Homeownership Rates: Are They Really Crashing?

The Census recently released their 2014 Homeownership Statistics, and many began to worry that Americans have taken a step back from the notion of homeownership.

Easy… Chicken Little

The national homeownership rate peaked in 2004, representing a 69.2% of Americans who bought vs. rented their primary residence. Many have noticed a decline in rate since then and taken that as a bad sign.

However, if you look at the national rate over the last 30 years (1984-2014), you can see that the current homeownership rate has returned closer to the historic norm. 2014 ended the year with a rate of 64% just under the rate in 1985 and 1995.

Bottom Line 

With interest rates and prices still below where experts predict, evaluate your ability to purchase a home with a local real estate professional.

5 Housing Trends in Winter 2015

5 Housing Trends in Winter 2015

By Polyana da Costa

RISMEDIA, Monday, February 23, 2015— (TNS)—If you think winter is not a good season to buy and sell a home or get a mortgage, you may want to reconsider. Buyers and homeowners seeking to refinance will find some good news this season—but they need to act soon. Buyers will find somewhat easier standards when trying to get a mortgage, and some may encounter lower down payment requirements. Those who want to refinance, especially homeowners with variable-rate loans, will have a second chance to grab a low fixed rate. Here are five housing trends you should expect to see during winter. Lending Standards Loosen Up It might get a little easier for some borrowers to get mortgages during winter. Increased competition among lenders and recent efforts by mortgage giants Fannie Mae and Freddie Mac should contribute to easier standards. Fannie and Freddie are not direct lenders. They set the guidelines for the types of loans they are willing to buy. Many lenders have been imposing stricter requirements when issuing mortgages to avoid the risk of lawsuits from Fannie and Freddie. Recently, Fannie and Freddie provided more clarity on when lenders can be penalized for loans that go bad after they’re sold. The revised rules put some lenders more at ease. The result: more loans. “I think we may see some more potential lending to make more mortgages available to more buyers.” says Jonathan Corr, president of Ellie Mae. “Right now, they can require you to repurchase the loan for pretty much anything, even small clerical errors.” Housing Market Stabilizes Home prices will continue to increase in 2015, but at a slower pace than they have in recent months. That’s not necessarily a bad sign for the housing market. Rather, it’s the beginning of a stable market, says Phil Huff, CEO of Platinum Data Solutions. “I think this is the beginning of the new norm,” he says. “I don’t expect to see pressure on prices one way or another.” Nationwide, prices are expected to rise about 4.5 percent by the end of the year, according to Realtor.com. That’s a reasonable increase, and it’s not like the price jumps that buyers saw in the past couple of years. Still, the winter may be a great time to buy and sell a home. “Some people feel like now is not necessarily a good time to list, but we continue to see homes move because of low inventory,” says Chad Royle, regional sales manager for Bank of the West in Denver. Mortgage Rates Are Low—for Now Mortgage rates have stayed low for much longer than most mortgage experts had expected. This winter may be the last chance for buyers and refinancers to grab rates at the bottom. The Mortgage Bankers Association predicts the 30-year fixed rate will reach 4.4 percent by the end of the first quarter. That’s slightly higher than where rates are now, but it’s still attractive. If you have sat on the sidelines, waiting to refinance or buy, you may be in for a surprise if you wait too long. The Federal Reserve is likely to raise the federal funds rate in 2015, and when that happens, mortgage rates will jump, says Brett Sinnott, director of secondary marketing at CMG Mortgage Group in San Ramon, California. “The clock is ticking,” Sinnott says. “Act now. The first quarter is going to be crucial in getting a loan completed.” Time to Refinance Helocs? Many homeowners who borrowed against their equity with home equity lines of credit or other variable-rate loans might want to consider refinancing this winter. Once the Fed raises the federal funds rate, these loans may become more expensive—and borrowers will find higher rates on fixed-rate loans, too, mortgage experts say. “If someone has a large line (of credit) and rates start jumping, that can drastically impact the individual’s ability to pay the loan,” Royle says. “I would strongly encourage people to consider refinancing into a fixed term now.” Proactive, Not Reactive Royle says he has seen a number of people refinancing because they have HELOCs whose draw periods are about to expire. But few people are refinancing because they are aware that rates will rise, he says. “I think that’s going to be the problem,” he says. “The consumer will be in a reactionary mode. I would encourage people to be proactive and refinance now.” Lower Down Payments for First-Timers Fannie Mae has recently announced a program that allows first-time homebuyers to get a mortgage with as little as 3 percent down, instead of the usual minimum of 5 percent. The program is available through state housing finance agencies. At least one of the co-borrowers on the loan must be a first-time buyer. Homeowners who wish to refinance, but don’t have sufficient equity to refinance through other types of loans, can refinance up to 97 percent of their home’s values. Buyers still have to meet Fannie’s requirements to qualify for a loan, but the program may be helpful to buyers who have not managed to save enough for a down payment. “They are trying to stimulate the market,” Huff says. “I think it will help some borrowers, but it’s not going to have a major impact on the market.” ©2015 Bankrate.com Distributed by Tribune Content Agency, LLC

Souther California Market Highlights from December 2014

• Foreclosure resales represented 5.0 percent of the resale market in December. That was down from a revised 5.5 percent in November 2014 and down from 5.8 percent in December 2013. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009. Foreclosure resales are purchased homes that have been previously foreclosed upon in the prior 12 months. 
• Short sales made up an estimated 6.2 percent of resales in December, down from a revised 6.4 in November 2014 and down from 10.2 percent in December 2013. Short sales are transactions in which the sale price fell short of what was owed on the property.
• Absentee buyers – mostly investors – bought 23.4 percent of the homes sold in December. That was down from a revised 23.8 percent in November 2014 and down from 26.9 percent in December 2013. The December 2014 absentee level ties the October 2014 level as the lowest for any month since October 2010, when 22.1 percent of homes were sold to absentee buyers. The peak absentee share was 32.4 percent in January 2013, and the monthly average since 2000, when CoreLogic DataQuick absentee data began, is about 19 percent. Absentee buyers include those who purchase vacation homes or other properties that public property records suggest are not used as primary residences. 
• Cash buyers accounted for 23.8 percent of December home sales, down from a revised 24.3 percent in November 2014 and down from 28.8 percent in December 2013. The December 2014 cash level was the lowest for any month since January 2009, when 22.0 percent of homes were bought with cash. The peak was 36.9 percent in February 2013, and the monthly average since 1988 is 16.7 percent.
• Southern California home buyers committed a total of $4.43 billion of their own money in the form of down payments or all-cash purchases in December. That was up from a revised $3.47 billion in November 2014. The out-of-pocket total peaked in May 2013 at $5.41 billion.
• Jumbo loans, or mortgages above the old conforming limit of $417,000, accounted for 31.3 percent of purchase lending in December, up from a revised 30.5 percent in November 2014 and up from 28.5 percent in December 2013. The July/August 2014 level of 32.3 percent was the highest since the credit crunch struck in August 2007. Prior to August 2007, jumbo loans accounted for around 40 percent of the home-loan market. The jumbo level dropped to as low as 9.3 percent in January 2009.
• Adjustable-rate mortgages (ARMs) represented 12.1 percent of home purchase loans in December, up from 12.0 percent in November 2014 and down from 13.0 percent in December 2013. The ARM share dropped to as low as 1.9 percent of home purchase loans in May 2009. Since 2000, a monthly average of about 30 percent of purchase loans have been ARMs.
• All lenders combined provided a total of $6.19 billion in mortgage money to Southern California home buyers in December, up from a revised $4.88 billion in November 2014 and up from $5.40 billion in December 2013. 
• The typical monthly mortgage payment for Southern California home buyers in December was $1,558, down slightly from $1,560 in November 2014 and down from $1,594 in December 2013. Adjusted for inflation, the December 2014 typical payment was 35.6 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was also 47.3 percent below the current cycle’s peak in July 2007.

San Diego Market Update

California pending home sales register first annual increase in nearly two years

REALTORS® say improving economic conditions and buyer urgency point to better market in 2015

LOS ANGELES (Jan. 23) – Pending home sales posted higher on a year-over-year basis for the first time since January 2013 and as expected, declined from the previous month due primarily to a seasonal slowdown toward the end of the year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.  

Additionally, with the specter of a better economy, greater job growth, and increasing household formation, C.A.R.’s new Market Pulse Survey found that many REALTORS® expect market conditions to improve in 2015, as does C.A.R.

Pending home sales data: 

• Pending sales were up 2.6 percent from the 69.1 index recorded in December 2013.  The yearly increase was better than the six-month average of -4.3 percent from June 2014 to November 2014.

• California pending home sales dropped in December, with the Pending Home Sales Index (PHSI)* falling 21.9 percent from 90.7 in November to 70.9 in December, based on signed contracts.  The monthly decline was in line with the seasonal slowdown in pending sales observed at the end of the year for the last two years.

Equity and distressed housing market data: 

• The share of equity sales – or non-distressed property sales – dipped for the second straight month in December.  Equity sales made up 89.8 percent of all sales in December, down from 90.5 percent recorded in November.  Equity sales have been more than 80 percent of total sales since July 2013 and have risen at or near 90 percent since mid-2014. Equity sales made up 84.4 percent of sales in December 2013.

• Conversely, the combined share of all distressed property sales edged up in December, up from 9.5 percent in November to 10.2 percent in December. Distressed sales were down 33 percent from a year ago, when the share was 15.6 percent. 

REALTOR® Market Pulse Survey**:

• In the fourth quarter of 2014, the vast majority (87 percent) of REALTORS® expected market conditions to either improve or stay the same over the next year.

• More REALTORS® (61 percent) closed a transaction in the fourth quarter of 2014, compared to the first quarter (53 percent).

• In an indication of stabilizing home prices, fewer homes (24 percent) sold above asking price in the fourth quarter of 2014, compared to 46 percent in the first quarter.

• Homes selling below asking price rose from 19 percent in the first quarter of 2014 to 48 percent in the fourth quarter, indicating home sellers’ expectations moved more in line with buyers’ expectations toward the end of the year and competition between sellers attempting to appeal to affordability strapped home buyers increased.

• More than half (58 percent) of properties received multiple offers in the fourth quarter of 2014, down from 69 percent in the first quarter.

Charts (click links to open):

• REALTORS® expect market to improve in 2015.
• More REALTORS® closed a transaction.
• More homes sold below asking price.
• Fewer properties received multiple offers.

Share of Distressed Sales to Total Sales
(Single-family)

Type of Sale	Dec-14	Nov-14	Dec-13
Equity Sales	89.8%	90.5%	84.4%
Total Distressed Sales	10.2%	9.5%	15.6%
REOs	4.7%	4.3%	5.1%
Short Sales	5.1%	4.8%	10.0%
Other Distressed Sales (Not Specified)	0.4%	0.4%	0.5%
All Sales	100.0%	100.0%	100.0%

Single-family Distressed Home Sales by Select Counties
(Percent of total sales)

County	Dec-14	Nov-14	Dec-13
Alameda	3%	3%	9%
Amador	10%	7%	35%
Butte	18%	13%	18%
Calaveras	14%	19%	NA
Contra Costa	6%	3%	7%
El Dorado	14%	7%	19%
Fresno	19%	16%	24%
Glenn	40%	29%	27%
Humboldt	14%	12%	14%
Kern	13%	10%	19%
Kings	26%	17%	28%
Lake	20%	19%	34%
Los Angeles	9%	9%	17%
Madera	13%	14%	20%
Marin	2%	2%	8%
Mariposa	7%	10%	40%
Mendocino	25%	13%	27%
Merced	10%	17%	22%
Monterey	9%	9%	20%
Napa	3%	7%	10%
Orange	6%	5%	10%
Placer	7%	8%	13%
Plumas	8%	11%	NA
Riverside	12%	13%	17%
Sacramento	13%	12%	19%
San Benito	8%	3%	15%
San Bernardino	14%	16%	22%
San Diego	6%	6%	5%
San Joaquin	13%	11%	23%
San Luis Obispo	6%	6%	7%
San Mateo	2%	1%	6%
Santa Clara	3%	2%	7%
Santa Cruz	2%	6%	15%
Shasta	20%	19%	24%
Siskiyou	26%	24%	24%
Solano	11%	9%	22%
Sonoma	6%	5%	15%
Stanislaus	12%	10%	22%
Sutter	20%	21%	32%
Tulare	16%	17%	26%
Yolo	10%	8%	18%
Yuba	22%	16%	31%
California	10%	10%	16%

NA = not available

*Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008. 

**C.A.R.’s Market Pulse Survey is a monthly online survey to gather California REALTORS®’ sentiment about their last closed transaction and business activity for the previous month and the last year.

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 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

The Difference Between A Home’s Cost vs. Price

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen in 2015?

A nationwide panel of over one hundred economists, real estate experts and investment & market strategists project that home values will appreciate by almost 4% by the end of 2015.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Tablepredicts that the 30-year fixed mortgage rate will appreciate to 4.5% by the end of 2015.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

Borrowers Who Refinanced in 2014 Saved Billions in Interest Payments

RISMEDIA, Monday, February 09, 2015— Freddie Mac recently released the results of its fourth quarter 2014 quarterly refinance analysis, showing that borrowers are continuing to take advantage of near record low mortgage rates to lower their monthly payments, shorten their loan terms and overwhelmingly choosing the safety of long-term fixed-rate mortgages as they closed out the year. Borrowers who refinanced in 2014 will save on net approximately $5 billion in interest over the next 12 months. This release of the report also contains annual statistics on refinances for the 22 largest metropolitan areas and four Census regions of the U.S.

"Our latest refinance report shows the refinance boom continued to wind down as the pool of potential borrowers declined over the course of 2014,” says Len Kiefer, Freddie Mac deputy chief economist. “However, because mortgage rates fell in the fourth quarter of last year, we actually saw the share of refinance originations tick up a bit despite volumes being down, a similar trend we expect to see for the first quarter of 2015 as mortgage rates have moved even lower. Lower mortgage rates, coupled with greater house prices appreciation last year, also brought about a larger share of borrowers cashing out home equity at the time of refinance. However, while the percentage is up, the total dollar amount declined by nearly $1 billion from the third quarter of 2014, and nearly $4.6 billion from the fourth quarter 2013."

The net dollars of home equity converted to cash as part of a refinance remained low compared to historical volumes. In the fourth quarter, an estimated $6.7 billion in net home equity was cashed out during a refinance of conventional prime-credit home mortgages, down from a revised $7.6 billion the previous quarter. For the full year, an estimated $24 billion in net home equity was cashed out, down from $28.6 billion in 2013. The peak in cash-out refinance volume was $84 billion during the second quarter of 2006, with an annual volume of $320.6 billion. Adjusted for inflation, annual cash-out volumes during 2010 through 2014 have been the smallest since 1997. 


Of borrowers who refinanced during the fourth quarter of 2014, 34 percent shortened their loan term, down from 35 percent from the previous quarter. Further, 35 percent of those who refinanced outside of HARP took out a shorter-term loan, while 33 percent of HARP borrowers shortened their term. Borrowers who kept the same term as the loan that they had paid off represented 60 percent and only 6 percent chose to lengthen their loan term. 


The average interest rate reduction in the fourth quarter was about 1.3 percentage points -- a savings of about 23 percent. On a $200,000 loan, that translates into saving about $2,500 in interest during the next 12 months. Homeowners who refinanced through HARP during the fourth quarter of 2014 benefited from an average rate reduction of 1.6 percentage points and will save an average of $3,300 in interest during the first 12 months or about $275 every month. 

About 71 percent of those who refinanced their first-lien home mortgage maintained about the same loan amount or lowered their principal balance by paying in additional money at the closing table. That's shy of the 88 percent peak during the second quarter of 2012. 

More than 95 percent of refinancing borrowers chose a fixed-rate loan. Fixed-rate loans were preferred regardless of what the original loan product had been. For example, 67 percent of borrowers who had a hybrid ARM refinanced into a fixed-rate loan during the fourth quarter. In contrast, only 4 percent of borrowers who had a fixed-rate loan chose an ARM. 

For all other (non-HARP) refinances during the fourth quarter, the median property value was up 5 percent between the dates of placement of the old loan and the new refinance loan. The prior loan had a median age of 5.8 years and 35 percent of borrowers shortened their loan term. 

In metro areas where house price declines were more severe, the share of "cash-out" borrowers was smaller. Median house values on refinance loans have declined in eleven of the 22 large metro areas included in the report, with the sharpest declines in Detroit and Tampa. Of the 22 areas, San Francisco and Houston were the metro areas where median house prices increased the most. 

The Two Things You Don’t Need to Hear from Your Listing Agent

You’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process. You need someone you trust enough to:

1. Set the market value on possibly the largest asset your family owns (your home)
2. Set the time schedule for the successful liquidation of that asset
3. Set the fee for the services required to liquidate that asset

An agent must be concerned first and foremost about you and your family in order to garner that degree of trust. Make sure this is the case. 

Be careful if the agent you are interviewing begins the interview by:

• Bragging about their success
• Bragging about their company’s success

An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of the house. However, you first need to know they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.

Look for someone with the ‘heart of a teacher’ who comes in prepared well enough to explain the current real estate market and patient enough to take the time to show how it may impact the sale of your home.

Not someone only interested in trying to sell you on how great they are.

You have many agents from which to choose. Pick someone who truly cares.

No Matter What the Groundhog Says… You Should Sell Before Spring!

Is spring closer than we think? Depending on which Groundhog you witnessed today, you may have less time than you think to get your home on the market before the busy spring season.

Many sellers feel that the spring is the best time to place their home on the market as buyer demand traditionally increases at that time of year. However, the next six weeks before spring hits also have their own advantages.

Here are five reasons to sell now.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are currently more prospective purchasers looking at homes than at any other time in the last 12 months, which includes last spring’s buyers’ market. These buyers are ready, willing and able to purchase… and are in the market right now!

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing supply just dropped to 4.4 months, which is under the 6 months’ supply that is needed for a normal housing market. This means, in many areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will increase in the spring. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. There is less overall business done in the winter. Therefore, the process will be less onerous than it will be in the spring. Getting your house sold and closed before the spring delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 23.5% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate below 4% right now. Rates are projected to be a full point higher by the end of 2015.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.