Inventory Low: California Pending Sales in Decline

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported last week that contracts
signed for previously owned homes in California took a dip in June. The decline in pending sales can be attributed to a lack of housing inventory. Inventory is low across the board but there is significant decrease in foreclosed home sales.

C.A.R.’s report showed a decline in the number of foreclosed homes selling. Last month, foreclosed homes accounted for 20.2 percent of all pending sales, a decline of 22.6 percent from May and 29.2 percent in June 2011.The share of non-distressed property sales rose to 58 percent in June, up from a revised 56 percent in May. Regular sales made up 50.5 percent of all sales in June 2011.

California Housing Market Improving

California’s housing market continues to show signs of improvement, home sales have experienced solid gains annually and home prices have reached their highest level since August 2010.

June sales rose 8.5 percent from 478,040 in June 2011. Closed escrow sales of existing, single-family detached homes in California declined 8.6 percent from 567,330 in May to a seasonally adjusted annualized rate of 518,460 in June. The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the June pace throughout the year and is adjusted to account for seasonal factors that typically influence home sales.

June’s price rose 1.3 percent from $316,410 in May and 8.1 percent from $296,410 recorded in June 2011. The June 2012 figure was 30.7 percent higher than the cyclical bottom of $245,230 reached in February 2009. The median price has posted above the $300,000 level for the third straight month after remaining below that mark for 15 months.

California’s housing inventory remained flat in June, with the Unsold Inventory Index for existing, single-family detached homes remaining at 3.5 months in June, consistent with the inventory level reported in May. June’s housing inventory was down from 5.1 months in June 2011. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A 7-month supply is considered normal.

California Homeowner Bill of Rights Signed Into Law

California Governor Jerry Brown signed into law the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible to help stabilize California's housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

The law will go into effect January 1, 2013

HARP Effecting Speed of Refinances

More homeowners are taking advantage of low interest rates and the government-sponsored Home Affordable Refinance Program (HARP). HARP was created by the federal government to simplify the refinances of homeowners with mortgages owned or guaranteed by Fannie Mae and Freddie Mac. But tighter lending standards precipitated by the mortgage crisis have made for an arduous application process. This is causing many large financial institutions to face backlogs of mortgage applications.

Speeding Up Refinances:

• HARP borrowers typically refinance with the banks that originally serviced their loans, because those banks already have their information. 
• Non-HARP borrowers might want to consider refinancing with a community bank, especially those that do not service HARP-eligible borrowers and are able to respond more quickly to non-HARP refinance requests.
• Mortgage brokers are reporting an increase in business from those looking to streamline the process. A benefit of working with a mortgage broker is that they typically have direct contact with the banks and can keep track of the application as it goes through many hands at the bank.

Homeowner Bill of Rights

On Wednesday, a “Homeowner Bill of Rights” moved a step closer to passing, with housing advocates claiming the bill would help people stave off foreclosures.

The legislation would ban the practice of dual-tracking, in which a bank continues foreclosure proceedings while a homeowner is seeking a loan modification; require banks to provide a single point of contact – either a person or a team – for struggling borrowers; and give borrowers the right to sue their lenders for “significant, material” violations of the new law.

The bills also require lenders to give a clean explanation when they reject borrowers for a loan modification, to verify mortgage documents before a foreclosure, and to provide copies to borrowers upon request. Lenders can be fined up to $7,500 per loan for filing and recording unverified documents. The bills’ provisions apply to first-lien mortgages for owner-occupants only.