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California Home Prices near 4-Year High

August 20th, 2012, 1:00 am • • posted by MARILYN KALFUS, THE ORANGE COUNTY REGISTER

California home sale prices came close to a 4-year high in July, with the pace of sales year-over-year growing for the fourth month in a row, the California Association of Realtors says.

“It’s hard to generalize the state of California’s housing market because the markets are so diverse and are performing so differently,” LeFrancis Arnold, the association’s president, said.

“REO-dominated areas (of homes seized by banks) such as those in the Inland Empire and Central Valley are experiencing sales constraints due to an extreme shortage of available homes,” he said. “On the other hand, a robust economy in the San Francisco Bay area and a relatively larger inventory at higher price levels is helping to fuel sales and prices.”

The July median price was the highest since August 2008, when it was at $352,730. July also marked the 5th straight month that the state’s median home price saw both month-over-month and year-over-year gains

The report says:

• The median price of an existing single-family home (or price at the midpoint of all sales) was $333,860 last month, up 4.2% from $320,540 in June and nearly 13% from the state’s July 2011 median of $296,160. During the housing crash, the state’s median price got as low as $245,230.
• July sales rose to an annualized pace of 529,230 homes – that is, homes that would sell if transactions were to occur for a year at July’s sales pace. That’s an increase of 15.3 percent over the pace in July 2011 – 459,140 homes.
• California’s housing inventory was pretty much flat in July, with the index of existing, single-family homes at 3.4 months compared to 3.5 months in June. However, July’s inventory was down from a revised 5.6-month supply in July 2011. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A seven-month “inventory” of homes for sale is considered normal.

In Orange County, prices slipped slightly, while sales had a dramatic increase. The association reported:

• • The median house price was $551,160 in July, barely down from $551,510 the year before and down about 3% from June. The low since the housing crash was $442,170 in January 2009, CAR spokesperson Lotus Lou said in an interview.
• House sales in O.C. were up 32.1% from year-ago levels.
• The county’s “inventory” of homes for sale was at a 4-month supply, down a bit from 4.2 months in June and plunging from 7.5 months in July 2011

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For information about coastal and luxury Los Angeles real estate, Orange County CA homes, and San Diego homes, call Bob Cumming of Keystone Group Properties at 310-496-8122. Keystone Group Properties services buyers and sellers of exclusive Southern California homes from Malibu and Santa Monica to Newport Beach and San Juan Capistrano, La Jolla and Mission Beach to distinctive Beverly Hills, Beverly Glen, and Bel Air homes.

HARP Refinances Continue Surge in First Half of 2012

One in Three Refinances Were Through HARP in June

Washington, D.C. –

The Federal Housing Finance Agency (FHFA) today released its June Refinance Report, which shows that one of every three refinances through Fannie Mae and Freddie Mac were made through the Home Affordable Refinance Program (HARP), the highest number since the inception of the program in April 2009. The continued increase in HARP volume is attributed to record-low mortgage rates and program enhancements announced last fall including removal of the loan-to-value (LTV) ceiling for borrowers who refinance into fixed-rate loans and the elimination or lowering of fees for certain borrowers.

Also in the report:

• Through June 2012, Fannie Mae and Freddie Mac refinanced 422,969 loans through HARP, more than all HARP refinances – 400,024 – last year.
• HARP refinances for loans with LTV greater than 125 percent surged in June to more than 40 percent of HARP volume as lenders began to sell Fannie Mae and Freddie Mac securities containing these loans June 1.
• More than two-thirds of borrowers in states hard-hit by the housing downturn – Nevada, Arizona and Florida – refinanced through HARP in June, compared with 33 percent nationwide.
• In Nevada, Arizona and Florida, underwater borrowers (with LTV greater than 105 percent) represented more than 80 percent of HARP volume in June.
• Since 2009, Fannie Mae and Freddie Mac refinanced more than 2.2 million loans through their existing programs and more than 1.4 million loans through HARP.

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For information about distinguished Southern California luxury real estate in Los Angeles County, as well as coastal Orange County homes and San Diego homes, call Bob Cumming of Keystone Group Properties at 310-496-8122.

No More ‘Drive-By’ Appraisals – On Some Loans

During the housing market’s go-go years, the practice of “drive-by” appraisals, in which property appraisers didn’t physically inspect the interior of a home, was commonplace.

It’s since become far less so, as mortgage lenders remain extremely cautious about the loans they are making. They want to make sure that they have an independent estimate of the market value of a home, so it stands to reason that an appraiser should actually take a look at the home’s interior. Most of the complaints about the appraisal industry these days are of a different nature – that appraisers are too conservative about how they value homes.

Rules proposed by federal regulators on Wednesday would ban the practice of “drive-by” appraisals and require a physical inspection of the home. But the rules, required by the Dodd-Frank financial overhaul of 2010, would only apply to a small slice of the mortgage market – loans defined by regulators as “higher risk.”

Regulators define high risk ones in which the rate is at least 1.5 percentage points above a market average.

However, lenders don’t make many loans above this threshold: In 2010, the most recent year for which data are available, such high-risk loans made up only 3.2% of the overall lending market, according to the Federal Reserve.

The regulators, including the Fed and Consumer Financial Protection Bureau, also said they aim to combat fraudulent property flipping schemes in which a developer buys a property, makes minimal repairs and tries to sell it at an inflated price. In an effort to combat this property flipping, the regulators propose to require lenders making higher-rate mortgages to obtain an additional appraisal at no cost to the borrower.

An appraisal exists to protect a lender; it is different from a home inspection done on the borrower’s behalf to see if there are any needed repairs before closing.

Separately, the consumer bureau proposed that lenders should be required to provide consumers a free copy of their appraisal no later than three days before the property sale closes.

That proposal, another Dodd-Frank requirement, has become standard practice around the appraisal industry in recent years, said Bill Garber, director of government and external relations for the Appraisal Institute, an industry trade group. Until around 2008, lenders didn’t provide a copy of an appraisal to borrowers unless they received a written request, but new standards for the industry changed that practice.                        Alan Zibel

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81 Percent of Refinancing Homeowners Maintain or Reduce Mortgage Debt in Second Quarter

Inflation-Adjusted Cash-Out Volume at 17-Year Low

MCLEAN, Va., Aug. 1, 2012 /PRNewswire/ — Freddie Mac (OTC: FMCC) released the results of its second quarter refinance analysis showing homeowners who refinance continue to strengthen their fiscal house.

News Facts

In the second quarter of 2012, 81 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table. Of these borrowers, 59 percent maintained about the same loan amount, and 23 percent of refinancing homeowners reduced their principal balance; the share of borrowers that kept about the same loan amount was the highest in the 27-year history of the analysis.
The net dollars of home equity converted to cash as part of a refinance, adjusted for consumer-price inflation, was at the lowest level in 17 years (since the second quarter of 1995). In the second quarter, an estimated $5 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006.
The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.5 percentage points, or a savings of about 28 percent in interest rate, the largest percent reduction recorded in the 27 years of analysis.
Among the refinanced loans in Freddie Mac’s analysis, the median depreciation of the collateral property was 16 percent over the median prior-loan life of 5.1 years. The prior-loan age was the oldest in 13 years, surpassed only by the prior-loan age recorded in the third quarter of 1999.
Property-value change and loan age varied between Home Affordable Refinance Program (HARP) and other refinance loans. For loans refinanced during the second quarter through HARP, the median depreciation in property value was 34 percent and the prior loan had a median age of about 5.5 years (to be eligible for HARP, the prior loan had to be originated before June 1, 2009). Excluding HARP loans, other loans refinanced during the second quarter had a median property-value decline of 2 percent over a median prior-loan age of about 4 years.
Quotes
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist:
“The typical borrower who refinanced reduced their interest rate by about 1.5 percentage points. On a $200,000 loan, that translates into saving about $2,900 in interest during the next 12 months. Fixed-rate mortgage rates hit new lows during June, with 30-year product averaging 3.68 percent and 15-year averaging 2.95 percent that month, according to our Primary Mortgage Market Survey®.
“The enhancements to HARP announced in October, such as removing the maximum loan-to-value limit, resulted in additional refinance volume during the second quarter. HARP loans were about one-third of Freddie Mac’s refinance fundings during the second quarter, the highest share since HARP’s inception.”
Get the latest information from Freddie Mac’s Office of the Chief Economist on Twitter:@FreddieMac
Cash-out Refinance Analyses Information
These estimates come from a sample of properties on which Freddie Mac has funded two successive conventional, first-mortgage loans, and the latest loan is for refinance rather than for purchase. The analysis does not track the use of funds made available from these refinances. The analysis also does not track loans paid off in entirety, with no new loan placed.

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