Delinquency rate on downward course

The delinquency rate, which includes loans 30 days or more past due, slipped to 6.41 percent in July after increasing to 6.7 percent in June. The decrease represents a monthly and yearly decline of 3.96 percent and 8.76 percent, respectively.

Foreclosure inventory also fell in July, dropping to 2.82 percent, down from 3.46 percent in June. Compared to a year ago, the decrease is much steeper, at 30.76 percent.

According to LPS, the foreclosure inventory rate is at the lowest level since February 2009.

Real Estate - Talking Points

• Home prices continued to post strong annual gains, and home sales recorded the first annual increase in six months, according to the CALIFORNIAASSOCIATION OF REALTORS® (C.A.R.). Closed escrow sales of existing, single-family detached homes in Californiatotaled a seasonally adjusted annualized rate of 443,520 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associationsand MLSs statewide.

• C.A.R. reports that sales in July were up 7 percent from a revised 414,670 in June and up 1.5 percent from a revised 436,870 in July 2012.  The year-to-year sales increase was the first since December 2012, following six consecutive months of declines.

• C.A.R.’s July 2013 resale housing report also notes that the available supply of existing, single-family detached homes for sale held steady in July at 2.9 months, unchanged from June’s Unsold Inventory Index. The index was 3.5 months in July 2012.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.

MLSListings Market Indicators Report: Dec. 2012

Fast Facts

Calif. median home price: November 2012: $349,300 (Source: C.A.R.)
Calif. highest median home price by region/county November 2012: Marin, $837,840 (Source: C.A.R.)
Calif. lowest median home price by region/county November 2012: Madera, $113,330 (Source: C.A.R.) 

Calif. Pending Home Sales Index: November 2012: 103.5 , down 14.4 percent from October's 121. 
 
Calif. Traditional Housing Affordability Index: Third quarter 2012: 49 percent (Source: C.A.R.)

Mortgage rates: Week ending 1/3/2013 30-yr. fixed: 3.34% fees/points: 0.7% 15-yr. fixed: 2.64 fees/points: 0.6% 1-yr. adjustable: 2.57% Fees/points: 0.4% (Source: Freddie Mac) 

American Taxpayers Relief Act signed into law

Last week, Congress reached an agreement in the “fiscal cliff” negotiations, and President Obama signed the American Taxpayers Relief Act into law last Wednesday.

C.A.R. would like to recognize and thank the tens of thousands of C.A.R. members who worked to successfully maintain the mortgage interest deduction by responding to the Call for Actions and open letter advertisements in the state’s major newspapers.

Here are some housing-related provisions included in the federal law:

• Mortgage Forgiveness Debt Relief Act extended for one year
• The “Pease Limitations” that reduced the value of itemized deductions, including the mortgage interest deduction, are permanently repealed for most taxpayers but will be reinstituted for high income filers.  This provision reduces a taxpayer's itemized deductions by 3 percent of the amount of his or her adjusted gross income (AGI) that exceeds the threshold amount.  Under the new law, the Pease thresholds are $300,000 for married taxpayers filing jointly and $250,000 for single taxpayers (i.e., a married couple with an AGI of $400,000 would be $100,000 over the threshold; the couple’s deductions would be reduced by $3,000 which is 3% of $100,000).  No matter how high a taxpayer's AGI, the Pease reduction cannot exceed 20 percent of the amount of itemized deductions otherwise allowable for the year. 
• The restoration of a tax deduction for mortgage-insurance premiums, including premiums paid to the Federal Housing Administration and private mortgage insurers.  This provision expired at the end of 2011 but has now been retroactively extended for all of 2012 as well as 2013.
• 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
• Capital gains rates will remain at 15 percent for those earning less than $400,000 (individual) and $450,000 (joint).   Gains above those income levels will be taxed at 20 percent.  Gains on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 taxpayers filing jointly.  

Home prices nationwide rise for eighth consecutive month

CoreLogic’s October CoreLogic HPI report shows home prices nationwide, including distressed sales, increased on a year-over-year basis by 6.3 percent in October 2012 compared with October 2011, representing the biggest increase since June 2006 and the eighth consecutive increase in home prices nationally on a year-over-year basis.

On a month-over-month basis, including distressed sales, home prices decreased by 0.2 percent in October 2012 compared with September 2012. Decreases in month-over-month home prices are expected as the housing market enters the offseason. The HPI analysis from CoreLogic shows that all but five states are experiencing year-over-year price gains.

Highlights as of October 2012:

• Including distressed sales, the five states with the highest home price appreciation were: Arizona, 21.3 percent; Hawaii, 13.2 percent; Idaho, 12.4 percent; Nevada, 12.4 percent; and North Dakota, 10.4 percent.
• Including distressed sales, the five states with the greatest home price depreciation were: Illinois, -2.7 percent; Delaware, -2.7 percent; Rhode Island, -0.6 percent; New Jersey, 0.6 percent; and Alabama, -0.3 percent.
• The five states with the largest peak-to-current declines, including distressed transactions, were Nevada, -53.5 percent; Florida, -44.5 percent; Arizona, -40.2 percent; California, -36.6 percent; and Michigan, -35.3 percent.

Freddie Mac releases December outlook

Freddie Mac recently released its U.S. Economic and Housing Market Outlook for December showing what some of the market features are expected to look like in 2013.

According to the outlook, long-term mortgage rates will remain near their record lows for the first half of 2013, then rise gradually during the second half of the year, but remain below 4 percent.

Property values are expected to continue to strengthen with most U.S. house price indexes likely rising by 2 to 3 percent in 2013.

Household formation should step up further to a net 1.20 to 1.25 million household increase in 2013 with housing starts up around the 1 million annualized pace by the fourth quarter.

Vacancy rates for both apartments and the single-family for-sale market could bring aggregate vacancy rates down to 2002-2003 levels as household formation outpaces new construction.

While the refinance boom will continue into early 2013, it will be less compared with 2012, so single-family mortgage originations are likely to decline by 15 percent conversely, expect multifamily lending to rise approximately 5 percent.