Let's go CONSUMER CONFIDENCE....I see you turning the corner - but what corner is that?

Bay Area home sales top last year again; median drops to $300K (Holy Cow)
Bay Area home sales rose above a year ago for the fifth consecutive month in January. Home buying remained slow in pricier coastal markets but was robust in many inland areas where steep price declines have boosted affordability and, in some cases, driven sales of existing houses to record levels. The role of foreclosures in the housing market continued to grow, representing 54 percent of the Bay Area homes that resold last month. A total of 5,050 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down 26.7 percent from 6,889 in December but up 40.8 percent from 3,586 in January 2008.
Last month's sales were the third-lowest for a January since 1988. Discounted foreclosures have helped fuel the surge in inland resale activity. They've also made it far more difficult for builders to compete with resale prices, helping to explain why sales of newly built homes fell last month to the lowest point for a January since at least 1988, when DataQuick's statistics begin. Conversely, resales of single-family detached houses hit record levels last month in San Pablo, Richmond, Pittsburg, Antioch, Oakley, Fairfield and San Pablo - areas that have attracted bargain hunters with their relatively large price drops and abundant foreclosures.
"One of the most common questions for the real estate pundits is, 'When will things get better in the housing market?' The question comes from the perspective of sellers, the industry, and those concerned about the downturn's impact on the economy," said John Walsh, DataQuick president.
"But from the perspective of a lot of first-time buyers and investors," he continued, "it's clear things have only been getting better for months. It's hard to imagine resale activity getting much stronger in many inland areas, especially if the deep discounts fade as a result of new efforts to stem foreclosures and stabilize prices."
The median price paid for all new and resale houses and condos combined in the nine-county Bay Area fell to $300,000 last month. That was down 9.1 percent from $330,000 in December and down a record 45.5 percent from $550,000 in January 2008.
The January median sale price - the point where half of the homes sold for more and half for less - stood at its lowest since it was $299,000 in December 1999. It was 54.9 percent below the peak median of $665,000 reached in June and July of 2007.
The median has fallen on a year-over-year basis for 14 consecutive months. Its dramatic plunge is partially the result of the regional decline in home values. But the decline also reflects a shift toward more sales in the less-expensive inland markets; slower high-end sales; and buyers' preference for lower-priced foreclosures.
Last month 54.2 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from 50.1 percent in December and 18.8 percent a year ago.
At the county level, foreclosure resales last month ranged from 16.4 percent of resales in San Francisco to 75.2 percent in Solano County. In the other seven counties, January foreclosure resales were as follows: Alameda, 51.9 percent; Contra Costa, 64.4 percent; Marin, 26.2 percent; Napa, 48.1 percent; Santa Clara, 45.6 percent; San Mateo, 34.1 percent; Sonoma, 55.6 percent.
San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales in late January were estimated in Alameda and San Mateo counties.
In October, use of FHA, government-insured mortgages allowing a down payment of as little as 3 percent rose to nearly 25 percent of Bay Area home purchase loans. That's a record in DataQuick's statistics and is up from less than 1.0 percent a year ago. At the same time, use of larger mortgages known as "jumbo loans," common in higher-cost coastal neighborhoods, continued to fall. Before the credit crunch hit in August 2007, 62 percent of Bay Area sales were financed with jumbos, then defined as over $417,000. Last month just 12.5 percent of purchase loans were over $417,000.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,297 last month, down from $1,471 the previous month, and down from $2,571 a year ago. Adjusted for inflation, current payments are 50.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.4 percent below the current cycle's peak in June 2006.
Indicators of market distress continue to move in different directions. Foreclosure activity has waned recently but remains near record levels, while financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable. Non-owner occupied buying activity has edged higher recently and is above-average in some markets

2009 Stimulus Package and The Housing Market

One component of the plan would lower the average homeowner's mortgage payment, which can easily take up 38 percent of a family's income. The goal of the plan is to lower most homeowners' mortgages to 31 percent of their income. A family with a household income of $50,000 will, on average, put $19,000 toward their mortgage. Under the president's plan they'd pay $15,500 toward their mortgage for a savings of $3,500. Lenders would also be required to write down a mortgage principal rather than interest rates, with the goal of helping to reduce the chances of default. The plan would also allow bankruptcy judges to modify mortgages, but only mortgages closed before the law is enacted are eligible. Homeowners would also need to inform their lender or loan servicer in advance of their intention to file for bankruptcy protection. According to a February 3rd article in the Charlotte [NC] Business Journal, the Charlotte Home Builders Association is petitioning members of the US Congress, upset over the total disregard for the housing market when developing the so-called “stimulus package” of $800+ billion.
The Homebuilders would like to at least see the $7500 tax credit for first-time buyers raised to $10,000, and extended through the end of 2009. I have also heard some folks argue that it should be doubled, and not required to be paid back. But in any event, I would like to at least see the Congress of the United States acknowledge that the housing market needs help. After all, it was the housing market that first felt the effects of the recession.
The Democrat-controlled house didn’t have any problem seeing the value in $300 million for contraceptives, $75 million for tribal alcohol and substance abuse reduction, and another $75 million for smoking cessation. They are also ready to pay back Hollywood for its extreme left-wing support during the campaign last year, by allocating $246 million in tax breaks for movie producers to buy motion picture film. The $7500 tax credit will not have to be paid back.

The home buyer tax credit will work like this. All taxpayers who buy a home in 2009 will get up to 10% of the purchase price back in a tax credit up to $15,000 (on a $150,000 home). The bill will not be retroactive and only affect home purchases after the bill is passed.
Where’s the help for the housing industry in this package? It seems to have been totally ignored. If you are in the business of building or selling homes, or in any of the supporting trades, like furniture, carpet, appliance sales, etc, this stimulus proposal doesn’t do much to help you out. Write or email your representative or your senator, and let them know that you shouldn’t have to be a chain smoking alcoholic Native American independent filmmaker to get help from the stimulus package.

The Slow Train Wreck Continues...

The slow train wreck continues. We can't help but rubber kneck. I read this today and wanted to share it with you.
By Jody Shenn
Feb. 9 (Bloomberg) -- JPMorgan Chase & Co. analysts almost doubled their projections for losses on some prime-jumbo mortgages underlying securities, created at the start of the U.S. housing slump, because of soaring defaults.
Losses on so-called hybrid adjustable-rate mortgages backing 2006 and 2007 prime-jumbo securities will reach 8 percent to 10 percent, according to a Feb. 6 report by New York- based analysts John Sim and Abhishek Mistry.
“The pickup of defaults in prime during the second half of 2008 has caused us to nearly double our loss projections on prime hybrids,” the analysts wrote.
Defaults on home loans not labeled as “subprime” that back so-called non-agency mortgage securities, the debt that sparked the global financial-market meltdown, have soared as home prices continue to tumble and the U.S. recession deepens. The share of prime-jumbo mortgages at least 60 days late climbed 0.71 percentage point to 5.29 percent in the month covered by January bond reports, according to JPMorgan.
About $500 billion of prime-jumbo bonds exist, according to Memphis, Tennessee-based FTN Financial. Jumbo loans are larger than what government-chartered Fannie Mae and Freddie Mac can buy or guarantee, currently $417,000 in most areas and as much as $625,500. Hybrid ARMs offer a few years of fixed interest rates, before switching to payments that vary with indexes.
Lower-Loss Sector
Losses on prime-jumbo mortgages with completely fixed rates in “recent vintage” bonds will be lower than losses on hybrid ARMs, partly because more of the borrowers will be able to qualify to refinance out of the loans, JPMorgan said.
“Although historical experience would lead us to increase prime fixed losses to 4 percent, faster prepayments could prevent many future defaults, keeping losses in the 2 percent range, a decrease from last month’s 2.3 percent to 2.8 percent” projection, the analysts wrote.
The share of Alt-A mortgages underlying bonds at least 60 days late, in foreclosure or already turned into seized properties climbed 1.53 percentage points last month to 22.88 percent, JPMorgan said. Defaults on so-called option ARMs rose 2.47 percentage points to 30.96 percent, the report said.
With the market for prime-jumbo mortgage bonds closed since early 2008 and banks issuing fewer loans to keep on their books, the average rate on a typical 30-year fixed-rate jumbo mortgage was 6.91 percent on Feb. 6, compared with 5.44 percent on similar “conforming” loans, according to Bankrate.com data.
Shares of Thornburg Mortgage Inc., a mortgage real-estate investment trust that specializes in jumbo-loan debt, and Redwood Trust Inc., a REIT with a similar focus, have fallen almost 100 percent and 75 percent over the past 24 months.
Santa Fe, New Mexico-based Thornburg gained 2 cents to 10 cents in over-the-counter trading as of 4:00 p.m. in New York today, while Mill Valley, California-based Redwood climbed 42 cents to $15.30 in New York Stock Exchange composite trading.