of an improving balance between supply and demand, declining REO sale shares, and a slowly declining foreclosure inventory.
 
The report also found that many borrowers in both the boom and “rust-belt” markets lack the means to prevent serious delinquency due to their limited ability to refinance at a lower mortgage interest rate. Policies designed to offer options for borrowers to lower their interest rates further can help decrease the flow of future delinquencies.
 
The current share of non-distressed sales is at its highest level since August 2008, positively impacting home prices, and is a sign of real improvement in the housing market.
=================================================================   More Than 95 Percent Of Refinancing Borrowers Choose Fixed-Rate Mortgages    
  • Thirty Percent Shorten Loan Term When Refinancing

    MCLEAN, Va., Aug. 14, 2012 /PRNewswire/ -- In the second quarter of 2012, fixed-rate loans accounted for more than 95 percent of refinance loans, based on the Freddie Mac (OTC: FMCC) Quarterly Product Transition Report released today. Refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

    News Facts

    • Of borrowers who refinanced during the second quarter, 30 percent reduced their loan term, while 67 percent of borrowers kept the same term as the loan they had paid off.
    • Eighty-one percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the second quarter, the highest share since the second quarter of 2010, while the remaining 19 percent chose to refinance into the same type of product.
    • Borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. For example, 25 percent of HARP borrowers shortened their loan term when they refinanced during the second quarter, compared with 30 percent of borrowers who refinanced outside of HARP. Further, 95 percent of borrowers who were refinancing out of an ARM under the HARP program chose a fixed-rate mortgage. In contrast, borrowers who had an ARM, but did not refinance through HARP, about one-half opted for another hybrid ARM.

    Quotes

    Attributed to Frank Nothaft, Freddie Mac vice president and chief economist

    • "Fixed mortgage rates averaged 3.79 percent for 30-year loans and 3.04 percent for 15-year product during the second quarter in Freddie Mac's Primary Mortgage Market Survey®, well below long-term averages and the lowest quarterly averages recorded in our survey. The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.0 percent during the second quarter of 2012. It's no wonder we continue to see strong refinance activity into fixed-rate loans.
    • "Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about three-quarters of a percentage point lower during the second quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Further, a shorter-term, fully amortizing loan reduces the loan balance faster and builds home equity sooner."

    Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter:@FreddieMac

    Quarterly Product Transition Information

    These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans and the latest loan is for refinance rather than for home purchase. Some loan products, such as 1-year ARMs and balloons, are based on a small number of transactions. During the second quarter of 2012, the refinance share of applications averaged 77 percent in Freddie Mac's monthly refi survey, and the ARM share of applications was 6 percent in Freddie Mac's monthly ARM survey, which includes purchase-money as well as refinance applications.

    Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com.

    SOURCE Freddie Mac

    For further information: Chad Wandler, +1-703-903-2446, Chad_Wandler@freddiemac.com

    The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.

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