Real Estate News for Sunday, January 28th, 2007

The chill at luxury's low end. As the national housing market continues to weaken, prices of homes in the $1 million range are slumping in many parts of the country. In once-golden Sunbelt cities like Miami and Santa Barbara, Calif., as well as in major Midwestern cities like St. Louis and Chicago, prices fell in the fourth quarter of 2006 from a year earlier, in some places by as much as 7.2 percent. In other areas, prices rose slightly but appreciation was sluggish, with gains of 4.3 percent or less. Still, analysts say, the category is holding up better than the overall market, which declined 10 percent during the same period. Click here to read more.

Condo Mania. Cheaper prices, urban infill fuel condo, townhouse boom. McGautha and Benatar are among a growing number of Bay Area home buyers who are looking to condos and townhouses, which are generally more affordable than single-family homes, to meet their housing needs in the nation's most expensive home-buying market — and fueling what builders and real estate analysts say is a condo and townhouse boom. In December, the median sales price for an existing condo or townhouse in the Bay Area was $496,000 — almost $150,000 less than the $645,000 median price of an existing single-family home. This year, KB Home, one of the nation's largest home builders, expects that 40 percent of its new homes in the Bay Area will be condos and townhouses — twice as big a share as last year. In 2006, KB Home opened condos and townhouses in Union City, Milpitas and San Jose. Additional projects will open this year in Fremont, Union City and San Jose. Click here to read more.

Teacher aid. Educators graduate to home ownership. Thanks to the California Housing Finance Agency, the Garrads are not renting anymore. Last year the couple spotted an advertisement for the agency s Extra Credit program which is tailored for teachers like Garrad and other school employees who cannot afford to buy their first home. They qualified for the program and last summer paid $440,000 for their dream home the one they were renting. They snapped it up when their landlord cashed out of California s smoking hot real-estate market. But the Garrads are among the lucky few working-class families who had access to financial assistance that helped them get into their all-important first home. Some programs are also available, including some for police officers and firefighters as well as other people who meet income qualifications. But even with this kind of assistance, getting into that first home can be a daunting challenge, primarily because of the high cost of housing. While sales have fallen off record levels, prices have not followed them down. For example, just last month even though sales in Los Angeles County tumbled an annual 12.9 percent, the median price of a home climbed 6.5 percent percent to a record $522,000. The picture is just as bleak in the Inland Empire, long one of the region's most affordable markets. Sales in San Bernardino County fell an annual 31.1 percent, but the median price rose 3 percent to $372,000. These remain the kinds of markets where the nurses, police officers, firefighters, teachers, janitors and other workers who look out for the community cannot afford to live in it. In the Inland Empire during last year's third quarter, the median home price was $393,000 and the minimum income needed to buy it was $134,629 with a 10 percent down payment. But an elementary school teacher's salary averaged $51,473; a police officer's, $50,026; a nurse's, $40,570; a retail salesperson's, $26,878; and a janitor's, $25,924. In the Los Angeles metro area, which includes the San Gabriel Valley, Long Beach and the South Bay as well as the San Fernando and Santa Clarita valleys, the median price in the third quarter was $523,000 and the minimum qualifying income was $179,163. But a teacher's salary in the area averaged $53,687; a police officer's, $52,178, a nurse's, $42,316; a retail sales clerk's, $28,036; and a janitor's, $27,040. The first thing prospective buyers should do is contact the city they live or work in. Most offer homebuying assistance. Some have more ambitious plans than others. Last year, the Neighborhood Housing Services of the Inland Empire helped 110 families buy their first houses. The agency administers a variety of down payment assistance programs and offers a 16-hour homebuying class. Another good source is the California Housing Finance Agency. This is a state agency that acts like a bank and its mission is helping folks buy their first home. It offers a variety of loan programs and down-payment assistance. Purchase price limits are generally higher than Fannie Mae and Freddie Mac's and are adjusted every six months. For example, the two big mortgage companies have a conforming loan limit in California of $417,000, unchanged from last year. That's the largest mortgage they can buy. But CalHFA has loan limits for both new and resale in each county. In Los Angeles and San Bernardino counties the lending limits are much higher than Fannie's and Freddie's. Click here to read more.

Home sales may go buyers' way. Sellers are lowering prices; mortgage rates are still low. The frenzy phase when homes were swooped off the market in a few days has passed, but that might be a good thing for buyers. Sellers are becoming more realistic and lowering their prices after about a year of flattening in the market. And buyers can still take advantage of today's mortgage interest rates that remain at historic lows. Motivated sellers often lower their asking price in order to sell. But some refuse, expecting prices to shoot back up in March, when the market tends to start to pick up. Despite low interest rates, year-over-year sales declined in most of the state's regions last month, said Leslie Appleton-Young, CAR vice president and chief economist. Increases were strongest in urban areas that experienced fewer new homes being built or strong economic growth in recent years, she added. Click here to read more.

~Tina Jan~
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com