Governor signs home tax credit bill

Governor Schwarzenegger signed AB 183. Eligible taxpayer credit is equal to the lesser of 5 percent of the purchase price or $10,000.  You must not have owned a home in the past three years to qualify.

Principal Reduction in Your Future?

Bank of America announces a new program for beleaguered home owners that allows for borrowers that are at least 20% underwater to reduce 30% principal of the total mortgage balance reduced. 

Citibank responds by saying they have no plans yet to reduce principal.  Citi reviews borrowers an a case-by-case basis and has reduced principal after all other options of affordability have been exhausted.

February Existing Home Sales came in yesterday in-line with analyst estimates.

Do you think this will effect the economy negatively and increase bank losses or is this a necessity to help heal the housing market woes?

Are you worried about the housing recovery?

Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. If this trend continues it will make it very difficult for the overall economy to get back on track.
The weakness in sales caused housing prices to drop almost 2 percent from a year ago to $165,100 on a national level.  In the West, sales are down almost 5 percent.

Continued high unemployment and an ongoing extremely difficult lending environment will keep a lid on the housing market and limit overall sales and possible future price appreciation.

Inventory of unsold homes jumped to 8.6 months.  6 months inventory of unsold homes is considered a balanced market and not regarded as a buyer or seller market.  If the supply of unsold homes continues to jump at these level and increase to double-digits it will put the brakes on the housing recovery and add significant downward pressure on prices.--Patrick

Expert opinion:

"Without a firm foundation in housing, the economy will struggle to return to normal," said Lawrence Yun, chief economist for the Realtors.

Is Real Estate at the bottom?

If the unemployment rate decreases and the work force expands in combination with further credit improvements and affordable homes available this will certainly help overcome the unavoidable rise in future interest rates.

Here are two expert opinions:

(1).  “I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.

(2).  “The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.

Please let us know your opinion on if we have hit the bottom in real estate or not.  Thank you.  Patrick

Interest Rates

The Feds on Tuesday, March 16 left interest rates unchanged. They left the rates in the 0 percent to 0.25 percent range.

Buyers of real estate will continue to benefit from super low rates. Today, March 18, Bank of America is offering 30-year Fixed rate of 4.875 percent.

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