Mercury News – The most likely first-time homeowners, young professionals and couples starting a family, won’t buy these days.  Or they can’t.  Or they already did during the housing boom.  And their absence helps explain why the housing industry is still depressed.

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Wall Street Journal – A new paper by Federal Reserve Bank of Boston economists used consumer sentiment data to try to find out how the housing market’s state of affairs was affecting the willingness to buy a home.  Age mattered, which suggests a new generation may be coming along that will cast a wary eye at homeownership for a long time to come.

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Sacramento Bee – Tens of thousands of homeowners are unable to take the traditional second step on the American homeownership ladder because they have mortgage balances much higher than the homes are now worth.

Los Angeles Times – Housing affordability increased in California in the second quarter as prices dropped from the same period a year earlier, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ housing affordability index.

The California Franchise Tax Board (FTB) recently released an update on the California home buyers’ tax credit alerting borrowers to fax delays it is experiencing.  Due to the high volume of faxes, borrowers may experience delays or difficulties in connecting to the fax number during the FTB’s normal business hours.  It may take several minutes or possibly up to an hour to connect and transmit the faxed application.  All applications for the California home buyers tax credit must be submitted via fax.

The California legislature on Monday passed AB 183, providing $200 million for home buyer tax credits. The Governor is expected to sign the bill into law this week. C.A.R. supported this important legislation since its inception.  Part of a package of four bills passed at the request of the Governor, AB 183 is designed to help stimulate the economy and create jobs.  It allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under AB 183 purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).

The U.S. Treasury has allocated nearly $700 million to CalHFA to help low-and moderate-income borrowers who have been impacted by unemployment and declining home values.  CalHFA now must submit a proposal by April 16 to the Treasury outlining innovative programs focused on foreclosure prevention and housing market stability.  The Treasury will review each proposal for compliance with program objectives and other requirements. The Treasury expects that CalHFA may begin drawing down funds within four to six weeks following submission of proposals, or mid-year.

Homeowners wanting to pay off their mortgage earlier than planned can do so by making extra principal payments.  One extra full principal and interest payment a year will reduce a 30-year loan to about 17 years, and adding the following month’s principal payment to the current one will cut the loan almost in half.  It is important that borrowers tell their lender the extra money is to be credited to principal.  Homeowners should keep records of their payments and review it once a year to be certain the lender has followed directions.

Private mortgage insurance (PMI) generally is required for home buyers whose down payment is less than 20 percent.  PMI may be added to the mortgage payment each month to protect the lender should the borrower default.  By law, PMI generally must be canceled automatically when the loan balance reaches 78 percent of the home’s original value.  However, lenders also may agree to cancel this coverage upon a borrower’s request when the balance declines to 80 percent of the current value, if certain conditions are met. Borrowers who have made their payments on time each month for five years should contact their lender or loan servicer to obtain all the details on cancelling the coverage.

- Mick Orton

From CNN Money- The combination of affordable home prices, low interest rates, and the federal tax credit for home buyers have created an opportune time for many buyers to purchase a home.  Many real estate analysts also believe that most housing markets have stabilized, but that some markets may decline further.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Buyers should keep in mind that housing markets are local and can vary greatly from one neighborhood to the next.  Working with a REALTOR® familiar with the area in which the buyer is searching can help the buyer select a house that best suits their needs.
• California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009.  In January, California’s median home price was 17.2 percent above the low for the current cycle.
• The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500. 
• The Federal Reserve has helped maintain low interest rates, which, in turn, has assisted home buyers.  However, the agency plans to stop purchasing mortgage-backed securities at the end of this month, which likely will increase rates on 30-year fixed mortgages.  Buyers may be able to lock in a low interest rate by working with their lender.

Note: How can this be when California is BROKE?

More than 20,000 California homebuyers could get state tax credits of up to $10,000 this year under a new stimulus proposed Wednesday by Gov. Arnold Schwarzenegger.

The governor’s plan to allocate $200 million in credits to buyers of new or existing homes is part of a job creation strategy. It goes now to state lawmakers for consideration.

“This is about helping eliminate extra housing to get construction back on tap,” said Victoria Bradshaw, Schwarzenegger’s secretary of labor and workforce development, in a call with reporters.

It’s unclear how fast legislators might act. But last year, they handily approved $100 million in tax credits for buyers of new, unoccupied homes. The credits, claimed by 10,600 buyers from March through June, proved popular and ran out faster than expected.