- The median price in California continued to increase in September, driven by lean inventory levels.
- The median price of a detached existing single family home was up 1.1 percent, $296,090 in September, from the August median of $292,960; but down 7.3 percent from the September 2008 median price of $319,310.
- Sales in California hit 530,520 homes in September, up 0.6 percent from August sales of 527,120 homes, and up 2.1 percent from September 2008 sales of 519,530 homes.
- With sales expected to stay in the low- to mid-500,000 range through the rest of the year, annual sales for 2009 will finish about 20 percent higher than the 2008 annual sales figure of 439,830 homes.
- Given recent price gains and sales levels, as well as lean inventory numbers that have averaged just over 4 months for the past 3 months, one should conclude that the California housing market is edging back toward its normal state.
- Indeed, these numbers are welcome developments for a housing market that was among the hardest hit in the country.
- But a look behind the top line numbers suggests that current conditions have resulted from a heavy dose of government policy intervention and from efforts by lenders â€“ who currently dominate the supply side of the market â€“ to manage the flow of troubled mortgages and properties at all stages of the â€˜foreclosure pipelineâ€™ from delinquencies to REOs.
- Defaults in California escalated rapidly in the last couple of years, with 111,700 defaults in 3Q09 and a record high of 135,400 defaults in 1Q09.
- Normally, the trend in foreclosures corresponds approximately to the trend in defaults with a one to two quarter lag so the number of foreclosures should be on the rise as well.
- Instead, the level of foreclosures has been steady at roughly 50,000 per quarter since the last quarter of 2008.
- This seems to be the result from the combination of government policy intervention:
1. Â foreclosure moratoria last year and early this year,
2. Â the federal loan modification program,
3. Â Efforts by lenders to deal problem loans on a case-by-case basis.
Â· Â Â Â As a result, market supply has held steady at levels that have stabilized the median price at the state level and in most California markets.
Â· Â Â Â In a number of markets, there have been some modest price gains compared to earlier in the year.
- With current government policies and lender practices in place, home prices in much of the state should hold steady, aside from normal seasonal fluctuations in prices between now and next spring.
- In the end, price stability is necessary for discretionary sellers, as opposed to distressed sellers, to return to the market and drive the supply side of the market to more normal conditions.
As of 3Q09 || source: CAR.org
All FHA loans are 100% insured this meansÂ there is "zero" loss to the mortgage holder.
So if the homeowner is in distress, it is good to remind the loan servicer to work with the homeowner toÂ cureÂ (refinance, loan modification) orÂ settle the loan status to allow the homeowner to start over and the bank to recover its losses through redeeming its insured loan with FHA.