Any housing recovery is unlikely to occur until potential homebuyers believe prices have hit bottom according to a report by Harvard University’s Joint Center for Housing Studies. The nation’s two-year old housing market downturn is as bad as any since World War 11 and record foreclosures and tighter credit will make it more difficult to reverse according to the report.
Homebuyers remain on the sidelines as they face the highest mortgage rates in nine months and stricter lender criteria. The Federal Reserve’s efforts to keep interest rates low with the hope of stimulating buyer activity has largely fallen on deaf ears as potential homebuyers watch prices continue to slide in many areas of the nation courtesy of a large inventory of foreclosed properties for sale.
Director Nicolas Retsinas observed that housing markets “historically recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability. It will take longer to rebound given the unusually high levels of foreclosures and constrained credit market. The slump in housing markets has not yet run its full course.”
Jumbo loans of more than $417,000 accounted for about one-third of the mortgage market last year and represented a fifth of all mortgage applications in May. Since March, however, Fannie Mae has packaged only $24 million in jumbo loans into securities while Freddie Mac has packaged about $220 million. Meanwhile, the two companies invested more than $32.4 billion to buy their own securities, according to regulatory filings.
The NATIONAL ASSOCIATION OF REALTORS® (NAR) had projected the two companies would buy $150 billion in jumbo loans this year. Totals now may be less than $74 billion. Freddie Mac has said it would buy between $10 billion and $15 billion in jumbo loans this year. The two companies own or guarantee almost half of the $12 trillion in U.S. residential mortgage debt. They experienced record losses totaling $11.8 billion over the last three quarters as mortgage defaults climbed to 30-year highs.
Since late last week, the U.S. Senate has been considering a housing bill that includes FHA reform (with permanent loan limits to 110% of local area median home price, capped at $625,500), GSE reform (with permanent loan limits to 100% of local area median home price, capped at $625,500), FHA foreclosure rescue, development of a National Affordable Housing Trust Fund, and an $8,000 Homebuyer Tax Credit. The bill has stalled due to a procedural vote in the Senate.
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Southern California property owners (and property managers) of existing residential multifamily complexes with two or more dwelling units may qualify for rebates from Southern California Gas Company (Sempra). The rebates are for upgrades such as high-efficiency dishwashers, attic insulation, wall insulation, and natural gas storage water heaters.
Rebates are available on a first-come, first-served basis until December 31, or until funds are depleted. To qualify, energy-efficient products must have been purchased and installed on or after January 1, 2006, and applications postmarked by December 31, 2008. The amount and availability of rebates may change during the year. Contact the Multifamily Rebate Program info Line Program at (800)427-4400.
AB 244 Contracts – This bill resolved a loop-hole relative to oral contracts for home improvements. The Contractor’s State Licensing Board sponsored this bill. A home improvement contract may be oral or written, and it is not uncommon for unlicensed contractors to enter into an oral agreement for home improvements. However, prior law sets forth a timeline for prosecuting an unlicensed contractor who has written a home improvement contract, but does not mention the timeline for oral agreements. The law now includes a 4-year time limit on bringing claims on a verbal contract; starting on the first payment date. (Source: Giardinelli & Duke, APC)
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