Edward Graziani Blog

August/September 2010 - The Santa Clara County Real Estate Market Trends Report

Fri, 06 Aug 2010 00:00:00 -0700

The August edition of the Report is now available.

HIGHLIGHTS

Sales slip after fed tax credit expires.

State tax credit helps mid and high-end segment of the market.

For the tenth month in a row, home prices are higher than the year before.

You can read the full on-line report here: Click here.

There is also a 4 page printable version with more articles here: Click here.

The Santa Clara County Real Estate Market Trends Report

Fri, 07 May 2010 11:45:00 -0700

The May edition of the Report is now available.

HIGHLIGHTS

In April, the median price for single-family, re-sale homes reached its highest level since August 2008.

The sales price to list price ratio was over 100% for the tenth month in a row.

Pending sales reach record levels in April.

Details on the new state tax credit for home buyers.

You can read the full on-line report here: Click here.

There is also a 4 page printable version with more articles here: Click here.

E Recycle Day June 6th

Fri, 29 May 2009 04:59:00 -0700

RELAY FOR LIFE

Fri, 29 May 2009 03:57:00 -0700

American Recovery and Reinvestment Act

Fri, 20 Feb 2009 05:58:00 -0800

Thank you Tracie-

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603

In an effort to save and create jobs, get our economy moving again, and to transform it for long-term growth and stability, President Obama signed the American Recovery and Reinvestment Act into law. One of the biggest public spending programs since World War II, the White House estimates it will create 3.5 million jobs nationwide, and 396,000 in California. State and local governments in California stand to receive about $26 billion of this $787 billion package.

Increase in Loan Limits
One piece of this legislation that will benefit our clients is the change to current loan limits. While the effective date has not yet been announced, this law reverts the current loan limits back to the loan amounts/levels allowed in 2008 with the Economic Stimulus Act. This will give buyers more purchasing power once it is implemented.

For example, in counties where the loan limit has been extended to $729,750, buyers can put 20% down on the purchase of a $912,000 home and take advantage of the implied lower rates associated with a conforming loan.

Please note that these are temporary increases that will end on December 31, 2009. Click here to review specific state and county details.

Tax Credit for Homebuyers
First-time homebuyers who purchase homes after January 1, 2009 and before December 1, 2009 may be eligible for a 10% tax credit (up to $8,000) on the value of the home. The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. A tax credit is better than a tax deduction, because a deduction just reduces the amount of your income which is taxed. In contrast, the credit reduces the amount of taxes you pay. Buyers will have to repay the credit if they sell their homes within three years.

You can review highlights of the entire bill here.

More Help for Homeowners
This week President Obama also announced a $275 billion plan to help some homeowners refinance, assist others in lowering their monthly payments and reduce mortgage rates. Almost one in 10 home mortgages is either delinquent or in foreclosure, and analysts estimate that at as many as six million families could lose their homes over the next three years in the absence of government action. Lowering the foreclosure rate helps to stabilize neighborhoods and the housing market, in general.

There are three components to the plan:

Helping homeowners who are still current on their payments, but who cannot refinance to a lower interest rate because they do not have enough equity in their homes.

Providing incentives to lenders who alter the terms of loans to make them affordable for the troubled borrowers.

Increasing the credit available for mortgages in general by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac.

The plan also asks Congress to give bankruptcy judges the power to change the terms of mortgages and reduce the monthly payments. This will have a negative impact on the industry.

Read more information on the current housing proposal here. The plan will take effect March 4, when the administration publishes detailed rules explaining it.

Here are some rates we've been seeing:

30 year conforming 4.625% 1 pt.

30 year high balance 5.375% 1 pt.

30 year FHA 4.750% 1 pt.

5 year jumbo 5.50% 1 pt.

7 year jumbo 5.750% 1 pt.

Banks: Federal government gives mixed message

Tue, 03 Feb 2009 04:32:00 -0800

A branch of the First National Bank is seen on the Northside of Pittsburgh, Friday, Jan. 3...

Source: Associated Press

Mon Feb 2, 7:06 PM EST

Banks that are being scolded by the government for not lending are blaming a new obstacle: The government itself.

Fearing more bank failures, federal regulators are forcing institutions to hold more money in reserve and scrutinizing loans. But bank executives complain that the extra oversight thwarts their ability to quickly pump billions of bailout dollars into the ailing economy.

Banks say they are caught in a frustrating Catch-22: How can they make more loans when creditworthy borrowers are scarce, their balance sheets are saddled with bad debt and regulators are hounding them to horde cash?

"We want to lend, but the regulators are flat-out telling us, 'Get your capital up.' Then there's Congress telling you to lend it all out," said Greg Melvin, a board member at FNB Corp., a Hermitage, Penn.-based bank that got $100 million in bailout money.

"Two arms of the government are saying exactly the opposite thing — it's ridiculous," added Melvin, who is also chief investment officer at investment firm C.S. McKee.

Regulators say they are only being careful, and they deny slowing lending.

"We don't believe that prudence and increased lending are mutually exclusive — they go hand in hand," said Andrew Gray, a spokesman for the Federal Deposit Insurance Corp.

The tit-for-tat marks the latest problem for the government's financial bailout, known as the Troubled Asset Relief Program, or TARP.

The government rolled out the $700 billion bailout late last year, hoping that injecting money into banks would expand lending and ease the credit crisis. But in a survey released Monday, the Federal Reserve said many banks are making it harder to get credit cards, mortgages and other loans.

Regulators have long required banks to keep a minimum level of capital on their books to stay in business. It was typically a figure equal to 10 percent of assets.

But as the financial crisis has worsened, many banks say they have been told to keep capital equal to at least 12 percent of assets. At the same time, regulators are combing through banks' loan applications and flagging those considered too risky.

It's unclear how broadly the stricter rules are being applied. But interviews with bank executives indicate that both healthy and troubled banks are facing more stringent oversight, regardless of whether they have received bailout money.

The goal is to keep banks from getting into more trouble. But to comply, some banks say they have little choice but to scale back lending — sometimes even to creditworthy borrowers.

Four government regulators oversee the country's roughly 8,500 federally insured banks and thrifts: the FDIC, the Office of Thrift Supervision, the Federal Reserve Board, and the Office of the Comptroller of the Currency.

Regulators shut down 25 banks last year and closed three so far this year because their capital levels fell too low. Meanwhile, regulators have ordered several banks to stop lending until they get more capital.

But the credit crisis has made it harder for banks to raise private capital. And the government doesn't want to give bailout money to banks that might later fail.

The harsh climate has taken a toll on banks such as Los Angeles-based First Federal Bank of California. It was forced to halt lending last month after its regulator, the Office of Thrift Supervision, said it needed more cash to absorb future losses on adjustable-rate mortgages.

Chief executive Babette Heimbuch said her bank wanted to keep lending but had a "difference of opinion" with the OTS over what its cumulative losses were and how quickly it will see them.

"They basically told us to stop lending," she said.

While the Treasury wants banks to lend, "the regulators have a whole different mindset: They want to protect the insurance funds," Heimbuch said, referring to money that regulators use to insure bank deposits.

Regulators see things differently.

William Ruberry, a spokesman for the OTS, said its No. 1 mission is to safeguard the institutions it oversees. He denied that such efforts were slowing lending.

"We want our institutions to lend, but we want them to lend in a safe and sound way," Ruberry said. "We think creditworthy borrowers shouldn't have a hard time finding loans."

But banking professionals say it's inevitable that tougher capital requirements for banks will reduce lending.

"There's just no doubt," said Stephen Wilson, CEO of LCNB National Bank in Lebanon, Ohio, which got $13.4 million in government capital. "If regulators tighten lending standards," fewer loans will be made.

Some of the banks' biggest critics reject that argument.

"I'm skeptical," Democratic Rep. Barney Frank of Massachusettes, chairman of the House Financial Services Committee, told The Associated Press in an interview. "If you're a bank that has TARP money, then you have more capital and you should be able to lend."

Frank said the Obama administration would push for more lending by banks that get bailout money. But others fear such efforts could backfire by forcing banks to lower lending standards.

"We're trying to get out of a credit problem, so the last thing you want is for banks to go out and make more bad loans," said Bert Ely, a longtime banking analyst in Alexandria, Va.

William Dunkelberg, chairman of Liberty Bell Bank in Cherry Hill, N.J., said regulators have forced his bank to set aside more capital in case their loans go bad — "even though we don't have any problems."

"We argued like crazy, but they're just being very cautious," Dunkelberg said.

Could the Obama administration and Congress simply tell regulators to lighten up on the banks?

Technically, yes.

Eugene Ludwig, a former comptroller of the currency, has advocated a "capital holiday" that would temporarily let banks draw down their capital and unclog lending.

But that plan carries risks, too. With less money on their books, banks will have a smaller cushion to protect themselves against losses. They would be at greater danger of failing if the economy worsened.

In the meantime, banks are adjusting to life with regulators constantly looking over their shoulder.

At First Federal Bank of California, Heimbuch said business is running as normal — albeit with no lending. She said her bank is trying to attract more capital. But she conceded there were no guarantees.

"You never know when a regulator is going to say enough is enough," she said.

Source: Associated Press

Can Inflation Return?

Wed, 21 Jan 2009 07:22:00 -0800

One thing we are listening to carefully is talk in the trading pits about the return of inflation. Word is that if Obama's stimulus and rescue packages do indeed work and get the economy headed in the right direction - inflation could gather steam rather quickly. This is why over the past three days, the Treasury market has been decimated. Mortgage Bonds - while trading lower - haven't lost even a fraction of the ground that Treasuries have lost, likely due to the Fed's buying of Mortgage Bonds. This is something worth paying attention to, as a spike in inflation may make it harder for the Fed to drive mortgage rates much lower through their purchase program