U.S. households slowly regaining wealth

Americans' net worth rose 1.3% in the fourth quarter to $54.2 trillion, the Federal Reserve says. It marked the third straight quarter of gains.

Washington

Americans are recovering their shrunken wealth -- gradually.

Household net worth rose last quarter, mainly because the healing economy boosted stock portfolios. But the gain was slight. And it was less than in the previous two quarters.

The Federal Reserve said Thursday that net worth rose 1.3% in the fourth quarter to $54.2 trillion. It marked the third straight quarter of gains. Net worth had risen 4.5% in the second quarter of 2009 and 5.5% in the third quarter.

Net worth is the value of assets such as homes, checking accounts and investments minus debts such as mortgages and credit cards.

Even with the gain, Americans' net worth would have to rise an additional 21% just to get back to the pre-recession peak of $65.9 trillion. That illustrates Americans' vast loss of wealth from the worst economic downturn since the 1930s.

Growth in stock portfolios delivered the biggest boost to net worth in the October-to-December period. The value of stocks increased nearly 4% to $7.7 trillion. Higher home prices helped slightly. The value of real estate holdings edged up 0.2%.

During the recession, which began in December 2007, household net worth plunged as low as $48.5 trillion in the first quarter of 2009. Stock holdings and home values nose dived, and as Americans' net worth evaporated, they felt less inclined to spend.

For all of last year, consumer spending dropped 0.6%. This year, as wealth, the economy and financial conditions slowly recover, consumer spending is projected to grow around a modest 2.2%, according to the National Assn. for Business Economics.

The Los Angeles Times

Here are the Stats for the month of January 2010!

 ACTIVE homes on the Market VS. Homes in ESCROW

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O.C. short sales gain traction

(Update: Short sale listings also on the rise.)

Some Realtors say the sale of a home for less than the owner owes on it has gotten smoother, while others say those underwater sales are as difficult as ever.

Whatever the case, Orange County’s year-long uptick in “short sales” increased another notch last month, rising to 21.3% of all existing home sales, according to figures from the Southern California Multiple Listing Service.

That’s up from 19.4% in September and the highest percentage this year.

Short sales also outpaced the sale of repossessed homes, or REO’s, for a second straight month, even though REO sales increased slightly, too.

Details from the latest SoCal MLS report include:

• Orange County home sellers completed 530 short sales in October, 80% more than took place at the start of the year.
• Short sales on average accounted for 18.6% of O.C. homes sold through the MLS during the first nine months of the year, falling as low as 16.7% in March.
• Repossessed homes resold by lenders accounted for 17.8% of sales in October, down from 44% at the start of the year.
• All distressed sales combined jumped to just over 1,000 in October.
• But distressed sales accounted for just 40.7% of all existing home sales last month, vs. 64.8% at the start of the year.

Posted in: Selling patterns • numbers • SoCal MLS posted by Jeff Collins

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FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

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