31. January 2009 by Burbank Real Estate.

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Ok, let’s talk about the bad news first:

• Steepest declines for the Dow in the month of January, ever.  (at least what’s on record) Mostly due to disappointing 4th quarter profits and the realization that the economy is in pretty bad shape.
• The housing report  for existing home sales jumped 6.5 percent in December to a 4.740 million unit annual rate — a gain that indicates lower mortgage rates and lower prices are boosting home sales. The jump slashed supply on the market, now at 3.676 million homes and down nearly 12 percent from November.   So we came down to a supply of 9.3 months at the current sales rate, down from November’s 11.2 months.
• The median home price fell 2.7% for December, what’s troubling is the erosion rate of -15.3% which is the largest since the Great Depression.
• Home sales increased 84.9 percent in December in California compared with the same period a year ago, while the median price of an existing home fell 41.5 percent, per C.A.R. report.
• Consumer confidence, or lack thereof, is showing a low not seen in more than 40 years.  We’re came in at 37.7 for January vs. 38.6 for December.
• FOMC left rates unchanged and anticipated leaving them at these levels for some time.
• Jobless claims continued to reflect weakness in the economy and the fact that the unemployed are not finding jobs.
• New home sales fell 14.7 percent in December to a record low 331,000 annual unit rate.
• 4th quarter GDP posted a sharp 3.8% decline, reflecting(you guessed it) a contracting economy.

Then there’s the good news……..

• Wage inflation is currently not a concern, according to those that measure the Employment Cost Index.
• Housing supplies did go down, that’s usually a positive.
• Interest rates are low.

What’s this all mean?

Well, several things.   Let’s start with the fact that the economy is in rough shape and it’s going to take some time to recover.   Let’s not forget the many years of excess and little oversight that helped to contribute to the current quagmire as well as our penchant for debt.

How fast that recovery happens, I think, will depend on many factors not the least of which include:

• How swiftly and wisely the government moves to stimulate the economy.
• Job creation is a must as we need to get all of these unemployed folks back to work.
• How soon the banking mess gets cleaned up so we can get back to making sound loans.
• Will the banks really make a solid effort to prevent foreclosures.  I think there are many instances where it makes sense to help the homeowner.   If less foreclosure properties are coming online, property values will begin to stabilize and we can start the recovery process.

The recovery will be felt differently in different parts of the country.  If our area employment and business activity can survive the downtown  our recovery process will, hopefully, happen sooner and be less painful.

Lots of unknowns at this time.

We’ve been in this downturn since December 2007 and most average 12-14 months, it’s safe to say this downturn is worse than most so we probably still have a few more months of painful news ahead of us.

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23. January 2009 by Burbank Real Estate.

Mortgage Applications go down as rates go up! 

Interest rates rose from record lows and the Mortgage Bankers Association reported that weekly mortgage applications declined 9.8 percent on a seasonally adjusted basis to 1,195.3 last week from 1,324.8 the previous week.

Most of the loans are still in refinances, but the refinance share of applications decreased to 83.3 percent of the total from 85.3 percent the previous week.

Interest rates:

• 30-year fixed-rate mortgages increased to 5.24 percent from 4.89 percent
• 15-year fixed-rate mortgages increased to 4.99 percent from 4.63 percent
• 1-year ARMs remained unchanged at 5.89 percent

Source: Mortgage Bankers Association (01/22/2009)

Housing starts in December continued to disappoint as starts fell another 15.5 percent, following a 15.1 percent plunge in November. The December pace of 0.550 million units annualized was down 45.0 percent year-on-year and was sharply below the consensus forecast for 0.615 million units. The fall in starts was led by the multifamily component which dropped 20.4 percent while the single-family component fell 13.5 percent.

After holding fairly stable for a year, pending home sales declined with the mounting number of job losses and a sinking economy. The Pending Home Sales Index fell 4.0 percent to 82.3 from a downwardly revised reading of 85.7 in October, and is 5.3 percent below November 2007 when it was 86.9. The current index is the lowest since the series began in 2001.

Will Congress lobby for higher loan limits?

Congressional leaders, both Republican and Democrats, have been lobbying President Obama to increase the limits of conforming loans – mortgages eligible to be purchased by Government Sponsored Enterprises (GSEs), like Fannie Mae and Freddie Mac – in high cost areas from $625,500 to $729,750 as part of an economic stimulus package. 

Last year, as part of the federal government’s economic stimulus package, the conforming loan limit was temporarily increased to $729,750 in high-cost areas.  Beginning Jan. 1, 2009, the conforming loan limit was lowered to its original level of $625,500 for high-cost areas.  This increase would be a huge boon in areas like Los Angeles where home prices are still much higher than many parts of the country.

Local news:

The Burbank-Glendale-Pasadena Airport Authority has entered into a $44,500 contract with Cooper Communications to inform the public about the Bob Hope Airport’s efforts to obtain a nighttime curfew for all flights.

The Airport Authority’s actions are part of the requirement by the Part 161 Study to inform the public about the curfew and get comments. 

Don’t get too excited yet, it’s still very unclear whether the FAA will support a mandatory curfew.  Read more…

Burbank City Council passes water ordinance, starting in March for more than 6,000 businesses.  This requires most businesses to install a low-flow faucet attachment to public restrooms.  Read more…

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22. January 2009 by Burbank Real Estate.

Image via WikipediaStudio City home sales saw an increase in days on market (DOM) of 19.68% and the average sale price decreased by 12%.  Two bedroom single family homes saw the largest decrease in sales price at 15%.It is a buyers market and we will continue to see weakness given that, Los Angeles is second in the nation behind New York with respect to projected job losses for this year, according to Fortune Magazine.  Having said tha, real estate is local, so we’ll have to see which areas show resiliency during the coming year.

Yearly Activity Report: Studio City 2008

Yearly Activity Report: Studio City 2007

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16. January 2009 by Burbank Real Estate.

Image by Getty Images via Daylife

·      In California, the median price of an existing home declined to $285,680 in November 2008, down 41.8 percent from November 2007 when the median price of an existing, single-family home was $490,511.  

·      The average rate for 30-year, fixed-rate mortgages was 5.01 percent for the week ending Jan. 8, according to Freddie Mac. Lower interest rates combined with lower home prices can facilitate more affordable mortgage payments.

·       To qualify for the amazingly low interest rates, borrowers will need a down payment of at least 20 percent and a FICO score of 700 or higher.  In California, a 20 percent down payment on a median-priced home would be $57,136.  Additionally, home buyers will need to pay for any closing costs not paid by the seller.

·      The huge number of foreclosures for sale is presenting an opportunity to purchase a home at a lower price.  Keep in mind that some foreclosed homes may be in disrepair and may require additional work.  A program offered by the Federal Housing Administration, 203K Streamline, allows home buyers to borrow as much as $35,000 more than the mortgage to pay for certain renovations, such as new paint, carpeting and appliances that a foreclosed home may need.

·     To calculate how much house they can afford, home buyers should consider the general principle of dedicating no more than 28 percent of their gross monthly income to covering the monthly mortgage payment, including property taxes and homeowners insurance.  All debt payments combined, including mortgage, credit cards, car payments, student loans, etc., should be less than 35 percent of the gross monthly income.  Realistically, here in California those numbers tend to be harder to achieve due to the higher cost of housing.  But coming close to these numbers should be your goal.

·     Useful home loan calculators: www.ginniemae.gov, www.bankrate.com, and www.fhainfo.com/calculators.htm.

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16. January 2009 by Burbank Real Estate.

Image via WikipediaAs you can see from the charts below, while volume remains steady, the average days on market(DOM) have increased by 25 days and the average sold price is down by $388,700 or  41.8%.

Keep in mind that given the diversity of housing in Toluca Lake the number reflects the overall trend in real estate for the area, but will not give you any meaningful information with respect to specific property types.  Bottom line is that we’re still in a buyer’s market!

Monthly Activity Report: December 2008

Property Type: Residential

The columns for New, Under Contract, and Sold represent the number of listings that went into those statuses during the month. These are updated on the 1st and 15th of each month for the preceding month.

Monthly Activity Report: December 2007

Property Type: Residential

The columns for New, Under Contract, and Sold represent the number of listings that went into those statuses during the month. These are updated on the 1st and 15th of each month for the preceding month.

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