Thursday, May 24, 2007

Market Graphs

Here is a link to a great PDF presentation by the National Association of Realtors.

"All Real Estate is Local" (May 2007)
Lawrence Yun, Ph.D., NAR Senior Economist
Economic Issues and Residential Real Estate Business Trends Forum

Wednesday, May 16, 2007

San Fernando Valley Market Update for May 2007

San Fernando Valley home resale activity remains strong.
By: Winnie Davis, SRAR President & David Walker

Even as some buyers hesitated due to fears over the impact on the market of potential problems with a limited number of high-risk home loans, sales activity in the San Fernando Valley came in stronger than expected for the first quarter of 2007, the Southland Regional Association of Realtors reported recently.

And, resale prices have adjusted to the more methodical activity level with a modest decline, the association also reported.

"Perceptions have no matched the realities on the ground when it comes to local home sales and prices," said Winnie Davis, president of the Southland Regional Association of Realtors. " A sharp drop in sales or prices has not happened and seems unlikely. Smart home buyers understand that today's wealth of opportunities outweigh and potential risk, especially if you're buying a home with the intent of staying in it for years to come."

Yet a steady drum beat of reports regarding potential problems in the so-called subprime loan market - where a limited number of loans were made to buyers with weak credit histories - have prompted some buyers to sit on the sidelines when they might be better served by jumping in while interest rates remain near historical lows.

"Publicity about an impending down market may be a self-fulfilling prophecy, but right now the numbers do not indicate that either prices or sales are plummeting," said Jim Link, the Association's executive vice president. "We believe home resale prices will stay pretty flat or go down slightly, but not enough to warrant waiting a long time to buy."

Indeed the median price of the 1,867 homes sold during the first quarter 2007 was off less than 1 percent to $606,000. The 1st quarter 2006 single-family median price was $607,700. Likewise, he condominium median price of $393,000 was down a modest 2.1 percent.

The median price reported for the single-family homes sold during March was of 3.3 percent while the condominiums median was unchanged from the prior year.

Link and Davis said that too many consumers also believe incorrectly that the number of homes listed for sale has tipped the balance in favor of buyers.

True, the number of active listings has increased, rising 27.6 percent during the 1st quarter to $5716 properties. Yet the market had been so hot and the inventory driven so low for so many years that any increase now seems to be dramatic.

However, at the current pace of sales, the 5716 active listings represented a 5.2-month supply. That compares to a 3.6-month supply for the same period of 2006.

"A balanced market, where buyers and sellers are on equal footing, in near a 5-6 month supply," link said. "Over the last 20 years the average has been a 6.7 month supply."

During the depths of the national recession of the 1990s the inventory hit a record high of 14,976 active listings, which was a 17.6 month supply at the then current pace of sales.

That was a true buyers' market, Link said, but today's 5.2 month supply offers opportunities, risks and rewards for buyers and sellers equally.

Friday, May 11, 2007

Your Credit Score is a C


You're probably familiar with your credit score-the little three-digit-number that lenders use to gauge your ability to pay back or receive credit and loans. The most well-known credit score is the Fair Isaac company's FICO score. The FICO score measures your credit history from 300 to 850, with most Americans scoring between 670 and 700.

But now credit scores come with numbers and letters, thanks to the new VantageScore. Developed as a joint effort by the three major credit bureaus (Experian, Equifax, and TransUnion) as an alternative to the FICO score, the VantageScore is being marketed as a much more comprehensive way for consumers and businesses to grade one's credit history.

The VantageScore ranges from 501to 990, with each score having a corresponding letter grade from F to A. The credit bureaus claim that the letter grades are something everyone can understand, as opposed to numerical scores that confuse at the first glance.

The credit bureaus also claim that the new scores will help people with bad or no credit histories get better loan rates and terms, as they score credit information differently than FICO.

Although the VantageScore is being heavily marketed as a consumer tool, it's currently targeted primarily at businesses and lenders. Experian is currently the only one of the three bureaus that sells the VantageScore directly to the consumer.

The flaw with the new VantageScore, however, is the same as with FICO or any other credit score-it's dependent on the data lenders provide. If there's an error or missing information on your credit report, your credit score will be lowered no matter how it's calculated.

Are mortgage lenders buying the VantageScore? Not as of yet. The overwhelming response from the lending industry has been that the FICO score is reliable and does the job of gauging borrowers' ability to pay loans. In other words, if it ain't broke, don't fix it.

So what's a confused home buyer to do? The VantageScore does offer consumers more options in terms of how it grades your credit history, but until it sees wider adoption by lenders, your best bet is to stick with the FICO score.

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