The Desert Sun

New figures show 38 percent of households in the Coachella Valley can afford an entry-level home here.

That indicates more people could afford homes in the fourth quarter of 2007 than at the end of 2006 - when affordability registered at 33 percent.

The analysis, released Tuesday, also shows the desert area is more affordable than California overall, where the housing affordability index is up to 33 percent.

The First Time Buyer Housing Affordability Index analysis is considered the "fundamental measure of housing well-being for first-time buyers in the state," according to the California Association of Realtors.

In the Coachella Valley, a person would have to make a minimum of $57,300 to qualify for a $285,970 entry-level home.

Assuming the buyer puts 10 percent down and has an adjustable interest rate of 6.21 percent, officials say that translates into $1,910 monthly payments, including taxes and insurance.
That's mathematically speaking. Real life doesn't always add up that way.

"Everybody has their own story to tell and everybody who makes $57,300 a year doesn't necessarily fit into that program," said Kurt Handshuh of California Home Loan in Palm Desert.

"If they have a car payment, or child-support issues, or a credit card payment every month, that drives the price of a house (one can afford) down."

The affordability index measures how many people in a geographic area can afford an entry-level home - or 85 percent of the median - in that same area.

At the height of the market, affordability in the desert was 11 percent to 13 percent.

Affordability calculations are based on income, not wealth. That's why the "Palm Springs/ lower desert" region has sometimes had affordability rates that were lower than the state as a whole despite lower prices here.

The Coachella Valley relies on the tourism and hospitality industry, and resort jobs don't always pay enough for employees to afford a house, says Greg Berkemer, executive vice president of the California Desert Association of Realtors.

"You're finding the jobs in the desert won't allow you to buy in the desert," Berkemer said.
Homes are available in that range: nearly 24 percent of properties on the Desert Area Multiple Listing Service on Tuesday fell below the $285,970 price tag.

Entry-level homes in the Coachella Valley are generally considered anything priced under $500,000. Average prices in that market dipped almost 4 percent in 2007 and sales of those homes were down 24 percent from 2006.

They still made up 68 percent of the desert's sales in 2007.

Experts agree that home prices will need to fall more if the large inventory is going to get sold.
Factors other than price also go into home-buying decisions.

First-time homebuyer deals can help people afford a home, but those incentives aren't always available anymore.

The city of Coachella in September ran out of funds for its first-time homebuyer program. Officials are reworking the program and hope to have it up again in March.

That program funded more than 200 loans in four years.

"We know there's a need out here," said Joann Lopez, the city's community services coordinator.
Adding to the complexities are all the problems on the lending side, including the end of exotic mortgages that got many people who might not have otherwise qualified into homes just a few years ago.

"Not everyone at $57,300 can make that work," Handshuh said of affording an entry-level home.

"Not everyone is going to qualify."

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Riverside is among the metro regions to see the largest drops in median prices.

The Associated Press

WASHINGTON - Sales of existing homes fell in 45 states during the October-December quarter, with metropolitan areas showing growing weakness, a real estate trade group said Thursday.

The fourth-quarter data from the National Association of Realtors underscore the breadth of the housing market's slump.

South Dakota was the lone state to show a sales increase. Existing home sales there rose 8.9 percent from the same quarter a year ago. Sales were unchanged in North Dakota. No sales figures were available for Idaho, Indiana and New Hampshire. Sales also fell in Washington, D.C.

Median home prices fell in more than half of the 150 metropolitan areas surveyed. Out of the 77 that experienced declines, 16 showed double-digit percentage drops, the trade group said. The largest price declines were found in Riverside; Lansing, Mich.; Sacramento; and Jackson, Miss., which posted price declines of 17 to 19 percent.

Lawrence Yun, the trade group's chief economist, attributed the declines in median prices to mortgage market problems that mushroomed last fall, making loans more expensive for borrowers seeking mortgages larger than $417,000, the maximum size of mortgages that government-sponsored mortgage companies Fannie Mae and Freddie Mac can purchase and market as securities

"The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," Yun said.

Nationwide, existing homes sold at an annual rate of 4.96 million units in the fourth quarter, down 21 percent from the sales pace of the fourth quarter in 2006, the Realtors group said.

The states suffering the biggest drop in sales in the fourth quarter were Nevada, down 44 percent and Wyoming, down 42 percent. Other states with big declines were New Mexico, down 39 percent, Oregon, down 38 percent and Arizona, down 37.6 percent.

Mortgage lenders, would-be homebuyers and Wall Street investors have been grappling over the past year with the impact of rising defaults, the result of lax lending standards that were prevalent during the housing boom. As defaults have risen, lenders have grown more cautious, which has allowed fewer buyers to qualify for home loans.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Zillow.com

Despite plenty of evidence to the contrary, 77 percent of homeowners believe that their homes are worth as much or more as they were in 2006, according to a Harris Interactive survey conducted for Zillow.com.

And 36 percent say their homes increased in value in 2007.

The slow market also isn’t discouraging homeowners from major transactions. Despite what they read and hear about the real estate market, 34 percent say they are equally or more likely to consider selling their homes this year, and 35 percent are just as likely as before to take out a home equity loan. 36 percent would consider a second mortgage.

Homeowners continue to forge ahead on projects that they believe improve the value of their homes.

In 2008:

• 82 percent will spend the same or more on minor home improvements (install new garbage disposal, repaint or wallpaper a room).
• 67 percent say they will spend the same or more on major home improvements (replace the roof, remodel the kitchen).

Are people just in denial? Not really, says Stan Humphries, Zillow.com vice president of data and analytics. "This likely reflects the fact that most Americans have not realized home-related losses because they're staying in their homes,”

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Daily Real Estate News

A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the National Association of Realtors.

Lawrence Yun, NAR chief economist, said sales activity is expected to remain soft through the first half of the year despite a generational low in mortgage interest rates.

“Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines,” he said. “Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas – that, in turn, would help to stimulate overall economic activity.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, slipped 1.5 percent to a reading of 85.9 from a downwardly revised index of 87.2 in November, and was 24.2 percent below the December 2006 level of 113.3.

“We’re seeing a pattern that is consistent with skimming along the bottom of the cycle, and sales could ease modestly,” Yun said.

The PHSI in the Midwest rose 3.4 percent in December to 84.9 but is 17.3 percent below a year ago. In the Northeast, the index slipped 1.7 percent to 68.9 and is 26.0 percent lower than December 2006. The index in the South fell 3.0 percent in December to 96.4 and is 27.0 percent below a year ago. In the West, the index declined 3.1 percent in December to 83.9 and is 24.1 percent below December 2006.

Existing-home sales are projected at an annual pace of around 4.9 million in the first half of this year, rising notably to 5.8 million in the second half, and totaling 5.60 million for all of 2009. The aggregate existing-home price should decline 1.2 percent in 2008 to a median of $216,300, and then rise 3.2 percent to $223,200 in 2009.

“Areas with a high prevalence of subprime lending will continue to feel downward price pressure. Where builders have cut construction sharply, and in most areas with improving affordability conditions, we’ll generally see moderately higher home prices,” Yun said.

Current housing conditions vary widely. Preliminary data shows rising home prices in areas such as Rochester, N.Y.; Charleston, W.V.; Waterloo-Cedar Falls, Iowa; and Albuquerque, N.M. Fourth quarter metro area median existing-home prices, showing changes in approximately 150 markets, will be released February 14.

New-home sales are likely to decline 17.7 percent to 637,000 in 2008 before rising 7.6 percent to 685,000 in 2009.

“Builders will further lower new home construction throughout this year and into 2009 to bring inventory under control,” Yun said.

Housing starts, including multifamily units, are estimated to fall 20.1 percent to 1.08 million this year, and decline another 1.3 percent to 1.07 million in 2009. The median new-home price is expected to fall 4.3 percent to $236,300 in 2008, and then increase 5.0 percent in 2009.

The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9 percent range in the fourth quarter, and then average 6.3 percent in 2009.

“Affordability conditions are anticipated to rise 14.2 percent this year, permitting more people to become homeowners, but buyers should avoid aggressive lenders and not over-stretch to enter the market,” Yun said. NAR’s housing affordability index is expected to rise from 113.0 in 2007 to 129.0 in 2008.

Growth in the U.S. gross domestic product (GDP) is projected at 2.2 percent in 2008 and 2.7 percent in 2009. The unemployment rate should rise to 5.4 percent in the second half of 2008 before averaging 5.2 percent in 2009. Inflation, as measured by the Consumer Price Index, is seen at 2.7 percent this year and 1.4 percent in 2009. Inflation-adjusted disposable personal income is likely to grow 1.7 percent in 2008 and 3.5 percent next year.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula