Condo Loans … More Difficult to Obtain
Yesterday, Fannie Mae severely tightened its lending criteria for condominiums. As the vast majority of mortgage loans are sold to Fannie Mae, this change will make it much more difficult to sell condominiums in many condo developments.
From the Wall Street Journal:
The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single entity.
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From a Florida reader: I am on the other side of the nation — Palm Beach area of Florida. The market hasn't reach near bottom because there is NO market. Housing & Stock Market Worries
The Obama new policy blitzkrieg has many worried. Just look at decline in stocks since Jan. 20 for the opinion of the investing public.
What are they so worried about? The short list includes:
- Proposals for higher income taxes on the highest earners.
- Higher taxes on capital gains and dividends.
- A new tax on all securities trades.
- "Cram-down" legislation forcing banks to accept lower profits on mortgages.
- The Employee Free Choice Act, which would give unions an advantage over management.
- The carbon tax & the resulting very possible double digit increase in utility rates.
- Limits on oil drillers' tax breaks.
- Limits on agricultural subsidies.
- Smaller deductions on mortgage payments.
- Cuts in subsidies to independent student loan providers.
- Limits on drug pricing and Medicare rates.
Housing Gains
>> Home Base
INFO THAT HITS US WHERE WE LIVE Among last week's interesting tidbits of information about housing, Radar Logic reported transaction-count increases in 14 of 25 metro areas tracked in December 2008, compared to December 2007. They put these gains to improvements in home affordability and low mortgage rates, but cautioned that their numbers don't necessarily reflect total transaction volume in each area.
Meanwhile, the Federal Housing Finance Agency reported the price of the average home sale in Q4 of last year was only 8.2% lower compared to the year before. The National Association of Realtors chimed in with data showing the average home sales price down 9.4% from a 2006 peak. We all know that parts of the country have experienced serious price drops. But the fact that these national averages aren't so severe, indicates price declines haven't been that bad for most of the country.
Conforming mortgage rates fell again last week, according to FreddieMac's weekly survey. The rate for 30-year fixed-rate mortgages is hovering just above January's all-time low. In fact, conforming mortga ge rates in the survey have only gone up and down about a quarter percent since the beginning of the year.
>> Review of Last Week
UP WE GO… After weeks of continual sliding, the market finally took off like a shot, posting its biggest weekly increase in months. This may not signal the start of a rebound for the market and the economy, but it could indicate a bottom, which is good. Bottoms show stabilization – that the contraction is slowing or has been stopped in some areas. Experts are saying things may go up and down on the way back up, but only time will tell if we're now at the bottom of this recession – and bear market.
Positive economic indicators for the week included a better-than-expected retail sales number for February. It was down just 0.1% overall, but taking out auto sales, retail was UP 0.7%, following a 1.7% GAIN in January. Consumer sentiment also came in a tick up for the month. Fear seems to be abating. On Friday, White House economic advisor Larry Summers said it was indeed encouraging to see signs of a rise in consumer spending.
Best of all was the encouraging financial news. Citigroup said it had a profit the first two months of the year a nd won't need more TARP money. JPMorgan was also profitable in January and February. Some economists see this as early evidence that monetary policy is having some traction. In Washington, Barney Frank, who chairs House Financial Services, said he thinks the SEC will soon reinstate the uptick rule, which would make it harder to short financial stocks.His committee also held its hearing on mark-to-market accounting and seems to favor temporarily suspending the rules. They gave SEC and FASB accountants three weeks to come back with a plan. This is positive news because many experts feel adjusting mark-to-market is vital to fixing the banking system. It should ease capital concerns at banks, giving them increased capacity to lend, which is central to the recovery.
The Dow zoomed UP for the week 9.0%, to 7223.98; the S&P 500 went UP 10.7%, to 756.55; and the NASDAQ almost matched it, going UP 10.6%, to 1431.50.
With stocks enjoying a great week, you'd expect bonds to get hammered, but things weren't so bad. In spite of China's reservations about Treasuries, the price of the benchmark 10-year Treasury dropped just a tad. So its yield, which runs counter to price, only inched up to 2.890%, still comfortably under the 3% threshold. This bodes well for mortgage rates continuing at attractive levels.
>> This Week’s Forecast
THE FED MEETS AND MORE… Tuesday and Wednesday, the Federal Open Market Committee meets and no change is expected to the Fed Funds Rate. But the policy statement coming out of the meeting will be closely analyzed for indications of how the Fed may further support the financial system.
Economic indicators we want to look at include Housing Starts and Building Permits on Tuesday, plus the Consumer Price Index on Wednesday for a further check on inflation. We'll also have earnings from FedEx, General Mills, Nike and Oracle.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Economic Calendar for the Week of Mar 16 – Mar 20
|
Date |
Time (ET) |
Release |
For |
Consensus |
Prior |
Impact |
|
M |
10:30 |
NY Empire State Mfg Index |
Mar |
–32.0 |
–34.65 |
Moderate |
|
M |
09:15 |
Industrial Production |
Feb |
–1.2% |
–1.8% |
Moderate |
|
M |
09:15 |
Capacity Utilization |
Feb |
71.1% |
72.0% |
Moderate |
|
Tu |
08:30 |
Housing Starts |
Feb |
453K |
466K |
Moderate |
|
Tu |
08:30 |
Building Permits |
Feb |
510K |
531K |
Moderate |
|
Tu |
08:30 |
Producer Price Index (PPI) |
Feb |
0.4% |
0.8% |
Moderate |
|
Tu |
08:30 |
Core PPI |
Feb |
0.1% |
0.4% |
Moderate |
|
W |
08:30 |
Consumer Price Index (CPI) |
Feb |
0.3% |
0.3% |
HIGH |
|
W |
08:30 |
Core CPI |
Feb |
0.1% |
0.2% |
HIGH |
|
W |
10:30 |
Crude Inventories |
3/13 |
NA |
–749K |
Moderate |
|
W |
14:15 |
FOMC Rate Decision |
0.0-0.25% |
0.0-0.25% |
HIGH |
|
|
Th |
08:30 |
Initial Jobless Claims |
3/14 |
NA |
654K |
Moderate |
|
Th |
10:00 |
Leading Economic Indicators (LEI) Index |
Feb |
–0.6% |
0.4% |
Moderate |
|
Th |
10:00 |
Philadelphia Fed |
Mar |
–40.0 |
–41.3 |
HIGH |
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months. Basically, no one is expecting the Fed to tighten monetary policy for some time to come. So no changes in the Fed funds rate are expected to come out of next week's meeting.
Current Fed Funds Rate: 0%–0.25%
|
After FOMC meeting on: |
Consensus |
|
Mar 18 |
0%–0.25% |
|
Apr 29 |
0%–0.25% |
|
Aug 12 |
0%–0.25% |
Odds of change from current policy:
|
After FOMC meeting on: |
Consensus |
|
Mar 18 |
1% |
|
Apr 29 |
5% |
|
Aug 12 |
10% |
This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego homes for sale
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Home prices should come back to 2001 level, then we can say that the San Diego real estate market has finished it's correction.
For now, I think the San Diego real estate market is in for a very slow recovery due to unemployment that looks like it may skyrocket. This recession is just now starting. This will further accelerate pressure on the housing sector but also later on, push interest rates higher in order for banks to recoup losses. No one has even started talking about the other wave of credit mess, Credit Card debt and the huge amount of adjustable loans issued in 2004-2005 that are set for their first adjustment in 2009. san diego real estate news
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San Diego Real Estate …The Coming Up-tick
For San Diego real estate, or for that matter perhaps all of California real estate, sales activity is about to pick up. Yes, the stars seem to be aligned for real estate buyers throughout Southern California. Will this be the long-awaited bottom to the real estate bust? Are real estate prices about to spike upward? Is now a once-in-a-lifetime opportunity to purchase San Diego real estate?
Traditionally, the season from mid-March through September is the busiest time for real estate activity. Combine this with long-term fixed mortgage rates around 5%, home prices around 40 to 50% of their 2005 values, a very generous federal $8000 tax credit for first-time buyers and an unbelievable California state new home buyers tax credit of 5% or $10,000, whichever is less, and you now have a potential to see double-digit increases in Southern California real estate sales.
Now, add to the above positive factors the new California law, called California foreclosure prevention act, which becomes effective May 21, 2009. This new law, which foolishly interferes with the free market, extends the normal foreclosure. They now take an additional 90 days… So in essence, just at our seasonally strong sales time, this new state law will dramatically affect the amount of new foreclosures coming on the market. The normal supply of foreclosures will be skewed, causing the Soundbite news media to declare a huge drop in foreclosures and available housing inventories.
Once the additional 90 day for the extended foreclosure period works it way through the system (August 21, 2009), sometime in late September or early October, the news media will again be reporting an uptick in foreclosure activity.
In conclusion, if you are planning on selling San Diego real estate, now may be a very opportune time. If you are planning on buying San Diego real estate to live in, and plan to hold onto it 10 or more years, now may also be an opportune time to get into the market. Personally, with that said, I believe the real estate activity update we are about to experience will most likely be short-lived, and starting in September or October, we will see a continuation of declining real estate values in San Diego that may very likely extend until the first quarter of 2010. San Diego real estate
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