Rental Vacancy Rates Fall to Lowest in Decade: 

The share of empty homes for rent fell to its lowest level in a decade during the second quarter.  This is very important for the housing market, as this type of trend is always a pre-curser for stronger housing demand.

The residential rental vacancy rate declined to 8.6 percent from 8.8 percent in the January-March period, the Commerce Department said on Friday. The second-quarter reading was the lowest since 2002.

In a positive sign for the housing market, the homeownership rate edged up to 65.5 percent in the second quarter from 65.4 percent in the prior period, the Commerce Department said.

The homeowner vacancy rate dropped to 2.1 percent, the lowest since the first quarter of 2006, from 2.2 percent in the first quarter.

The homeownership rate peaked at 69.4 percent in 2004 at the height of a housing market boom fueled by cheap credit.

Confidence in housing market continues to remain positive:

Housing market confidence among Americans continues to trend in a positive direction despite stalling optimism about the economy and personal finances, according to results from Fannie Mae’s June 2012 National Housing Survey.  Results indicate flattening economic trends may be contributing to waning consumer expectations about their personal financial situation.  Nevertheless, Americans’ continued positive sentiment about housing appears to remain buoyed by low house prices and interest rates at historically low levels.

Highlights of the June survey include:

• Average home price expectation hit 2 percent this month, a 0.6 percent increase from May and the highest value recorded since the survey began in June 2010.
• Thirty-five percent of respondents say that home prices will go up in the next 12 months, the highest level recorded since the survey’s inception.
• Thirty-seven percent of those surveyed think mortgage rates will go up in the next 12 months, a 4 percentage point decrease from last month.
• The percentage who say it is a good time to buy increased slightly to 73 percent, matching the highest level recorded since the survey began two years ago, while the percentage who think it is a good time to sell remained at 15 percent.
• On average, respondents expect home rental prices, generally steady since May, to increase by 4.0 percent over the next 12 months.
• Forty-eight percent of respondents think that home rental prices will go up in the next 12 months, while 5 percent think they will go down.
• Sixty-nine percent of respondents said that they would buy if they were going to move, a 6 percentage point increase from last month and the highest level recorded since the survey’s inception.
• The percentage of respondents who would rent decreased from 32 percent to 27 percent, the lowest number to date.

Housing scorecard shows promising signs of stability:

HUD and the U.S. Dept. of the Treasury have released the June edition of the Obama Administration’s Housing Scorecard, which shows some promising signs of stability, though the overall outlook remains mixed.

Home equity rose $457.1 billion in the first quarter of 2012, a 7.4 percent increase from the previous quarter and its highest level since the second quarter of 2010. Sales of previously owned homes posted sharp gains in May of 9.6 percent compared with a year ago and new home sales in May recorded their highest level in more than 2 years. However, foreclosure starts and completions turned up in May, underscoring continued fragility in the housing market.

The June Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

• More than 5.3 million modification arrangements were started between April 2009 and the end of May 2012 – including nearly 1.2 million homeowner assistance actions through the Making Home Affordable Program and more than 1.3 million FHA loss mitigation and early delinquency interventions.
• As of May, more than one million homeowners have received a permanent HAMP modification, saving approximately $536 on their mortgage payments each month, and an estimated $13.3 billion to date. 
• Eighty-six percent of homeowners entering the program in the last 23 months have received a permanent modification, with an average trial period of 3.5 months. 

More than 83,000 homeowners have had their principal reduced as part of their HAMP permanent modification, and nearly 84,000 second lien modifications have been completed through the Second Lien Modification Program.

Number of Underwater Mortgages Decline:

"Underwater" mortgages are when a person owes more on their home than the home is worth. Most borrowers that did find themselves underwater was due to a rapid fall in home prices when the housing market tanked. But as home prices come back, the number of borrowers that are underwater are falling.

This is very important to the housing market because this has started to release a segment of purchasers that have been essentially trapped in their house, unable to sell it so that they could make the move to another home.

The number of Americans who owe more on their mortgages than their homes are worth declined in the first three months of the year, aided by a modest rebound in U.S. home prices.

While improving, the number of underwater mortgages remains far higher than in a healthy housing market, when about 5 percent of home loans are underwater.

U.S. home prices rose in 19 of 20 major U.S. cities in April from March, according to the Standard & Poor's/Case-Shiller index. That was the second straight month that prices rose in a majority of the cities tracked by the index. A measure of national prices registered an increase of 1.3 percent — the first gain in seven months.

Low mortgage interest rates have helped drive home sales higher this year, fueling price increases. In some markets, a lack of homes for sale has led to those on the market receiving multiple offers.

Governor signs California Homeowner Bill of Rights into law:

California Governor Jerry Brown signed into law today the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible to help stabilize California's housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.
The Homeowner Bill of Rights has four major components:

• Prohibiting “dual track” foreclosures that occur when a servicer continues foreclosure while also reviewing a homeowner’s application for a loan modification;
• Creating a single point of contact for homeowners who are negotiating a loan modification;
• Expanding notice requirements that must be provided to a borrower before taking action on a loan modification application or pursuing foreclosure; and
• Allowing injunctions against foreclosure until violations are corrected and permitting civil penalties against servicers that file multiple, inaccurate mortgage documents or commit reckless or willful violations of law.

These new laws make California the first state in the nation to take provisions in the National Mortgage Settlement, which covered the nation’s five largest mortgage loan servicers, and apply those rules to all mortgage servicers.

C.A.R. opposed this well-intentioned legislation because it will encourage the filing of lawsuits intended for delay and further discourage lending.

While C.A.R. is disappointed in the final outcome, the good news is that what has passed is a much-improved version of the package of bills initially sponsored by the Attorney General, which would have originally halted ALL foreclosures, drying up both REO inventory and even short sales.

C.A.R. will continue to fight for the thoughtful, balanced reform of the foreclosure process. For example, C.A.R. is sponsoring AB 1745 (Torres) which prohibits “dual tracking” to prevent lenders from selling a property at a foreclosure sale if a short sale has already been approved. C.A.R. has also worked cooperatively with the Attorney General on several of the bills in her “bill of rights.”

The law will go into effect January 1, 2013. For full text of the bills, visit: http://leginfo.ca.gov/bilinfo.html.

Retail Real Estate Recovery Taking Hold:

Now that residential real estate has bottomed and started to make some gains, commercial real estate is starting to pick up to. This is very important to your local housing market as a vibrant retail business always supports local housing demand.

Vacancy rates and rents at U.S. neighborhood shopping centers improved for the second quarter in a row, further evidence the sector is moving toward recovery after years of weakness, real estate research firm Reis said on Friday.

The retail real estate sector has been among the hardest hit in commercial property. At the mercy of consumer spending, the sector has reflected the diverse pressures and changes since the housing crisis began in 2007.

The first quarter marked the first time in nearly seven years that average vacancy rates at strip malls fell, and that trend continued in the second quarter, Reis said, with the rate declining to 10.8 percent. While demand for space is weak, the firm said, new construction is even weaker.

At the same time, asking rents rose 0.2 percent, up from a gain of 0.1 percent in the first three months of the year.

Speeding up refinances:

While many large financial institutions are facing backlogs of mortgage applications as more homeowners take advantage of low interest rates and the government-sponsored Home Affordable Refinance Program (HARP), borrowers looking to accelerate the refinancing process are finding some relief from brokerages and community banks that are not servicing HARP loans.

Making sense of the story

• HARP borrowers typically refinance with the banks that originally serviced their loans, because those banks already have their information and, according to the Mortgage Bankers Association, “There’s potential for it to be a less painful process.”
  
  
• Still, tighter lending standards precipitated by the mortgage crisis have made for an arduous application process.
  
  
• Mortgage brokers are reporting an increase in business from those looking to streamline the process. According to one broker, a benefit of working with a mortgage broker is that they have direct contact with the banks and can keep track of the application as it goes through many hands at the bank.
  
  
• Borrowers also might want to consider refinancing with a community bank, especially those that do not service HARP-eligible borrowers and are able to respond quicker to non-HARP refinance requests.

Homeowner Bill of Rights plans move forward:

On Wednesday, a so-called “Homeowner Bill of Rights” moved a step closer to passing, with housing advocates claiming the bill would help people stave off foreclosures. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not.

Making sense of the story

• C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes AB 278 because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, making it difficult for even well-qualified borrowers to obtain financing.
  
  
• The legislation would ban the practice of dual-tracking, in which a bank continues foreclosure proceedings while a homeowner is seeking a loan modification; require banks to provide a single of point – either a person or a team – for struggling borrowers; and give borrowers the right to sue their lenders for “significant, material” violations of the new law.
  
  
• The bills also require lenders to give a clean explanation when they reject borrowers for a loan modification, to verify mortgage documents before a foreclosure, and to provide copies to borrowers upon request. Lenders can be fined up to $7,500 per loan for filing and recording unverified documents. The bills’ provisions apply to first-lien mortgages for owner-occupants.
  
  
• For more information about C.A.R.’s opposition to AB 278 and to learn how to take action, visit.