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Thursday, April 24, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS

Welcome to the Market Matters Advisory, your weekly guide to responding to the market.

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April 24, 2008

     Bloomberg.com

U.S.economy:  Sales of existing homes fell in March

The national housing downturn continued in March as single-family home sales fell 2 percent in March – the seventh decline in the past eight months, the NATIONAL ASSOCIATION of REALTORS® (NAR) reported Tuesday.  The NAR said the median price of a home fell from $217,400 a year ago to $200,700 this March, a 7.7 percent decline.  The inventory of homes for sale increased by 40,000 units to 4.06 million homes.  At the March rate of sales, it would take 9.9 months to deplete the inventory, up from 9.6 months in February.

MAKING SENSE OF THE STORY FOR CONSUMERS

The March results were in line with a Bloomberg survey of 72 economists, who projected a 2.3 percent decline in sales.  Experts say buyers will likely stay on the sidelines until foreclosures, which are seen as driving prices down, level off.  Since sales and price data lag a month or more, it is difficult to project when prices will level off and begin to rise.

The Midwest and South suffered the largest sales declines during March, falling 6.5 percent and 3.5 percent, respectively.  However, the West (which includes California) and Northeast regions both experienced a 2.2 percent increase in sales.

Availability of credit is seen as a major barrier to improved home sales.  On Tuesday, Bank of America reported it will limit the number of low-documentation loans it issues and further restrict credit to some borrowers after it reserved more than $6 billion to cover mortgage loan losses.

To read the full story, please click here:

http://bloomberg.com/apps/news?pid=20601087&sid=aQdRyvIRlWhQ&refer=home

     USA Today

Bargain hunters boost home sales in some markets

With prices falling in many parts of the country and the number of foreclosures rising, a small yet growing number of bargain-hunting buyers are seeing an upside to the real estate market.

MAKING SENSE OF THE STORY FOR CONSUMERS

First-time homebuyers priced out of the market during the frenzied 2001-2005 market are among those most attracted to real estate today.  In November 2007, 39 percent of buyers were first-timers, up from 36 percent in 2006, according to NAR.  The key impediment to buying?  Meeting tighter bank qualifying criteria.

International buyers increasingly are looking at opportunities in the U.S. real estate market.  Declines in the value of the dollar against other currencies and lower prices translate into a discount of up to 30 percent for some foreign buyers.

Investors from other states also are seeking bargains in those markets hardest hit by the real estate downturn.  Some are even buying properties sight-unseen for conversion to rentals until the market heats up again – a risky proposition, according to some observers.

To read the full story, please click here:

http://usatoday.com/money/economy/housing/2008-04-16-bargain-hunting-real-estate_N.htm

   National Public Radio

Home prices drop most in areas with long commute

Urban real estate markets featuring short commutes are faring better than those suburban neighborhoods where homeowners must drive a significant distance to work.  It seems that the longer the commute, the greater the drop in existing home prices.

MAKING SENSE OF THE STORY FOR CONSUMERS

With gas prices skyrocketing, more buyers are taking driving distance and the time they spent commuting into consideration when they look for a home. Some who bought homes in distant suburbs during the real estate boom because that’s where they could afford to buy underestimated the cost of commuting and are suffering both a decline in their home value and a more expensive daily commute.

Builders are shifting gears and building closer to metro areas, where empty-nesters and younger singles are more likely to buy.  This has created a renaissance in many downtown communities.  With the percentage of couples with children declining, the trend toward suburban living is expected by some to continue to moderate even after the housing market recovers.

To hear the full story, please click here:

http://www.npr.org/templates/story/story.php?storyId=89803663

     Los Angeles Times

Lenders derail plan to let bankruptcy judges modify mortgages

The Mortgage Bankers Assn. says the measure would raise interest rates, but critics contend this claim is based on faulty data

A congressional proposal to help struggling homeowners stave off foreclosure by permitting bankruptcy judges to modify mortgages is losing momentum and may not be voted on this year thanks to efforts by critics who claim it would do more harm than good.

MAKING SENSE OF THE STORY FOR CONSUMERS

The Mortgage Bankers Association, which opposes the legislation, says the proposed measure would increase the cost of all new mortgages by 2 percent, raising the monthly payment on a $300,000, 30-year, fixed-rate mortgage by $402 or about $5,000 a year if interest rates increased from 6 percent to 8 percent.

However, a study by a pair of Georgetown and Columbia University professors claims there is no reason to believe the legislative proposal would cause lenders to significantly increase mortgage rates.  That’s because the proposal would only apply to subprime and other mortgages originated after Jan. 1, 2000.

The current proposal would allow bankruptcy judges to modify a mortgage when the appraised value has fallen below the loan balance.  The additional principal owed would be reclassified as unsecured debt and the loan terms modified to give a homeowner a greater likelihood of repaying their debt.   At the same time, the modification must allow the bank to receive the entire value of the remaining loan over time.

Currently, judges can modify loans secured by almost any type of personal property other than a residence.  Proponents say the measure before Congress would increase the potential that mortgage loan servicers, who have been hesitant to voluntarily modify loans from their borrowers, would be more likely to agree to do so.

To read the full story, please click here:

http://www.latimes.com/business/la-fi-bankrupt22apr22,1,4749705.story

In Other News…

     BusinessWeek

It’s Spring. Ready to buy a home yet?

Spring has always been busy for real estate.  Even though buyers and sellers remain cautious, now could be a good time to make a move
To read the full story, please click here:
http://www.businessweek.com/lifestyle/content/apr2008/bw20080417_795645.htm?chan=autos_real+estate+--+lifestyle+subindex+page_real+estate+news

      The New York Times

Piling on:  Borrowers buried by fees

To read the full story, please click here:

http://www.nytimes.com/2008/04/20/business/20gret.html_r=1&scp=2&sq=morgenson&st=nyt&oref=slogin

     The Modesto Bee 

A good time to buy

To read the full story, please click here:

http://www.modbee.com/business/story/274742.html

     San Francisco Chronicle 

Rossmoor is where older homeowners thrive

To read the full story, please click here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/20/RE34105UEN.DTL

     San Diego Union-Tribune

Silver lining in the midst of more bad housing news

To read the full story, please click here:

SignOnSanDiego.com > News > Business > Dean Calbreath -- Silver lining in the midst of more bad housing news