Foreclosures Sink To 4-Year Low

Foreclosure activity continues to slow.

According to RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings nationwide fell 35 percent as compared to July 2010, a statistic suggesting that the housing market continues to improve.

"Foreclosure filing" is a catch-all term encompassing default notices, scheduled auctions, and bank repossessions.

Filings fell to a 44-month low in July 2011.

For all the improvement, though, activity remains concentrated in just a few states. More than half of all bank repossessions last month occurred in just a handful of states.

In July, 6 states accounted for 52% of activity.

1. California : 19% of all repossessions
2. Georgia : 8% of all repossessions
3. Florida : 7% of all repossessions
4. Texas : 6% of all repossessions
5. Michigan : 6% of all repossessions
6. Arizona : 6% of all repossessions

At the other end of the spectrum is Vermont. With just 11 repossessions for all of July, Vermont accounted for 0.016% of repossessions nationwide.

Distressed homes are in high demand with today's home buyers. According to the National Association of REALTORS®, they account for 30% of all home resales. That's no surprise, either.

Distressed homes typically sell at 20 percent discounts as compared to non-distressed ones.

But, if buying a foreclosure is in your agenda, be sure to do your homework. Buying bank-owned homes is different from buying from "people". The contracts are different, the negotiations are different, and the homes are sometimes sold with defects.

If you plan to purchase a foreclosure , therefore, be sure to speak with a licensed real estate agent first. There's plenty of available information online but when it's time to buy, have an experienced agent on your side.

Strong Job Growth In July Trumped By Credit Downgrade

More Americans are getting back to work.

The latest Non-Farm Payrolls survey from the Bureau of Labor Statistics shows that 117,000 net new jobs were created in July, thumping analyst estimates and surprising Wall Street investors.

In addition, May and June's originally-reported figures were both revised higher:

• May 2011 was revised higher by 28,000 jobs
• June 2011 was revised higher by 28,000 jobs

The national Unemployment Rate slipped to 9.1 percent.

The jobs report's strong readings would typically be a boon to stock market and a threat to mortgage rates. This is because more employed Americans means more disposable income spent on products and services; and more taxes paid to governments at the federal, state and local level.

This combination fuels consumer spending and supports new job growth, a self-reinforcing cycle that spurs economic growth and often to draw investors into equities.

This month, however, the market reaction has been decidedly different.

Since the Friday release of the July Non-Farm Payrolls report, the Dow Jones Industrial Average has lost close to 6 percent of its value. Furthermore, mortgage bonds -- which typically sink on a strong jobs figure -- have thrived.

High demand for mortgage-backed bonds have pushed mortgage rates below their all-time lows set last November; the biggest cause of which is Standard & Poor's credit downgrade of U.S. government-issued debt.

Ironically, the credit rating downgrade sparked a surge of safe haven bidding that has been tremendous to rate shoppers and home buyers nationwide. Bond buyers are flocking to the U.S.

If you've been shopping for a mortgage, therefore, or recently bought a home, use this week's action to your advantage. Call your lender and ask about rates. You may be surprised at what you find.

A Simple Explanation Of The Federal Reserve Statement (August 9, 2011 Edition)

Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the first time in 5 meetings that the nation's Central Bank was non-unanimous and the first time since 1992 that the FOMC adjourned with as many as three dissenters.

In its press release, the FOMC had little good to say about the U.S. economy, noting that since its last meeting in July:

1. Growth has been "considerably slower" than expected
2. Labor market conditions have deteriorated
3. Household spendng has "flattened"

The Fed also noted that the housing sector remains depressed.

On the positive side, the Fed said that business investment in equipment and software continues to expand, and that energy costs have dropped and no longer contribute to inflationary pressures on the economy.

In fact, the Fed worries that inflation may be running too low for the country's good.

To that end, the Federal Reserve has pledged to keep the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013". This is a departure from prior statements in which the Fed gave no such date.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in California are improving, but note that sentiment can shift quickly -- especially in a market as uncertain as this one.

If today's mortgage rates look good in your household budget, consider locking in a rate.

The FOMC's next scheduled meeting is September 20, 2011.

Mortgage Rates Make New 2011 Lows

Mortgage rates in California plunged to new 2011 lows this week. 

According to Freddie Mac's weekly Primary Mortgage Market Survey, the national, average 30-year fixed rate mortgage fell to 4.39% this week -- the lowest 30-year fixed reading since November 18, 2010.

The 0.16 drop from last week is the largest one-week rate drop in more than 2 years, and, although the 30-year fixed remains above its all-time lows from November 2010, two other benchmark products made new records this week.

Both the 15-year fixed rate mortgage and the 5-year ARM are reporting lower than at any time in recorded history.

Freddie Mac puts those average rates at 3.54% and 3.18%, respectively.

Mortgage rates are dropping for several reasons, including :

• U.S. economic growth is slower-than-expected
• The U.S. government plans to curb its spending
• Global investors seek the safety of U.S.-backed bonds

The first two items are unfavorable for business and, as a result, stock markets have sold off all week. The Dow Jones Industrial Average posted an 8-day losing streak and Thursday it made its biggest one-day loss since 2008.

When equities lose, bonds tend to gain. This leads mortgage rates lower.

Mortgage rates also fell on "safe haven" buying; bond buys made because of their relative safety to risky assets. Mortgage bonds are considered "safe" so when economies and geopolitics are uncertain, mortgage rates improve.

Going forward, there are reasons for mortgage rates to fall again. The economy won't rebound overnight and neither will investor confidence. However, markets can be fickle and rates have been known to reverse quickly.

With rates as low as they've been history, it's an advantageous time to refinance your home loan, or purchase a new property.

Closing At The Start Of September? Watch Out For Labor Day.

Home sales have heated up, according to the National Association of REALTORS®.

More homes are going under contract this summer than went during the winter or spring seasons. Many of these homes are scheduled for late-August/early-September closings. 

If your home is among them, plan ahead. 

Like for the rest of the U.S. workforce, Labor Day is a popular vacation time in the real estate, title and mortgage industries. Closings come together more slowly when the parties involved are on holiday. In addition, when issues arise, they are often slower to resolve because not everyone is "present". 

Therefore, if you're under contract to buy or sell your home, or have a refinance in-process with a lender, get proactive with your home and your loan. Finalize your approval as quickly as possible.

Here are some tips to help your loan clear faster:

1. Prepay your first year of homeowners insurance, effective your closing date. Provide proof of payment to your lender.
2. Document and deposit all gifts and retirement withdrawals to be used at your closing as early in the process as possible.
3. Get Power of Attorney forms signed by all parties, and lender-approved, if applicable.
4. When your lender makes a paperwork request, fulfill the request within 24 hours.

There are steps you can take to make your closing go more smoothly, too.

First, if your transaction is purchase, don't leave your walk-through for the last-minute. Schedule it for as early as reasonable. This way, if there's an issue, there's ample time to resolve it. Remember, it's harder to solve problems when one or more parties to the transaction is away on vacation.

Second, if you have planned time off between now and your closing, make it known, and be reachable in the event of emergency by phone, email or both.

Lastly, if possible, avoid scheduling your closing for the Friday before Labor Day or the Tuesday after. Real estate, title and lender offices are notoriously short-staffed and overworked on these two days. Routine tasks take longer than usual.

You can't stop people from going on vacation, but you can plan for it. It would be foolish not to.

Pending Home Sales Rise For 3rd Straight Month

Buyers are writing contracts at a furious pace nationwide.

On a seasonally-adjusted basis, the Pending Home Sales Index rose 2 percent last month to reach its highest level since March.

A "pending home sale" is a home under contract to sell, but not yet closed. 

The forward-looking Pending Home Sales Index is up 11 percent from its low of the year, according to the National Association of REALTORS®, and well ahead of its rolling 6-month average.

Unfortunately, national data isn't always helpful for buyers and sellers nationwide. To help make data more relevant, therefore, the official Pending Home Sales Index report includes a region-by-region breakdown. 

Between May and June 2011, results were mixed:

• Northeast Region: -0.4%
• Midwest Region : -3.7%
• South Region : +4.4%
• West Region : +6.4%

However, even the value of regional data may be dubious.

The West Region, for example, which showed big gains in June, is comprised of multiple states containing thousands of cities and towns. Some of those areas outperformed the region, and some of them underperformed. The Pending Home Sales Index doesn't show which towns did which. It can't.

For everyday buyers and sellers , it's the local data that matters.

The Pending Home Sales Index shows that more contracts were written in June than in April or May -- a good sign for housing overall. And because 80% of all contracts close within 60 days, we can expect the summer's home resale activity to be high.

This leads home prices higher.

With mortgage rates low and home sales spiking, now may be the best time to buy a home in 2011. Home prices appear to be rising and mortgage rates should, too.

16 of 20 Case-Shiller Cities Show Improvement In May

Standard & Poors released its May 2011 Case-Shiller Index this week. The index measures change in home prices from month-to-month, and year-to-year, in select U.S. cities.

May's Case-Shiller Index showed a 1 percent increase from April 2011. Home values rose in 16 of the Case-Shiller Index's 20 tracked markets. Only Detroit, Las Vegas and Tampa fell. Phoenix was flat.

Don't look too far into the findings, though. Like the FHFA's Home Price Index, the Case-Shiller Index is rife with flaws.

The first flaw of the Case-Shiller Index is its limited geography. Despite being positioned as a national housing index, Case-Schiller Index is sourced from just 20 cities nationwide. There are more than 3,100 municipalities nationwide.

The Case Shiller Index's second flaw is that it ignores all home types excepts for single-family, detached homes in its findings. Condominiums, multi-family homes, and new construction are not included in the Case-Shiller Index.

In some markets, these excluded home types outnumber the included ones.

Furthermore, the Case-Shiller Index is flawed in that it takes 60 days to release.

The Case-Schiller Index reports on a housing market from 2 months ago -- hardly helpful for today's buyers and sellers , trying to make sense of today's real estate market data. 

When you want real-time housing market data, therefore, look past the Case-Shiller Index and talk to a real estate professional instead. It's where you'll get your best, most relevant information.