California Loans News

According to the John Burns Real Estate Consulting, the real estate market today may be augmented due to the spurring government housing assistance programs. The home builders’ company had a survey, which revealed 59 percent of this year’s sales have occurred with the help of several housing finance programs. The loans are through Veterans Administration (VA) home loans, Federal Housing Administration (FHA) assisted loans and United States Department of Agriculture (USDA) rural development housing and community facilities programs. These financing programs provided loans with 96.5 to 100 percent loan-to-value. Other purchases made were through cash sales, jumbo loans and other conforming loans.

The highest use of financing aid from FHA was well known with the Northern California builders. Southern Florida builders have profited well from high percentage of cash purchases. John Burns Consulting vice president Jody Kahn said, “The cash sales are most likely due to investor purchases of attached homes.” Kahn added, “Not surprisingly, Southern California reported the largest use of jumbo mortgages. The tough underwriting and higher pricing of jumbos has constrained sales of move-up homes.”

The survey for this month consisted of 262 home building industry executives, coming from both the public and private sectors. The respondents’ observations reflected actual conditions of 86 metropolitan statistical areas (MSAs) and 1,741 communities in different regions of California and Florida. The included areas in California are Midwest, South, Southeast, Northeast, Northwest and North, while Florida regions included North and South.

The survey highlights represent national decrease of average unsold, finished inventory per community, equal to 3.7 from last month to 2.7 as of time of the recent survey. Significant declines in inventory per community including September’s data are the regions of Southern California, Northwest and Southern Florida. The average net sales per community also decreased nationally, from 2.0 to 1.6, reminiscent of the June and July levels. The decrease in sales may be contributed to seasonality and lack of entry level inventory to close before November 30 for some home builders.

Despite the reports of home price increases in several California areas last September, the prices have softened for October. Southern California homes are rated flat, while Northern California’s home prices are still decreasing. As for Southern Florida builders, the prices may seem to be increasing.

In 4 of the 10 regions in both states have been reported to be built with new homes. Also, 3 regions have seen activities of trimmed starts. The Northeast, Southeast and Northwest California regions have reported increased starts with the range of 8 to 9 percent. The Southern Florida region had the largest increase in the same field for October. Declines in start rates are seen in Midwest and Southern California and Northern Florida.

The firm’s chief executive officer John Burns said, “The good news for builders is that there seems to be momentum behind the effort to extend the federal tax credit and that the FHA is going to become more conservative, but not significantly curtail operations. Political winds can change quickly though, so stay tuned.”

Post a Comment