From the California Association of Realtors...
In every county across the sate, the income needed to buy a median-priced home in California has surpassed the median household income, according to the results of a study released earlier this month by the California Budget Project.
According to the report, more than 43 percent of all California households are renters, and nearly a quarter of them are projected to be spending more than half their incomes on rent, eliminating the opportunity to save for a down payment on a home.
"All indications suggest that the situation (for renters) has grown worse over the past three years," the report states. "The number of Californians in need of affordable housing far outstrips the supply of low cost units."
Click here for the full report.
21 February 2008
C.A.R. REPORTS ENTRY-LEVEL HOUSING AFFORDABILITY AT 33 PERCENT
From the California Association of Realtors...
The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago, according C.A.R.'s First-time buyer Housing Affordability Index (FTB-HAI) released Tuesday.
The FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.21 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $2,740 for the fourth quarter of 2007.
Click here for more.
The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago, according C.A.R.'s First-time buyer Housing Affordability Index (FTB-HAI) released Tuesday.
The FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.21 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $2,740 for the fourth quarter of 2007.
Click here for more.
Good Times Bad Times
I know we've had our share over the last few years, but it seems to be an interesting time right now - especially with the media. Lately, I've noticed a bit of confusion as to which way the media wants to spin the current real estate market. There have actually been some positive reports and mention of a "bottoming" market mixed in the with usual doom-and-gloom that they regularly treat us to.
Even California's highest real estate organization, the California Association of Realtors (CAR) can't figure out which way to go as indicated by a recent email I received from them. One headline touted a fourth-quarter affordability rate of 33% in California, which is 9% higher than a year ago and the highest rate I've seen in my 5 years as a Realtor.
CAR then spins around and says that home ownership is out of reach for many Californians. While this is true, the affordability has increased significantly while rents seem to have outpaced income growth - making an even stronger case for buying a home.
I believe we're certainly in a transition period right now with a market that does seem to be bottoming out and headed back toward some slow growth for while. As many experts said a while back, this downturn was a necessary correction for a market that was spinning out of control and making it much more difficult for the average Californian to join the ranks of homeowners.
The two articles I mentioned will be posted below (or above) this one...
Even California's highest real estate organization, the California Association of Realtors (CAR) can't figure out which way to go as indicated by a recent email I received from them. One headline touted a fourth-quarter affordability rate of 33% in California, which is 9% higher than a year ago and the highest rate I've seen in my 5 years as a Realtor.
CAR then spins around and says that home ownership is out of reach for many Californians. While this is true, the affordability has increased significantly while rents seem to have outpaced income growth - making an even stronger case for buying a home.
I believe we're certainly in a transition period right now with a market that does seem to be bottoming out and headed back toward some slow growth for while. As many experts said a while back, this downturn was a necessary correction for a market that was spinning out of control and making it much more difficult for the average Californian to join the ranks of homeowners.
The two articles I mentioned will be posted below (or above) this one...
04 February 2008
Pinpoint the right type of loan for you
By Charles Scutt Content That Works Features
Article Launched: 02/01/2008 10:02:51 AM PST
Mercurynews.com
Thinking about buying a new home but suffering from pre-borrowing anxiety? Despite the subprime mortgage meltdown, tighter lending restrictions and widening foreclosure fears, the American dream of home ownership still is attainable so long as you know what to expect in the current mortgage loan climate.
The good news, according to Michael LaCour-Little, a finance professor at California State University-Fullerton, is that most borrowers those with good credit and some down payment or significant housing equity should not have difficulty obtaining financing today. It s the no-money-down loans to borrowers with weak credit that will be very hard to come by.
Elisa Mullins, a broker and owner of Assist-2-Sell Premier Realty in St. Louis, Mo., says that the average borrower can weather the current financing storm, especially if she or he has good credit, which typically equates to a credit score of 680 or higher.
They have the opportunity to be in the driver s seat and take a proactive approach toward their future to include buying into the American dream, Mullins says. The credit-worthiness of the borrower will secure favorable financing in today's market. That will open the buyer to a lot of different mortgage products that are not available to credit-risky borrowers.
Nevertheless, today s borrowers will have to prove that they can repay a loan without any problems, says Gavin Susman, COO of Sky Development, Inc. in Florida. They will have to abide by Fannie Mae's guidelines for debt-to-income ratios utilizing documented income. Gone are the days where you could get away with providing a letter from your employer stating how much you make.
Instead, you'll need to provide pay stubs with W-2 forms or tax returns, Susman says. If your income is not documented and you have bad credit, you will not be able to secure any mortgage unless you are financing no more than 70 percent of the value of the property, he says. Even then, you may have a hard time getting the loan.
Additionally, you can anticipate having to pay higher interest rates nowadays if you seek a non-conforming loan one exceeding $417,000 says LaCour-Little.
What s more, says Mullins, you should expect to have around 5 to 10 percent of the purchase price saved. If you cannot get the seller to credit the pre-paids and closing costs, then you will need to have an adequate down payment, the amount of which is contingent on your creditworthiness.
With lenders adding more restrictions, be prepared to pay more in borrowing fees as well, says Mullins. With fewer lenders out there today than in years past, it makes it more competitive among lenders. The fees will go up naturally as a result.
On a side note, while there may be fewer lenders, greater loan availability may be on the horizon, says LaCour-Little, thanks to the recent Federal Reserve cut in interest rates. However, even though the rate cut is likely to produce greater liquidity in the mortgage market, the rate cut itself is not likely to reduce most mortgage rates, since they tend to be tied to longer-term rates rather than the federal funds rate that the Federal Reserve controls, he says.
When mulling over your mortgage-loan options, it s important to scrutinize several key criteria, says Scott Christiansen, a senior mortgage professional with WestCal Mortgage Corp. in Southern California.
Consider your income today vs. income in the future, he says. Look at potential tax breaks, and spread out your investments the amount of money you put into your home vs. other investment vehicles. Work with a mortgage professional who comes recommended and whom you trust. Lastly, do your homework and take action. Times change, and so do financing programs, so what is available this week may not be next week.
Doing your homework inevitably involves checking your credit score and analyzing your credit report carefully, says LaCour-Little. If you do identify any problems, try to resolve them before applying for a loan.
Though they ve gotten a lot of bad press lately, don't be too quick to dismiss adjustable-rate mortgage options, says Christiansen.
ARMs are still a great option for the informed borrower, he says. ARMs are designed to fit a borrower s time line and payment range. If you're going to live in a home for three to five years, look at a five- to seven-year ARM. If you plan on living in a home for 20 years, and you elect to go with a five- or seven-year ARM, then you run the risk of the rate being higher at the adjustment period. Many lenders and borrowers went about the last few years as if the housing market could do nothing but grow. There are always adjustments, corrections and changes, and all should be considered when selecting the best mortgage-financing solution.
If you get turned down by a lender, don't despair, says Mullins.
This is a sign of the times - a good sign, she says. Lenders are finally putting in some safeguards to help buyers recognize when they should not be buying. Get the tools you need to clean up your credit and other personal situations before you decide to take on any debt you can t afford.
LaCour-Little says that approximately 20 to 30 percent of mortgage-loan applications are declined each year. It s not the end of the world, he says. Different lenders have different underwriting guidelines, so you may simply need to apply to another lender.
Ultimately, remember that banks make money lending money, says Christiansen. The days of a real estate investor coming in without a job, with terrible credit and almost no money in the bank and buying homes and apartments may very well be over. But smart money is still available to smart borrowers.
Article Launched: 02/01/2008 10:02:51 AM PST
Mercurynews.com
Thinking about buying a new home but suffering from pre-borrowing anxiety? Despite the subprime mortgage meltdown, tighter lending restrictions and widening foreclosure fears, the American dream of home ownership still is attainable so long as you know what to expect in the current mortgage loan climate.
The good news, according to Michael LaCour-Little, a finance professor at California State University-Fullerton, is that most borrowers those with good credit and some down payment or significant housing equity should not have difficulty obtaining financing today. It s the no-money-down loans to borrowers with weak credit that will be very hard to come by.
Elisa Mullins, a broker and owner of Assist-2-Sell Premier Realty in St. Louis, Mo., says that the average borrower can weather the current financing storm, especially if she or he has good credit, which typically equates to a credit score of 680 or higher.
They have the opportunity to be in the driver s seat and take a proactive approach toward their future to include buying into the American dream, Mullins says. The credit-worthiness of the borrower will secure favorable financing in today's market. That will open the buyer to a lot of different mortgage products that are not available to credit-risky borrowers.
Nevertheless, today s borrowers will have to prove that they can repay a loan without any problems, says Gavin Susman, COO of Sky Development, Inc. in Florida. They will have to abide by Fannie Mae's guidelines for debt-to-income ratios utilizing documented income. Gone are the days where you could get away with providing a letter from your employer stating how much you make.
Instead, you'll need to provide pay stubs with W-2 forms or tax returns, Susman says. If your income is not documented and you have bad credit, you will not be able to secure any mortgage unless you are financing no more than 70 percent of the value of the property, he says. Even then, you may have a hard time getting the loan.
Additionally, you can anticipate having to pay higher interest rates nowadays if you seek a non-conforming loan one exceeding $417,000 says LaCour-Little.
What s more, says Mullins, you should expect to have around 5 to 10 percent of the purchase price saved. If you cannot get the seller to credit the pre-paids and closing costs, then you will need to have an adequate down payment, the amount of which is contingent on your creditworthiness.
With lenders adding more restrictions, be prepared to pay more in borrowing fees as well, says Mullins. With fewer lenders out there today than in years past, it makes it more competitive among lenders. The fees will go up naturally as a result.
On a side note, while there may be fewer lenders, greater loan availability may be on the horizon, says LaCour-Little, thanks to the recent Federal Reserve cut in interest rates. However, even though the rate cut is likely to produce greater liquidity in the mortgage market, the rate cut itself is not likely to reduce most mortgage rates, since they tend to be tied to longer-term rates rather than the federal funds rate that the Federal Reserve controls, he says.
When mulling over your mortgage-loan options, it s important to scrutinize several key criteria, says Scott Christiansen, a senior mortgage professional with WestCal Mortgage Corp. in Southern California.
Consider your income today vs. income in the future, he says. Look at potential tax breaks, and spread out your investments the amount of money you put into your home vs. other investment vehicles. Work with a mortgage professional who comes recommended and whom you trust. Lastly, do your homework and take action. Times change, and so do financing programs, so what is available this week may not be next week.
Doing your homework inevitably involves checking your credit score and analyzing your credit report carefully, says LaCour-Little. If you do identify any problems, try to resolve them before applying for a loan.
Though they ve gotten a lot of bad press lately, don't be too quick to dismiss adjustable-rate mortgage options, says Christiansen.
ARMs are still a great option for the informed borrower, he says. ARMs are designed to fit a borrower s time line and payment range. If you're going to live in a home for three to five years, look at a five- to seven-year ARM. If you plan on living in a home for 20 years, and you elect to go with a five- or seven-year ARM, then you run the risk of the rate being higher at the adjustment period. Many lenders and borrowers went about the last few years as if the housing market could do nothing but grow. There are always adjustments, corrections and changes, and all should be considered when selecting the best mortgage-financing solution.
If you get turned down by a lender, don't despair, says Mullins.
This is a sign of the times - a good sign, she says. Lenders are finally putting in some safeguards to help buyers recognize when they should not be buying. Get the tools you need to clean up your credit and other personal situations before you decide to take on any debt you can t afford.
LaCour-Little says that approximately 20 to 30 percent of mortgage-loan applications are declined each year. It s not the end of the world, he says. Different lenders have different underwriting guidelines, so you may simply need to apply to another lender.
Ultimately, remember that banks make money lending money, says Christiansen. The days of a real estate investor coming in without a job, with terrible credit and almost no money in the bank and buying homes and apartments may very well be over. But smart money is still available to smart borrowers.
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