Good news on the loan front! For the first time in a decade Conforming loan limits have increased, offering a little bit of relief and flexibility for borrowers that otherwise would be stuck exhausting more of their resources on a larger down payment, or forced into the Jumbo market.
The new Conforming loan limit for California: $424,100…. High Balance Limit in Placer, Sacramento, Yolo, and El Dorado Counties: $488,750
Each is an increase that will make a difference in the required down payment for people who’s loan amount would have been capped at $417,000 or $474,950, increasing the standard limit by $7,100, and the high balance limit for the 4 counties in the Sacramento area by $13,800.
Some higher cost counties, such as in the Bay Area and Southern California, see the high balance limit increasing to $636,150 (from $625,500).
There is no information yet on if this will affect FHA loam limits in any way (historically FHA has adjusted their limits with Fannie and Freddie in most, but not all, counties)
A common theme on this blog over the years, “shadow inventory” and the future of distressed sales (foreclosures and short sales), is coming up one more time. While conventional wisdom for years has been every bit of good news on the housing front has been a bunch of hype I have been sharing statistics with you that spells out what has actually been happening.
In reality the future foreclosure rate is determined by one thing, one thing most media source and people never mention, people missing their first mortgage payment today. It is as simple s that. If you read this website you know that I share these statistics every few months or so and the number of people missing their mortgage payments has been going down, down, down; and with it the number of foreclosures 6-12 months later.
The nationwide delinquency rate is lower than any time since Q1 2008, the time we began to see cracks in the market but well before the crash happened. This means the foreclosure rate over the next couple years will be lower and lower too. To boot the actual foreclosure start rate is lower than at any time since Q2 2006!
“Shadow inventory,” homes that banks are holding onto or short sales/foreclosures that just haven’t happened yet, the media (and some gloomy Gus’) favorite boogie man is non-existent. The banks have already unloaded their inventory for the most part and home prices have rebounded so much only a small fraction of people still owe more than their home is worth.
I’m sure if you have been in the market to buy or sell a home lately you see that short sales and foreclosures are a very small part of what is out there, when just two years ago they made up the bulk of the market in the greater Sacramento area; including Roseville and Rocklin.
This is all good news!
Senior Mortgage Consultant – 19 Years Experience
This has been a popular subject on this site, I’ve often discussed it in a way that flies in the face of what the conventional media has been pushing for the last few years; the rate of mortgage delinquencies nationwide has decreased to its lowest level in the last six years (since “pre-crash”).
In the 4th quarter of 2013 the percentage of homeowners at least 60 days late on their mortgages had dropped to under 4.0%. Marking two straight years of quarterly improvements and the first time this metric has been sub-4% since 2008.
The level is still too high, with most economists preferring it be under 2% in a normal market, but improvement is improvement. And steady improvement is even better!
But real estate is always local, right? Indeed, for the most part that is true, and in California our rate is 3.06% for Q4 2013! Beating the national average by quite a bit and putting us nearly in the normal range and at one of the lowest mortgage delinquency rates of any of the 50 states. The rate in the Roseville/Rocklin/Lincoln area is even lower, well within the historically normal range.
Looking forward? As we’ve discussed many times here, less delinquent accounts = less foreclosures in the future. This is why I was telling everyone that was so scared of the media’s boogeyman of the last half decade, “shadow inventory,” that they have nothing to worry about. It didn’t exist and, while the foreclosure problem looked as scary as could be in 2010-2012, the fact late payments were on the decline told us that distressed sales in the future were also going to decline.
Couple that with the FACT that mortgages of the last 5 years have been of MUCH higher credit quality (no more people that couldn’t buy homes could anymore, and are therefore less likely to default), we see an ever-improving real estate market that should stand on its own after years of being propped up by Washington.
Put this one in the win column!
SOURCE: TransUnion Data
Senior Mortgage Consultant – 18 Year’s Experience
The Federal Housing Finance Agency (FHFA), overseer of mortgage giants Fannie Mae and Freddie Mac (GSE’s), has decided to leave the maximum loan limits for loans they guarantee unchanged for 2014. The maximum conforming loan limit will remain at $417,000.
As has been the case since 2008 some areas considered “high cost”, including most of California, are still exempt from the $417,000 ceiling with limits that range as high as $625,000 in higher priced counties in the Bay Area and Southern California.
For the greater Sacramento area (Sacramento, Placer, and El Dorado County) the “High Balance Conforming” limit remains at $474,950. Unchanged for at least another year.
Earlier this year FHFA director Edward DeMarco made an announcement that he would like to reduce the limits for 2014 in some areas in an attempt to take the FHFA further out of the market and foster more investment from the private sector. Before that happened Congress protested the idea as harmful to homeowners and said that it would hurt the real estate market and economy before it has had a chance to fully recover from the crash of 2008 and recession that followed (and they were right about that). In addition to this DeMarco is on the way out and North Carolina US Congressman Mel Watt is nominated for the director’s job and he is seen as very pro-home-ownership, something that may well have made the FHFA decision easier.
We have a lot of buyers and sellers in Roseville, Rocklin, Granite Bay, Folsom, and El Dorado Hills this will affect (or won’t affect as the news is that the limits are not changing, but you get the point), very good news for people with at least a 10% down payment in the $500-800,000 price range. Likewise a good thing for people selling a home in that price range as well.
Senior Mortgage Advisor – 17 Years Experience
The amount of homes worth less than owed on their mortgage in the Sacramento area has continued to fall.
Just two years ago almost 50% were underwater and as recently as January 2012 over 40% were still underwater. Since then things have changed immensely. Looking at the immediate past, 4th quarter 2012 (data for the 1st quarter of 2013 is not yet available) there were only 32% in that same boat.
In the 4th quarter of last year, 32% or about 150,000, of all residential properties in the Sacramento region had a mortgage for more than their homes were worth. This is compared to 36%, or about 175,000 properties, in the previous quarter.
This is still a high number but that means about 25,000 homeowners in region now have equity when they didn’t have it just three months earlier.
The 1st quarter 2013 data is not available yet but there is no doubt in my mind there will be another dramatic change as property values are appreciating even more today than they were in the 2nd half of last year. My guess is when it is reported the number will be well under 30%. Not quite where we want it to be yet, but definitely headed in the right direction.
Senior Mortgage Planner -17 Years Experience
I know I know, it has been a long time since I have posted. And I meant to post this a few weeks ago, a HAPPY NEW YEAR and WELCOME 2013 post if you will. So consider it a belated one of those… 🙂
2012 was a very interesting, and depending on who you ask, a good year for jobs, the economy, and real estate (I of course will be focusing on the latter).
Completed Foreclosures were down a whopping 23% year over year (Nov 2012 compared to Nov 2011). The number is still too high but has been shrinking month after month, and year after year, for long enough to call it a trend.
There were approximately 1.2 million homes in some stage of foreclosure (the foreclosure inventory) in November, about 3.0 percent of all homes with a mortgage. In November 2011 there were 1.5 million homes or3.5 percent of all mortgaged homes in the inventory. This is a decrease of 18 percent year-over-year.
CoreLogic’s Mark Fleming said, “The pace of completed foreclosures has significantly improved over a year ago as short sales gain popularity as a disposition method. Additionally, the inventory of foreclosed properties continues to decline while the housing market demonstrates an ongoing ability to absorb the distressed sales that result from completed foreclosures.”
All data points show a continuing trend of ever improving housing markets, jobs increasing, and improvements to the economy. As mentioned these are not good enough, but I have a good feeling about the future!
Images and data courtesy of CoreLogic. http://www.corelogic.com
Not what you expect to hear out there in the “Eyore media” but, according to the Business Forecasting Center at The University Of the Pacific, the state of California remains on a steady but slow economic recovery.
Based on the study, for this year and next the state’s GDP is projected to grow at an average pace of 2.5%. With job growth projected at 1.8%.
The state’s unemployment rate, currently sitting at 10.7%, is projected to slowly shrink but stay about that magic number of 10.0% though 2013. Going into 2014 and beyond they forecast the unemployment rate to continue to shrink into single digits as the rate of economic recovery increases with construction/housing again making a positive effect on the economy for the first time in over half a decade.
Here is a link to the report: LINK