Real Estate News Archive June 2006Here is the real estate news making headlines across the state and country in June 2006.
June 30th, 2006
Tax savings in housing
According to an analysis released on Thursday by the National Association of Home Builders, thirty-five million taxpayers used the home-mortgage deduction in 2003, deducting a total of $338 billion, or an average of $9,650 per household.
Areas with rapidly growing populations and high house prices saw higher mortgage interest deductions.
At the top of the list: California's 14th district, which includes parts of San Mateo, Santa Clara and Santa Cruz counties, which had an average mortgage interest deduction of $35,000 per household.
States with at least $10 billion of mortgage interest deducted in 2003 were:
- California ($64.9 billion)
- New York ($19.7 billion)
- Florida ($17.6 billion)
- Texas ($16 billion)
- Illinois ($15.9 billion)
- New Jersey ($12.9 billion)
- Michigan ($11.5 billion)
- Virginia ($11.3 billion)
- Ohio ($10.9 billion)
- Pennsylvania ($10.8 billion)
- Georgia ($10.6 billion)
June 29th, 2006
Fed Raises Interest Rates
The U.S. Federal Reserve raised interest rates by a quarter percentage point to 5.25% on Thursday.
The vote was unanimous.
The Federal Open Market Committee was widely expected to announce the rate increase, but it is less clear whether the Fed will stop or move rates higher to 5.5% in August, and perhaps toward 6% by year's end as a small but growing number of Wall Street firms expect.
"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information," the committee wrote. The new language replaced wording saying "some further policy firming may yet be needed."
Source: Wall Street Journal OnlineJune 28th, 2006
Fed begins 2 day meeting today - Hike expected
"The Federal Open Market Committee begins its two-day meeting on Wednesday with a foregone conclusion: another increase in the central bank's target interest rate.
Although the outcome is known, the Fed officials will have a very tough two-day session.
Their task is to dig through the economic data, sort out the trends and set a new course for monetary policy, two years after starting on the long march toward interest-rate neutrality.
Fed officials have proclaimed that they are not happy about the acceleration in consumer prices, especially over the past few months. Chairman Ben Bernanke said recent increases were "unwelcome."
Fed watchers and financial markets took Bernanke's comment as a sure sign that the FOMC would boost the overnight rate from 5% currently to 5.25% on Thursday. There is some chatter about the FOMC making a bolder, half-point move.
And there is a growing consensus that the federal funds rate could go to 5.75%, or 6% or even higher in the next few months as inflation rates inevitably accelerate. That could happen, but there's also a chance that U.S. economic growth will slow in the coming months to a pace that would give the Fed a reason to pause. The housing market and consumer spending have already slowed noticeably under the pressure of higher interest rates and higher energy costs. "
June 28th, 2006
Drop in Home Loan demand, Rates at 4 year high
U.S. mortgage applications fell last week as interest rates hit their highest in over four years, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended June 23 decreased 6.7 percent to 529.6 from the previous week's 567.6.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.86 percent, up 0.13 percentage point from the previous week, its highest level since April 12, 2002 when it reached 6.92 percent.
The MBA's seasonally adjusted purchase mortgage index fell 6.2 percent to 389.0.
The purchase index, which is considered a timely gauge of U.S. home sales, was substantially below its year-ago level of 477.4.
The group's seasonally adjusted index of refinancing applications decreased 7.5 percent to 1,356.0. A year earlier the index stood at 2,529.2.
The refinance share of applications decreased to 35.3 percent from 35.5 percent the previous week.
Fixed 15-year mortgage rates averaged 6.49 percent, up from 6.37 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.36 percent from 6.22 percent.
The ARM share of activity decreased to 29.1 percent of total applications from 29.6 percent the previous week.
Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy's recovery from recession despite uncertain business investment.
While analysts differ on whether or not there is a housing bubble, most agree that the market is cooling off from its record run.
The MBA's soft data followed separate reports this week showing a mixed picture of the U.S. housing sector.
The National Association of Realtors on Tuesday said the pace of sales of existing homes in the United States fell 1.2 percent in May as higher interest rates damped buying activity in May but were a shade above market forecasts.
Sales of existing U.S. homes fell to a seasonally adjusted annualized rate of 6.67 million units in May from a downwardly revised level of 6.75 million in April. May's rate was 6.6 percent below the pace of 7.14 million units a year earlier.
The Commerce Department on Monday said sales of new single-family U.S. homes again defied predictions of a slowdown in May and rose 4.6 percent.
The pace of new home sales rose to a seasonally adjusted 1.234 million-unit annual rate from a downwardly revised 1.180 million unit pace in April, the Commerce Department said.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.
June 27th, 2006
CAR Numbers for May 2006
The California Association of Realtors have released the numbers for May 2006:
The median price of an existing home in California increased 8 percent in May and sales decreased 21.1 percent compared with the same period a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
"The median price of a home continued to increase in May, but at a more sustainable 8 percent rate," said C.A.R. President Vince Malta. "This is the first time since November 2001 that the median price did not increase by double digits, reflecting the return to the more balanced market that we have anticipated.
"Interest rates, while still historically low, continue to impact sales as did the inventory of homes for sale, which reached nearly a six-month supply in May," he said. "It's important that consumers work with their REALTOR® to ensure that their home is competitively priced in today's changing market."
Closed escrow sales of existing, single-family detached homes in California totaled 488,260 in May at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 21.1 percent from the 618,920 sales pace recorded in May 2005.
The statewide sales figure represents what the total number of homes sold during 2006 would be if sales maintained the May pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during May 2006 was $564,430, an 8 percent increase over the revised $522,530 median for May 2005, C.A.R. reported. The May 2006 median price increased 0.5 percent compared with April's revised $561,750 median price.
For complete city data, please see May 2006 California Median Home Price.
"Year-to-date sales are down 19.5 percent, in line with our recently revised 2006 California Housing Market Forecast, which projected a 16.8 percent decrease in sales for this year to 520,000 units compared with 2005," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "We expect the rate of home price appreciation to increase 8 percent to $565,900 for the year as a whole, compared with the impressive double-digit gains we've witnessed over the past four years."
Highlights of C.A.R.'s resale housing figures for May 2006:
- C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in May 2006 was 5.9 months, compared with 2.7 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
- Thirty-year fixed mortgage interest rates averaged 6.6 percent during May 2006, compared with 5.72 percent in May 2005, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.63 percent in May 2006 compared with 4.23 percent in May 2005.
- The median number of days it took to sell a single-family home was 44 days in May 2006, compared with 27 days (revised) for the same period a year ago.
Statewide, the 10 cities and communities with the highest median home prices in California during May 2006 were: Laguna Beach, $1,692,500; Saratoga, $1,500,000; Burlingame, $1,371,000; Newport Beach, $1,336,000; Manhattan Beach, $1,241,500; Los Gatos, $1,180,000; Santa Monica, $1,162,500; Rancho Palos Verdes, $1,144,000; Lafayette, $1,142,500; Calabasas, $1,130,000; Santa Barbara, $1,130,000.
Statewide, the 10 cities and communities with the greatest median home price increases in May 2006 compared with the same period a year ago were: Santa Monica, 60.3 percent; Ridgecrest, 56.3 percent; Adelanto, 42.5 percent; Loma Linda, 36.7 percent; Barstow, 36 percent; Laguna Beach, 33.8 percent; Delano, 33.3 percent; Tustin, 32.8 percent; Campbell, 32 percent; California City, 30.6 percent.
June 27th 2006
NAR Numbers for May 2006
The National Association of Realtors have released their data for May 2006:
Resales of U.S. homes fell 1.2% in May to a seasonally adjusted annual rate of 6.67 million, the National Association of Realtors said Tuesday.
Sales of existing homes have fallen in three of the past five months, and are down 8.3% from the peak last June.
"We're right on course for a soft landing," said David Lereah, chief economist for the real estate group. "Fingers and toes crossed." The inventory of unsold homes increased 5.5% to 3.60 million, a 6.5-month supply, a nine-year high. The median sales price increased 6% in the past 12 months to $230,000.
June 21st, 2006
California May 2006 Home Sales by Dataquick
Dataquick has released its numbers for CA home sales in May 2006:
A total of 51,750 new and resale houses and condos were sold statewide last month. That's up 9.5 percent from 47,250 for April and down 15.2 percent from a revised 61,000 for May 2005.
Last year's May was the strongest May in DataQuick's statistics, which go back to 1988.
The median price paid for a home last month was $469,000, a new record.
That was up 0.2 percent from $468,000 for April, and up 9.8 percent from $427,000 for May a year ago.
SF Bay Area
Sales of Bay Area homes declined for the fourteenth month in a row in May as prices continued to slowly edge up, a real estate information service reported.
A total of 9,064 new and resale houses and condos were sold in the nine-county region last month. That was up 8.4 percent from 8,358 for April, and down 19.8 percent from 11,308 for May last year, according to DataQuick Information Systems.
Last month was the slowest May since 2001 when 7,864 homes were sold. The strongest months of May since 1988 were May 2004 with 12,028 sales, and last year. May sales hit bottom in 1995 with 5,779.
The median price paid for a Bay Area home was $631,000 last month, another record. That was up 0.5 percent from April's $628,000, and up 6.1 percent from $595,000 for May a year ago. Last month's year-over-year increase was the lowest since May 2003 when the $427,000 median was up 3.4 percent.
Home sales in Southern California slowed for the sixth month in a row, making last month the slowest May since 1999. Homes are appreciating in value at their slowest pace in almost six years, a real estate information service reported.
A total of 27,286 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 10.3 percent from 24,748 for the month before, and down 11.7 percent from 30,886 for May a year ago, according to DataQuick Information Systems.
While last month was the slowest May since 1999 when 25,404 homes were sold, sales were still above the May "average" May of 24,857 (going back to 1988). The strongest May was in 2002 when 32,391 homes were sold, the slowest was in 1993 when 15,001 were sold.
The median price paid for a home in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was $485,000 last month. That was the same as April, and up 6.4 percent from $456,000 for May last year.
The 6.4 percent year-over-year increase was the lowest since July 2000 when the $205,000 median was up 6.2 percent from $193,000 a year earlier. The median peaked in March at $486,000, and current trends indicate it may peak again this summer.
Source: DataQuick Information Systems, DQNews.com
June 12th, 2006
71 housing markets overvalued
A growing percentage of U.S. housing markets are "extremely overvalued" and are at risk of falling prices, according to a study based on government data released Monday by Global Insight and National City.
In the first quarter, 71 housing markets, representing 39% of all U.S. housing, were deemed to be "extremely overvalued" based on median sales prices, median income, population and historic values.
That's up from 64 markets accounting for 36% of housing in the fourth quarter. In the first quarter of 2004, just 1% of housing was considered overvalued. To be "extremely overvalued," homes had to be valued at least 34% more than "normal."
When prices do fall from overvalued levels, they typically fall by about half the overvaluation, DeKaser said. The correction usually takes three and a half years.
California and Florida accounted for 17 of the top 20 overvalued markets, economists at the two firms said.
Homes in Naples, Fla., were deemed to be 102% overvalued, the economists said.
Other highly overvalued markets included Salinas, Calif.; Port St. Lucie, Fla.; Merced, Calif.; Bend, Ore.; Stockton, Calif.; Punta Gorda, Fla.; Santa Barbara, Calif.; Madera, Calif.; and Riverside, Calif.
Among other big cities, Miami was overvalued by 64%, Los Angeles by 61%, Oakland by 47%, San Jose by 44%, Nassau and Suffolk counties in New York by 44%, and Phoenix by 43%.
Not all markets were overvalued. Of 317 markets, 88 were deemed to be undervalued. College Station, Texas, was undervalued by about 24%.
Among big cities, Dallas and Fort Worth were undervalued by 19%, Houston by 16%, New Orleans by 12% and San Antonio by 11%.
The 10 most overvalued U.S. home markets
1. Naples, Fla.
2. Salinas, Calif.
3. Port St. Lucie, Fla.
4. Merced, Calif.
5. Bend, Ore.
6. Stockton, Calif.
7. Punta Gorda, Fla.
8. Santa Barbara, Calif.
9. Madera, Calif.
10. Riverside, San Bernardino, Calif.