Home Price Declines Continue as the S&P/Case Shiller Home Prices Indices Set New Record Annual Declines

New York, January 27, 2009 – Data through November 2008, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 11 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus November 2007.

Following the lead of the 11 metro areas, the 10-City Composite matched last month’s record decline of 19.1% and the 20-City Composites set a new record, down 18,2%.

“The freefall in residential real estate continued through November 2008,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Since August 2006, the 10-City and 20-City Composites have declined every month – a total of 28 consecutive months. Every region was down in excess of 1% for the November/October period, with eight of the regions recording record monthly declines. Phoenix and Las Vegas were the worst performers for the month at -3.4% and -3.3%, respectively, and also have the lowest returns over the one-year period, returning -32.9% and -31.6% respectively. Overall, more than half of the metro areas had record annual declines.

As of November 2008, average home prices are at similar levels to what they were in the first quarter of 2004. From their peak in mid-2006, the 10-City Composite is down 26.6% and the 20-City Composite is down 25.1%.

Monthly data also continues to show a housing market in decline. All 20 metro areas, and the two composites, posted their third consecutive monthly decline. In addition, eight of the MSAs posted their largest monthly decline on record – Atlanta, Boston, Charlotte, Chicago, Dallas, New York, Portland and Seattle. Although in decline over the past few years, some these regions have out-performed on a relative basis, when compared to the national average. It is clear, however, that the declines in home prices is affecting all regions regardless of geography or employment opportunities.

Dallas and Denver faired the best in November, in terms of relative year-over-year returns. While in negative territory, their declines remained in low single digits of -3.3% and -4.3%, respectively. It should be noted, Charlotte reported its third consecutive largest monthly decline on record, down -1.9%. Denver and Cleveland were the best reporting markets for the month returning -1.1% and -1.2%, respectively. On a relatively positive note, eight of the 20 metro areas recorded better annual returns compared to last month.

LOCALLY

The Standard & Poors/Case-Shiller Home Prices Indices 10 City Composite and 20 City Composite privides us with a national perspective. For the South Coast County of Santa Barbara (Carpinteria thru Goleta) the trend is the same but the numbers are different.

If we compare the local median sales prices for the years of: 2005 of $1,250,000; 2006 $1,190,000; 2007 of $1,231,750 and then take an average of those three years it is $1,223,917. Comparing this figure with the year ending median sales price for 2008 of $1,035,000 we note a drop of -15% in median sales price

This is approximately within 1% of the local median sales price for the year 2004 of $1,005,000. This same year was also interestingly mentioned by Case-Shiller in their national comparison for current levels in median sales price.

When the final numbers trickle in we may see the year 2004 used as a comparative benchmark for the median sales price in 2008, perhaps nationally and locally.

2008 FORECLOSURE ACTIVITY UP 81 PECENT

A total of 3,157,806 foreclosure filings, including default notices, auction sale notices and bank repossessions, were reported on 2,330,483 U.S. properties during the year, an 81% increase in total properties from 2007 and a 225% increase in total properties from 2006, according to RealtyTrac ®’s 2008 U.S. Foreclosure Market Report ™. According to the report, 1.84% of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03% in 2007.

Foreclosure filings were reported on 303,410 U.S. properties in December, up 17% from the previous month and up nearly 41% from December 2007, according to the report. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4% from previous quarter but still up nearly 40% from the fourth quarter of 2007.

More than 7% of Nevada housing units (one in 14) received at least one foreclosure notice in 2008, giving it the nation’s highest state foreclosure rate for the year, the report said. Florida registered the nation’s second highest state foreclosure rate in 2008, with 4.52% of its housing units (one in 22) receiving at least one foreclosure filing during the year. Arizona registered the nation’s third highest state foreclosure rate, with 4.49% of its housing units (one in 22) receiving at least one foreclosure filing during the year. Other states with Top 10 foreclosure rates for 2008 were California, Colorado, Michigan, Ohio, Georgia, Illinois, and New Jersey, according to the report.

A total of 523,624 California properties received a foreclosure filing in 2008, the nation’s highest state total. Foreclosure activity in the state increased nearly 110% from 2007 and nearly 498% from 2006. Florida had the second highest state total, followed by Arizona.

With 9.46% of its housing units (one in 11) receiving foreclosure filing during the year, Stockton, Calif., registered the highest foreclosure rate among the nation’s 100 largest metropolitan areas in 2008, according to the report. Other California cities in the top 10 were Riverside-San Bernadino at No. 3 (8.02%, or one in 12 housing units); Bakersfield at No. 4 (6.17% or one in 16 housing units); and Sacramento at No. 9 (5,2% or on in 19 housing units), the report said.

More info: http://www.realtytrac.com/ContentManagement/pressrelease.aspx?

Will Loan Limits Rise?

Congressional leaders from both parties have been lobbying President-Elect Obama to increase the limits of conforming loans – mortgage eligibility to be purchased by Government Sponsored Enterprises (GSEs), like Fannie Mae and Freddie Mac – in high cost areas from $625,000 to $729,750 as part of an economic stimulus package. Qualified borrowers with conforming loans receive the best interest rates, because many in the financial industry believe conforming loans carry less risk.

Last year, as part of the federal government’s economic stimulus package, the conforming loan limit was temporarily increased to $729,750 in high cost areas. Beginning Jan. 1, 2009, the conforming loan limit was lowered to its original level of $625,500 for high cost areas.

In California, the new conforming loan limits for metropolitan areas range from $474,950 in the Sacramento-Arden-Arcade-Roseville metropolitan area, covering El Dorado, Placer, Sacramento, and Yolo counties to $625,500 in the Los Angeles-Long Beach-Santa Ana metropolitan area.

The purchase of homes in expensive areas of the nation like Santa Barbara is facilitated by reasonable interest rates. By increasing the loan limit for "Confirming Loans" to a higher figure it reduces the interest rate on larger amounts and greately facilitates the purchase of homes by buyers.

Source: NY Times

Mortgage Rate Relief Might Not Last Long

The Federal Reserve’s announcement that it’s purchasing up to $500 billion of securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae, has contributed to a reduction in mortgage rates to record lows. However, some mortgage experts warn that the low rates may not last long and could actually rise as early as this summer.

According to Celia Chen, senior director of housing economics at Moody’s Economy.com, in the second half of this year, the Federal Reserve’s program will have run its course and other issues will move to the forefront, which could push mortgage rates higher.

http:www.reuters.com/article/ousiv/idUSTRE5077SJ20090108

1043 Portesuello Ave, Bel Air Knolls - SOLD!

Inviting & Distinguished Bel Air Knolls Home


This home features 4 bedrooms and 2 bathrooms and is located in a natural setting. The floor plan is very spacious, light and open. The kitchen has a resurfaced butcher block island counter, pull out pantry shelves and lazy susan shelves in one corner. The dining room has oak hardwood floors. The master bedroom has crown molding and French doors that lead to your spa. Outside there is a walkway up to a deck that has captivating views of the city and mountains. This home is located in Bel Air Knolls which is an upscale neighborhood close to shopping and leisure pursuits. Click here to see more pictures as well as other featured properties.


Priced at $1,029,000

C.A.R. Statistics for November

-Calif. median home price - November 08: $285,680(Source: C.A.R.)

-Calif. highest median home price by C.A.R. region November 08: Santa Barbara So. Coast $1,200,000 (Source: C.A.R.)

-Calif. lowest median home price by C.A.R. region November 08: High Desert $148,580 (Source: C.A.R.)

-Calif. First-time Buyer Affordability Index - Third Quarter 08: 53 percent(Source: C.A.R.)

-Mortgage rates - week ending 12/31/08 30-yr. fixed: 5.10% Fees/points: 0.7%15-yr. fixed: 4.83% Fees/points: 0.7%1-yr. adjustable: 4.85% Fees/points: 0.5%(Source: Freddie Mac)

The drop in median home prices in California for 2008 approaches 36% according to the California Association of Realtors (C.A.R.). C.A.R. is estimating a 6% drop in prices for 2009. South Coast County of Santa Barbara is approaching a 15% drop in the median sales price for 2008. It will probably be mid to low single digit depreciation for our area. Based on current interest rates, buyers need make their move. A one percent drop in interest rates approximates a 10% increase in purchase price added to the 15% depreciation.