This morning President Bush signed the "Housing and Economic Recovery Act of 2008." For the past several years, C.A.R. and the
National Association of Realtors® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.
The California Association of Realtors wishes to thank all of you who responded to these Calls-for-Action. These efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.
The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.
The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.
Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.
The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.
C.A.R. also supports the following bill provisions:
A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.
Other provisions in the legislation:
The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.
The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.
C.A.R. wishes to thank those California Members of Congress who supported the bill:
Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard "Buck" McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.
"Used with permission from The California Association of
Realtors."
By Bruce Spence
Record Staff Writer
July 21, 2008 6:00 AM
Stockton Homebuyer's Frustrated with the Market
The housing downturn, now permanently embossed with a "foreclosure" icon, is offering many the chance to buy when only a few years ago soaring prices had put owning a home well out of reach.
For many, buying a home still seems out of reach these days, although for different reasons.
J.P. Wheeler, a 31-year-old elementary school teacher, and his wife, Amanda, a Social Security claims representative, have been actively looking to buy their first home, going out to house hunt once or twice a week for the past four months.
Most houses on the market are foreclosures, and that's where the best possible prices appear to be, he said.
But there are also lots of people who see this as a good time to buy, he now knows.
The two have made offers - all over asking price - on three houses and have yet to get any of their offers accepted.
Their most recent attempt involved competing with five other potential buyers making their final, best offers on a 2,000-square-foot house listed at $280,000 in the Brookside area of north Stockton.
The Wheelers came in second with an offer of $335,000 - 20 percent above the asking price.
"I don't like to count my chickens before they hatch, by any stretch, but I thought that was a very aggressive offer," J.P. Wheeler said. "I was surprised it didn't come to fruition. ... It makes you scratch your head, wondering what more you can do."
Frustration perhaps best defines the feeling, he said.
"Definitely not anger," he said. "I understand banks are trying to make money, and I'm trying to get a deal."
Stockton-area real estate brokers and agents say that has become a common experience in recent weeks because of increasing competition among would-be buyers since banks began cutting prices on foreclosure holdings late last year, and sales have jumped five months in a row.
The dominance of foreclosures in the home-sales market had driven down prices brutally.
The median selling price countywide has declined from a peak of $425,000 in July 2006 to $220,000 last month - a 48 percent drop over two years and the lowest monthly selling price level since April 2002, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data.
The competition often feels intense and initially surprises would-be buyers, leaving them feeling as if they're in a bidding war, agents and brokers said.
"This is a really strange time," said Lela Nelson of Lela Nelson Realty in Stockton. "We've never experienced this kind of market before."
Cynthia Ruiz and her partner, Jesse Alonzo, recently bought a three-bed, two-bath foreclosure home in Stockton that they were able to get for $220,000, and they're happy, because they got a good deal.
But Ruiz said foreclosure property prices seemed to be set artificially low to boost competition and drive up offers. For example, the couple made an offer of $215,000 on a house initially listed at $185,000 but got outbid - a frustrating experience, she said.
"The starting prices are real attractive, but what they're selling for is more than they listed it for," Ruiz said. "It's very misleading."
Mian Quddus, a Santa Clara man who took a foreclosure bus tour in Stockton this past spring, had been eyeing houses in hopes of finding a good deal as an investment and, later, a retirement home. He found a couple of properties he liked but decided not even to make offers, because he heard there were already a lot of people lined up wanting to buy.
"So it didn't feel right going for it," he said. "I really didn't want to get into a bidding war."
Even the professionals looking for a deal are getting frustrated competing for foreclosures.
Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton, has been scouring the area for a good foreclosure house on behalf of his son and daughter-in-law.
He's looking in the $300,000 to $320,000 price range and offering $350,000 minus $9,000 closing costs, but the competition is so fierce that he's netted nothing with 10 offers, and three more are pending.
"I'm just writing offer after offer for them, and we can't get anything," he said. "There are a lot of people looking to buy in that price range, because those homes sold for up to $700,000 only a few years ago."
Sylvia Wong of Sylvia Wong Realty in Stockton represents several banks selling foreclosure properties in the area.
They usually set the price pretty low to encourage multiple offers, and it works all the time, she said.
Wheeler said he and his wife intend to keep looking for that very nice house at a very nice, reasonable price - an affordable home where they can raise a family.
"We're just going to keep plugging along, try not to get too frustrated and know something's going to shake loose for us," he said.
Contact reporter Bruce Spence at (209) 943-8581 or bspence@recordnet.com.
"Used with permission from The Record, a division of Ottaway Newspapers, Inc."
By Bruce Spence
Record Staff Writer
July 17, 2008 6:00 AM
San Joaquin Home Sales Continue Rising
Sales of existing homes - primarily foreclosures still - continued to climb in June in San Joaquin County for the fifth consecutive month while the median sales price slipped to the lowest level since spring 2002.
A total of 921 single-family homes were sold last month countywide, up from 859 in May, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data.
That is the highest monthly tally of closed escrow sales in the county back through January 2002, the oldest data on record with TrendGraphix.
Year to year, that is more than a threefold increase from 303 closed sales in June 2007. Eight out of 10 sales are foreclosure properties, which have been dominating the housing market since the first of the year.
"This is the sign that we hoped would happen this summer, and we're seeing it happen," said Mike Collins, broker associate of Collins Realty in Stockton.
The median sales price countywide fell from $235,000 in May to $220,000 last month, the lowest monthly sales level since April 2002.
Also, the number of homes on the market fell by nearly 300, meaning that sales continue to outstrip the number of new foreclosures coming into the market while cutting deeply into the number of existing homes on the market.
The 4,551 existing houses on the market last month - down from a high of nearly 6,100 in September - would be sold in three months at the current pending sales pace.
The existing-home sales market had been stagnant for many months, until banks started cutting prices on foreclosure holdings at the end of last year. Sales began jumping in January.
Stockton-area brokers said competition has become increasingly fierce in the past couple of months since banks began listing many foreclosures at below market value, which sets the stage for multiple offers - and, ultimately, higher sales prices.
"Many buyers don't understand multiple offers when we're supposed to be in a bad real estate market," Collins said.
Listing prices can be a little misleading, said Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton.
The banks are oftentimes putting homes on the market below market, he said, and by the time all the multiple offers come in, they are close to market price.
"They really have no emotional attachment to the home and just want it off their inventory list," he said.
Jerry Abbott, president and co-owner of Coldwell Banker Grupe in Stockton, said that because of foreclosures, prices have declined 41 percent in the previous year after a 36 percent drop the 12 months before that, and that's good news for many people who couldn't afford to buy a home before the downturn.
"We needed a correction in the market," he said. "The foreclosures - even as painful as they are - are part of a correction that has to occur."
Collins said the number of listings is dropping not only because foreclosures are selling so strongly but also because many traditional homeowners who would like to sell have either pulled out of this foreclosure-dominated market or aren't bothering to list at all.
Contact reporter Bruce Spence at (209) 943-8581 or bspence@recordnet.com.