The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California dropped to 36 percent in the second quarter of 2013, down from 44 percent in first-quarter 2013 and from 51 percent in second-quarter 2012, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The second quarter 2013 figure fell below 40 percent for the first time since the third quarter of 2008.
Nearly all regions of the state experienced sharp quarter-over-quarter declines in housing affordability, with Bay Area and coastal regions recording the greatest decreases in the index due to significantly higher home prices.
At an index of 71 percent, Madera County was the most affordable county of the state, while San Francisco and San Mateo counties tied for the least affordable at 17 percent.
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Nearly half (46 percent) of homeowners who received assistance with their mortgage in 2009 through the government’s Home Affordable Modification Program (HAMP) redefaulted on their mortgages, while 38 percent who received loan modifications in 2010 have done so, according to a report by the Office of the Special Inspector General for the Troubled Asset Relief Program.
According to Christy Romero, the special inspector general for the Troubled Asset Relief Program, the Treasury failed to analyze its own data to determine which borrowers were most at risk of losing their homes to foreclosure after receiving government support.
Homeowners in default on loans held by banks or investors can apply to their mortgage servicer to reduce their monthly payments. Under HAMP, investors, servicers and homeowners are all eligible to receive incentive payments to make the loan more affordable.
In all, just 865,100 homeowners were active in the HAMP program as of April. Of those, 10 percent have missed one or two payments but have not yet redefaulted. The overall redefault rate is 26 percent. More info
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Report: U.S. is not experiencing a housing bubble
CoreLogic this week released its July MarketPulse report in which CoreLogic Chief Economist Mark Fleming, Ph.D., and Deputy Chief Economist Sam Khater share their optimism about the ongoing recovery in the U.S. housing market.
Key findings in the July MarketPulse report include:
- According to CoreLogic the market is not experiencing a housing bubble, and the rise in mortgage rates will help to prevent one in the future.
- Housing affordability is near its height due to historically low interest rates and home prices.
- According to the housing affordability index, all but two states are affordable today, and most states are near their recent affordability high points.
- Cash sales peaked above 40 percent two years ago and are slowly receding.
- Cash sales are one of the drivers behind the rapid house price recovery.
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