About Palos Verdes Peninsula's Palos Verdes Peninsula

Interest rates nudged up a bit this week but remained near record lows. The following are some excerpts from this week's newsletter on interest rates from HSH Associates :

"In a week where a "landmark" forclosure-abuse lawsuit finally came to a close, mortgage rates held close to record low levels. One happenstance is good for potential homebuyers, the other not so much. Inasmuch as $25 billion in penalties for perceived wrongdoing must be paid, and the money ultimately must come from somewhere, we can only be left to conclude that the cost of mortgages will eventually be higher than it would be absent the settlement.

And what of the foreclosure and loan servicing "abuse" settlement, which ran longer than a year, with tens or possibly even hundreds of millions in legal costs? Well, homeowners who weren't directly subject to any kind of foreclosure abuse might be able to get as much as $20,000 chopped off their loan balance, if they are in trouble or in danger of becoming so and if their loan is not a GSE (FNMA or Freddie Mac owned loan ) or FHA-backed model. That's expected to eat up maybe $17-$20 billion of the settlement, while another three to $5B is expected to be distributed in the form of checks to up to perhaps 750,000 folks who lost their homes to foreclosure between 2008 and 2011. Other funds will provide some refinance opportunities for certain borrowers, and most of the rest will go to states for foreclosure prevention programs and such.

Where are the borrowers who were making payments per the terms of their contracts whose homes were taken from them? If they exist, what is $2,000 to them? Conversely, why should a borrower who lost their home to foreclosure for failing to make payments (sometimes for years) be eligible for compensation at all? Does the fact that a human did or did not fully review the paperwork during the foreclosure process change that simple fact? It does not.

Principal reductions are all well and good, but they are being offered to folks who haven't been "abused" by the system per se, but are as much victims of the downturn as anyone else who owns a home. That said, if the house is underwater by perhaps $50,000 (a working figure, according to CoreLogic), the homeowner will remain underwater for many years yet to come. Although it does move the needle closer to zero for some, it fails to solve the problem. Also, if the loan isn't re-amortized after the principal reduction (that is, if the $20,000 is simply treated as a one-time prepayment), there will be zero effect on the borrower's monthly payment, which is stipulated in the loan contract. Rather, the value will come in total interest savings from shortening the loan term. That's great, but is not immediate relief of any sort. It would, however, change the mix of principal and interest due in a borrower's payment, moving them toward solvency at a slightly accelerated pace.

For reasons hard to discern, we seem more intent upon trying to penalize the issues of the past than trying to solve the issues of today. We'd argue that the $25 billion (or more) would better have been used to help promote homebuying. Given how many properties are now going to be dumped into the market as the foreclosure disposition process comes back up to speed, fueling homebuying by whatever means possible should be a priority. Twenty-five billion would cover a lot of GSE-required MI premiums, pay for a pile of crisis-created GSE loan-level pricing adjustments, paid for some of the FHA insurance premium for first-time homebuyers or other ideas.

As we move slowly away from the crash of the housing market, it's of course natural to want vengeance for wrongdoing and to lash out at whatever the closest party might be. "Victims" of virtually every sort can be found if one looks hard enough, but untangling the thorny mess which produced the market collapse to find a responsible party who can be forced to pay damages is harder. It took decades of good intentions (and perhaps some bad ones) to build the mess we have today, and the parties involved range from regulators and politicians at the top to people flipping homes for profit at the bottom and everything in between. Good or bad, the settlement is done. More lawsuits are likely to follow, with mortgage-backed securities up next. More costs to be passed along, more effort expended addressing yesterday's problems, and less on today's troubles.

Mortgage rates are holding pretty steady at very favorable levels. A larger batch of economic data is due next week, including the latest from the National Association of Homebuilders and data on housing starts. The new home market has been showing some signs of enthusiasm over the last couple of months, and it seems likely that this gradual improvement will continue. Minutes from the last Federal Reserve meeting are also due and should prove interesting, given the new communications and policy direction they started last month. There will be inflation news, retail sales for January and more.

We thought rates would tick a little higher this week and they did. That might again be the case next week, just enough to again keep us a whisker or two above record lows.

The following are interest rate quotes from Al Hermann of American California Financial :

30 Yr Fixed FHA
Rate	APR
3.600	4.280	Details

Conforming 30 Yr Fixed up to $417000
Rate	APR
3.750	3.895	Details

Conforming Jumbo 30 Yr Fixed $417001 - $625500
Rate	APR
3.875	4.014	Details

Jumbo 30 Yr. to $1.5 Mil
Rate	APR
4.625	4.761	Details

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate	APR
3.375	3.458	Details

The following are interest rate quotes from Jan Schott Bank of America, Home Loans jan.schott@bankofamerica.com 310-802-2300 :

Conforming Loans to $417,000

5 Yr Fixed: 2.375% @ 1.000/pts 2.875% @ 0/pts

30 Yr Fixed: 3.875% @ 1.000/pts 4.375% @ 0/pts

Conforming High Balance to $625,500

5 Yr Fixed: 2.500% @ 1.000/pts 3.000% @ 0/pts*

30 Yr Fixed: 4.000% @ 1.000/pts 4.500% @ 0/pts

Non-Conforming Loans to $2,000,000

5 Yr Fixed: 2.625% @ 1.000/pts 3.000% @ 0/pts

30 Yr Fixed: 4.125% @ 1.000/pts 4.375% @ 0/pts

FHA Fixed Loans to $729,750

30 Yr Fixed: 3.750% @ 1.000/pts 4.125% @ 0/pts

Interest rates remained near record lows. The following are some excerpts from this week's newsletter on interest rates from HSH Associates :

"The Federal Reserve kicked off its new strategy of clearer communications at the close of January's Open Market Committee Meeting on Wednesday afternoon. With just a few words, plus some charts, the Fed now expects to keep interest rates "extraordinarily low" for a period up to 18 months longer than the mid-2013 previously in place. Also for the first time, the Fed more officially revealed more explicitly that it will use an inflation target to help control monetary policy.

Mortgage rates were rising somewhat in the early part of the week, goosed by warmer economic news, but reversed course to some degree. Why? If nothing else, it reinforces the idea that the Fed expects the economy to continue to experience sub-par growth which will require additional assistance, and that price pressures are low and will likely remain that way for some time.

The Fed's commitment to a low interest rate policy (and possibly a QE3) is aimed squarely at reviving the housing market. Sales of new homes came in at an annualized rate of 307,000 in December, down by some 7,000 units from November. While it was the worst year for new home sales since records were kept (1963), we have been encouraged by both the stable pattern of sales and also that inventory levels are at record lows (157,000 units built and ready for sale, about 6.1 months worth at the present rate of absorption). With lows of 281K annualized units and highs of 316K annualized, we are closer to the top than the bottom of a weak range, so any increase in demand must be met with new construction.

Arguably, the broad economy is better served by re-igniting and re-inflating housing, and this is the path we are set upon, for at least the foreseeable future. Refinance if you can, purchase a new (or used, or additional) home if you are inclined, but there doesn't seem to be much of a sense of urgency... for the moment. We are perhaps more optimistic than others that the housing market will strengthen in 2012."

The following are interest rate quotes from Al Hermann of American California Financial :

30 Yr Fixed FHA
Rate	APR
3.625	4.304	Details

Conforming 30 Yr Fixed up to $417000
Rate	APR
3.750	3.895	Details

Conforming Jumbo 30 Yr Fixed $417001 - $625500
Rate	APR
4.000	4.140	Details

Jumbo 30 Yr. to $1.5 Mil
Rate	APR
4.625	4.761	Details

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate	APR
3.300	3.463	Details

The following are interest rate quotes from Jan Schott Bank of America, Home Loans jan.schott@bankofamerica.com 310-802-2300 :

Conforming Loans to $417,000

5 Yr Fixed: 2.625% @ 1.000/pts 3.000% @ 0/pts

30 Yr Fixed: 3.875% @ 1.000/pts 4.375% @ 0/pts

Conforming High Balance to $625,500

5 Yr Fixed: 2.500% @ 1.000/pts 3.125% @ 0/pts*

30 Yr Fixed: 3.875% @ 1.000/pts 4.500% @ 0/pts

Non-Conforming Loans to $2,000,000

5 Yr Fixed: 2.625% @ 1.000/pts 3.000% @ 0/pts

30 Yr Fixed: 4.000% @ 1.000/pts 4.375% @ 0/pts

FHA Fixed Loans to $729,750

30 Yr Fixed: 3.875% @ 1.000/pts 4.125% @ 0/pts

Rates based on a Single Family Residence Purchase with 20% down, FICO score of 740 or greater, 30/day pricing. FHA is based on Single Family Residence Purchase with 3.5% down payment, FICO score minimum of 620 and 30/day pricing. Points are for Rate only. Closing Costs apply. Rates not guaranteed and subject to change daily. Please contact me for more information on Condo, Multifamily Units and Refinancing at 310-802-2300.

I do a lot of relocation work with people transferring to the Los Angeles area from other parts of the country , and they often are looking at areas throughout the greater Los Angeles area to decide which is the best community for them to live in. In addition to the rural nature of Palos Verdes, and our great school system, one of the best things about the Palos Verdes Peninsula is its stunning beauty. Here are a few pictures I have taken:

Catalina Island from Del Cerro Park

South Bay Beaches

Lunada Bay in Palos Verdes Estates with Catalina Island

Rancho Palos Verdes Coast Line

La Venta Inn in Malaga Cove area of Palos Verdes Estates

Point Vicente Lighthouse

Beautiful Sunset

The following is my market report for the year ended December 31, 2011 for the South Bay Los Angeles and the Palos Verdes Peninsula: Simply Click on the Market Report Desired Below ( Note that Market Information Reports are Year to Date Figures ) : Palos Verdes Peninsula City and Individual Neighborhood 4th Quarter 2011 Detailed Real Estate Activity Palos Verdes Peninsula 2011 Year End Market Information Manhattan Beach and Hermosa Beach 2011 Year End Market Information Redondo Beach 2011 Year End Market Information Torrance 2011 Year End Market Information San Pedro 2011 Year End Market Information

The figures included in the table below are only for the three months in the 4th Quarter :

The total inventory of single family homes for sale in the cities listed above is down approx. 35% compared to the prior year, the sales activity is up 10%, and there is only 3 months of inventory. For most of the last two decades, L.A. County has averaged an 8 month inventory. Homes in the lower end of the price range have also been selling faster than the higher priced homes. Average price per sq. ft. for homes sold in the 4th quarter 2011 for the cities listed above is down approx. 8& overall compared to the 4th quarter of 2010.

FINANCING (See our web blog at http://mmegowan.activerain.com/for rate updates):

Interest rates for Conforming Loans ($417,000 and below) are at approx. 3.9%, approx. .5% lower that at the end of last quarter. Rates for loans between $417,000 and $625,500 (conforming jumbos) are approx. 4.0% ( a reduction of about .5% from last quarter end. Conforming loans generally require a 20% down payment (less for FHA or VA loans). Interest rates on Jumbo 30 year fixed rate mortgages (loans in excess of $625,500) have an average rate of approx. 4.5 to 4.75%, approx. the same as the prior quarter. The spread in interest rates between conforming loans and jumbo loans has narrowed considerably over the last year or so as more banks are participating in making jumbo loans. Jumbo loans require a higher down payment of 25 to 30%. All rates above are APR rates as of 11/15/2011, and assume a 20% down payment, no points and a FICO score of at least 740.

Fourth Quarter 2011 Market Analysis for Palos Verdes Peninsula Condos and Townhomes

The average price per sq. ft. for townhomes and condos on the Palos Verdes Peninsula has fallen approx. 13% compared to the fourth quarter of last year, and averaged $295 per sq. ft. during the 4th quarter 2011.. Prices in a few projects , such as the Palos Verdes Bay Club have fallen more than this. Pricing during 2011 for condos and townhomes has fluctuated widely, between $279 and $356 per sq. ft.

The following is a chart of Palos Verdes Peninsula condos and townhomes for sale and sold over the last year

The inventory of condos and townhomes for sale of 42 units at the end of the 4th quarter of 2011 continues to fall dramatically from its peak in March 2011 ( a 54% decrease) and is 37% lower than a year ago. Sales volume for the quarter ws also 11% higher than last year, which has resulted in a reduction to only a 4 month inventory of condos and townhomes for sale.

I have been very involved in the condo and townhome market on the Palos Verdes Peninsula. You can see that by "Googling" the search term " Palos Verdes Condos" and you will see that my website is the first listing on page one of the search results. To check out the various condo and townhome projects on the Palos Verdes Peninsula, see the following link on my website: PV Condos & Townhomes / Townhouses. Each of these project descriptions have an analysis of recent prices paid for sales in each project. You can also see the latest listings for condos and townhomes in Palos Verdes on my website at the following link: MLS Listings - South Bay and PV

Interest rates remained near historicao lows to start the new year. The following are some excerpts from this week's newsletter on interest rates from HSH Associates :

"Out with the old year, in with the new. After several months of improving economic reports, optimism appears to be growing for the moment that the new year will bring steadily improving economic growth. There will no doubt be challenges both expected and unexpected as 2012 progresses, and probably, some beneficial surprises as well.

Will the housing market be one of them? Could be. Sales of existing homes are nudging higher, builders are building again (at least multifamily stock) and mortgage rates, well, mortgage rates really don't get any lower than they are at the moment and are starting 2012 at approximately 60-year lows. That said, better economic news, should it persist, will tend to bump rates higher as we go.

Aside from fantastic mortgage rates and lots of available low-priced housing stock, the key to a housing market improvement is fewer folks losing jobs and more getting them. In that regard, the end of 2011 points to a hopeful warming trend. Seasonal adjustments aside, over the past five weeks new claims for unemployment assistance have been in their most favorable pattern since March 2011. During the week ending December 31, that trend continued, with 372,000 new applications for benefits filed at state windows. Fewer people losing jobs is a key to re-building shattered consumer confidence as we roll forward.

Mortgage rates are at favorable levels, and it would take monumental economic change for better or worse to move them in either direction very much. At the moment, the warmer economic climate here is providing some much-needed distraction from the troubles in Europe, but those issues continue to influence the markets.

Will the good news continue? More clarity should come next week with the release of Retail Sales data for December, consumer borrowing, initial January consumer sentiment readings and a few other indicators. Look for little change in mortgage rates next week, perhaps a couple of basis point upward movement at most."

The following are interest rate quotes from Al Hermann of American California 'finaniao

30 Yr Fixed FHA
Rate	APR
3.750	4.437	Details

Conforming 30 Yr Fixed up to $417000
Rate	APR
3.750	3.895	Details

Conforming Jumbo 30 Yr Fixed $417001 - $625500
Rate	APR
3.875	4.014	Details

Jumbo 30 Yr. to $1.5 Mil
Rate	APR
4.625	4.761	Details

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate	APR
3.375	3.505	Details

The following are interest rate quotes from Jan Schott Bank of America, Home Loans jan.schott@bankofamerica.com 310-802-2300 :

Conforming Loans to $417,000

5 Yr Fixed: 2.500% @ 1.000/pts 2.875% @ 0/pts

30 Yr Fixed: 3.875% @ 1.000/pts 4.125% @ 0/pts

Conforming High Balance to $625,500

5 Yr Fixed: 2.750% @ 1.000/pts 3.000% @ 0/pts*

30 Yr Fixed: 3.875% @ 1.000/pts 4.375% @ 0/pts

Non-Conforming Loans to $2,000,000

5 Yr Fixed: 2.750% @ 1.000/pts 3.125% @ 0/pts

30 Yr Fixed: 4.125% @ 1.000/pts 4.500% @ 0/pts

FHA Fixed Loans to $729,750

30 Yr Fixed: 4.000% @ 1.000/pts 4.375% @ 0/pts

Rates based on a Single Family Residence Purchase with 20% down, FICO score of 740 or greater, 30/day pricing. FHA is based on Single Family Residence Purchase with 3.5% down payment, FICO score minimum of 620 and 30/day pricing. Points are for Rate only. Closing Costs apply. Rates not guaranteed and subject to change daily. Please contact me for more information on Condo, Multifamily Units and Refinancing at 310-802-2300.