No Big Changes in Mortgage Rates Tracked By Freddie Mac

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®). While the 30-year fixed-rate mortgage rate rose, the 15-year fixed-rate dipped slightly; shorter-term rates fell.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.37 percent with an average 0.7 point for the week ending September 16, 2010, up from last week when it averaged 4.35 percent. Last year at this time, the 30-year FRM averaged 5.04 percent.

15-year FRM this week averaged a record low of 3.82 percent with an average 0.6 point, down slightly from last week when it averaged 3.83 percent. A year ago at this time, the 15-year FRM averaged 4.47 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.55 percent this week, with an average 0.6 point, down slightly from last week when it averaged 3.56 percent. A year ago, the 5-year ARM averaged 4.51 percent.

1-year Treasury-indexed ARM averaged 3.40 percent this week with an average 0.7 point, down from last week when it averaged 3.46 percent. At this time last year, the 1-year ARM averaged 4.58 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Interest rates on 30-year fixed mortgages have remained below 5 percent for the last 19 weeks giving people ample opportunity to refinance their existing mortgage debt. As a result, homeowners reduced their financial obligations relative to disposable personal income during the second quarter of 2010 to the lowest share in almost eight years, according to the Federal Reserve. Currently, four out of five mortgage applications are for refinancing existing mortgage debt, based on figures by the Mortgage Bankers Association.”

Source: Freddie Mac

Housing Opportunity Index Rises to 72.3 Percent in Q2

Housing affordability remained near its highest level nationwide for the sixth consecutive quarter, according to the most-recent National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

The HOI indicated that 72.3 percent of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the second quarter was slightly more affordable than the previous quarter and almost equaled the record-high 72.5 percent set during the first quarter of 2009.

Major metro areas with the least affordable housing markets included San Francisco-San Mateo-Redwood City; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.

San Luis Obispo-Paso Robles, Calif., was the least affordable of the smaller metro housing markets in the country during the second quarter. Others near the bottom included Santa Cruz-Watsonville, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Napa, Calif.

Source: National Association of Home Builders

Nearly 1 Million Home Buyers Must Repay Tax Credit

Approximately 950,000 of the nearly 1.8 million Americans who claimed the federal first-time home buyer tax credit on their 2009 tax returns will have to repay the government, according to a report from the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA's study found that an estimated 4.1 percent of the approximately 1.77 million individuals receiving the tax credit had incorrect purchase dates recorded at the IRS. The report also found that $10.1 million in home buyer credits were claimed by taxpayers who were identified as deceased by the Social Security Administration.

TIGTA recommended that the IRS take steps to correct the errors and IRS officials agreed with the recommendations and stated that they plan to take steps to improve controls.

Source: TIGTA

Fast Facts

Calif. median home price: July 2010: $314,850

Calif. highest median home price by C.A.R. region July 2010: Santa Barbara So. Coast $871,250

Calif. lowest median home price by C.A.R. region July 2010: High Desert $128,950

Calif. First-time Buyer Affordability Index - Second quarter 2010: 64 percent

Mortgage rates: Week ending 9/9/2010 30-yr. fixed: 4.35

Fees/points: 0.7%

15-yr. fixed: 3.83% Fees/points: 0.6% 1-yr.

Adjustable: 3.46% Fees/points: 0.7%

Source: CAR & Freddie Mac

California Housing Prices on the Rebound

The national housing market is shrouded in uncertainty. But in California, there are glimmers of stability.

Home prices are rising in virtually every corner of the state. They've climbed for nine consecutive months, and in July posted a 10.4% gain year-over-year. That puts the state's median price at $315,000 -- nearly twice the national median of $183,000.

And the news is even better in coastal cities.

San Francisco posted the biggest gain of any U.S. metro over the past year, rising 14.3%. The median price there is now more than $607,000. Meanwhile, San Diego has climbed 11.2% (median price: $389,000) and Los Angeles jumped 9.2% (median price: $345,000).

Meanwhile, Florida, Arizona and Nevada -- California's erstwhile bubble-state partners -- continue to struggle. So where is the Golden State's strength coming from?

"I think it comes from the fact that prices went down so far and so quick," said Lesley Appleton-Young, California Association of Realtors' chief economist. "That left a lot of people here saying, 'Wow, affordable California housing.'"

However, a quick home price rebound was delayed by the crush of foreclosures that accompanied the subprime mortgage meltdown. California real estate had become so expensive that a basic single-family home required many buyers to overextend themselves with exotic loans.

That is no longer the case. Most of the subprime-related distressed properties have been flushed from the system. And when a foreclosure does hit the market, it's snapped up. The median days it took to sell a home in July was just 44 -- lightening fast.

"It's the dearth of supply for distressed properties that has put pressure on home prices," said Appleton-Young. "More than half the homes on the market last year drew multiple offers."

Plus, the California economy is picking up. Even in a recession, it has remained one of the world's 10 largest economies, mainly because it is driven by every major industry -- aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.

"California is a much larger, stronger and more diversified economy than the other [bubble] states," according to Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA.

Another factor that has helped lift prices is a trend toward more short sales. Fewer of the distressed properties are going all the way through the foreclosure process. "The shift to short sales in itself would increase home prices," said Mark Goldman, who teaches real estate at San Diego State University.

That's because short sellers usually occupy and take care of the homes until they're sold, leaving the properties in better condition and worth more than similar foreclosed homes.

Goldman added that California markets are, generally, more constrained than any of the other bubble states. Florida and Nevada, for example, still have room to develop and grow in most areas. But the lack of developable land is especially acute in California, pushing home prices up.

Finally, the California state government has not sat idle. "California provided markets with more significant price support," he said, "That played a role in elevating prices."

The state support came in the form of tax credits of up to $10,000 for first-time homebuyers and buyers of new homes. Some purchasers were able to combine the state credit with one from the federal government to reduce their costs by $18,000.

For home sellers in other states, what's happening in California is encouraging. Trends often begin on the coast, so they're hoping the recovery will roll eastward.

Source: CNN/Money