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Housing Crisis to End in 2012 as Banks Loosen Credit Standards

by Ashlie DuCros

By: Krista Franks

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

For more information visit: www.Ashlieducros.com 714-743-9778 ADucroshomes@gmail.com

 

Home Sales on the Rise: Ready for Spring Buying Season?

by Ashlie DuCros

Daily Real Estate News | Thursday, February 23, 2012

Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports. 

 “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.

 While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.  

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

 Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.

 

 Housing Affordability Improves

 As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.

 “Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”

 The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.

 Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.

 Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said.  “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”

 

Breakdown by Housing Type

 Here’s a closer look at how home sales fared by housing type in January:

 Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.

 Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.

 

Home Sales by Region

 The following is a breakdown of existing-home sales in January by region:

 •Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.

•Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.

•South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.

•West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.

 

Contract Delays, Cancellations Remain High

 Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.

 The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.

Housing Affordability Reaches New Records

by Ashlie DuCros

Daily Real Estate News | Friday, February 17, 2012

All the signs are pointing this way... Find out why now is the right time to buy a home!!

Housing affordability rose to a record high during the fourth quarter of 2011, which means a home buyer’s purchasing power is greater than it ever has been before, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

 The index showed that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, according to the index. That marks the highest percentage recorded in the index’s 20-year history.

 "While today's report indicates that home ownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels," says Barry Rutenberg, chairman of the National Association of Home Builders.

 Most Affordable Cities

 According to the index, the most affordable major housing market was Youngstown-Warren-Boardman, Ohio, in which 95 percent of all homes sold during the fourth quarter were affordable to households earning the median family income of $54,900, according to the index.

 Other top affordable housing markets include:  Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.

 Least Affordable Cities

 However, some metro areas still remain too pricey for buyers. The least affordable major housing market during the fourth quarter was New York-White Plains-Wayne, N.Y.-N.J., in which 29 percent of all homes sold were affordable to those earning the area's media income of $67,400.

 Other high-priced metro areas at the bottom of the affordability index include: Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.

 

Source: National Association of Home Builders

 

Feb. 2012 Orange County Stats:

Check out the stats for Active homes vs. homes in escrow. 

# Of Homes For Sale vs. Homes In Escrow

City:

For Sale:

 In Escrow:

Yorba Linda

221

63

Brea

63

62

Fullerton

269

251

Anaheim Hills

137

112

Newport Coast

110

34

Orange

293

256

Irvine

570

397

Laguna Beach

North Tustin

Anaheim

237

63

455

56

26

410

 

For questions please contact me at 714-743-9778 or log on to www.ashlieducros.com

 

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Ashlie DuCros & Associates
Coldwell Banker Previews Global Luxury
21580 Yorba Linda Blvd.
Yorba Linda CA 92887
714-743-9778
Fax: 714-849-5489