THIS MONTH IN REAL ESTATE

March 2013
Existing-home sales edged up in January, while a seller's market is developing and home prices continue to rise steadily above year-ago levels, according to the National Association of Realtors. Sales rose in every region but the West, which is the region most constrained by limited inventory. Lawrence Yun, NAR chief economist, said tight inventory is a major factor in the market. "Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country." "We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth," Yun explained. NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said homes are selling faster. "The typical home is selling nearly four weeks faster than it did a year ago," he said. "In this environment, Realtors can help buyers strike a balance between moving quickly and protecting their interests, such as making offers contingent upon a satisfactory home inspection and obtaining a loan; of course, a loan pre-qualification may help too."
Source: National Association of Realtors February 21, 2013

THE NUMBERS THAT DRIVE REAL ESTATE Home Sales Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.4 percent to a seasonally adjusted annual rate of 4.92 million in January from a downwardly revised 4.90 million in December, and are 9.1 percent above the 4.51 million-unit pace in January 2012.

Seasonally Adjusted Home Sales In Millions

Source: National Association of Realtors February 21, 2013

Home Price
The national median existing-home price for all housing types was $173,600 in January, up 12.3 percent from January 2012, which is the 11th consecutive month of year-over-year price increases; that last occurred from July 2005 to May 2006. The January gain is the strongest since November 2005 when it was 12.9 percent above a year earlier.

Median Home Price - In Thousands

Source: National Association of Realtors February 21, 2013

Supply of Inventory
Listed inventory is 25.3 percent below a year ago when there was a 6.2-month supply. Raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.

Supply of Inventory - In Months

Source: National Association of Realtors February 21, 2013

Mortgage Rates
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.41 percent in January from a record low 3.35 percent in December; it was 3.92 percent in January 2012.
Source: National Association of Realtors February 21, 2013

Type 30-Year Fixed 15-Year Fixed 5/1 ARM Historical Average

Primary Mortgage Market Survey
Source: Freddie Mac, February 28, 2013

Average Rate 3.51% 2.76% 2.61% 8.90%

Rate (Last Month) 3.53% 2.77% 2.63% 8.90%

Distressed homes - foreclosures and short sales - accounted for 23 percent of January sales, down from 24 percent in December and 35 percent in January 2012. Fourteen percent of January sales were foreclosures and 9 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in January, while short sales were discounted 12 percent.

The median time on market for all homes was 71 days in January, down from 73 days in December and is 28.3 percent below 99 days in January 2012. Short sales were on the market for a median of 94 days, while foreclosures typically sold in 47 days and non-distressed homes took 75 days; 31 percent of all homes sold in January were on the market for less than a month. First-time buyers accounted for 30 percent of purchases in January, unchanged from December; they were 33 percent in January 2012. All-cash sales were at 28 percent of transactions in January, down from 29 percent in December and 31 percent in January 2012. Investors, who account for most cash sales, purchased 19 percent of homes in January, down from 21 percent in December and 23 percent in January 2012. Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 4.34 million in January from 4.33 million in December, and are 8.5 percent above the 4.00 million-unit level in January 2012. The median existing single-family home price was $174,100 in January, up 12.6 percent from a year ago. Existing condominium and co-op sales rose 1.8 percent to an annualized pace of 580,000 in January from 570,000 in December, and are 13.7 percent higher than the 510,000-unit level a year ago. The median existing condo price was $169,600 in January, up 9.4 percent from January 2012. Regionally, existing-home sales in the Northeast increased 4.8 percent to an annual rate of 650,000 in January and are 12.1 percent above January 2012. The median price in the Northeast was $230,500, up 2.4 percent from a year ago. Existing-home sales in the Midwest rose 3.6 percent in January to a pace of 1.16 million and are 17.2 percent higher than a year ago. The median price in the Midwest was $131,800, which is 8.6 percent above January 2012. In the South, existing-home sales increased 1.0 percent to an annual level of 1.96 million in January and are 14.0 percent above January 2012. The median price in the South was $152,100, up 13.4 percent from a year ago. Existing-home sales in the West fell 5.7 percent to a pace of 1.15 million in January and are 5.7 percent below a year ago. The median price in the West was $239,800, which is 26.6 percent above January 2012.
Source: National Association of Realtors February 21, 2013

THE LOCAL MARKET Banks step up efforts to forgive mortgage debt in California
But a report on aid offered under last year's settlement with the five largest mortgage servicers says more than half is still geared toward getting people out of their homes.
By Alejandro Lazo and Jim Puzzanghera, Los Angeles Times February 22, 2013 Banks are stepping up efforts to forgive mortgage debt for troubled California homeowners, although more than half of the aid offered under last year's landmark mortgage settlement is still geared toward getting

people out of their homes. California homeowners have received an estimated $16.9 billion worth of completed aid doled out by the nation's five largest mortgage servicers under the accord reached last year. In the most detailed report to date on how that money is flowing to borrowers, regulators noted an increase in the number of principal reductions, although the single biggest chunk of aid has been short sales. In principal reductions, banks write down mortgage debt for borrowers who remain in their homes. Short sales allow homeowners to sell their properties for less than they owe. Both require banks to take a haircut. Nationally, more than half a million consumers had received a total of $45.8 billion in aid from the five largest banks as of Dec. 31. The settlement was struck last year by 49 state attorneys general, several federal agencies and Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. Officials had first estimated that the banks would provide $34 billion in direct homeowner aid through their programs. Housing and Urban Development Secretary Shaun Donovan said Thursday that he now expects the final amount will be more than $50 billion. The settlement resolved investigations into allegations that the financial institutions had used flawed paperwork and other faulty practices to foreclose on homes. Before the settlement, many lenders opposed principal write-downs, arguing that they rewarded delinquent borrowers. But consumer advocates have long pushed for wide-scale principal relief. "Clearly there is some added momentum around principal reduction modifications, and that is encouraging," said Paul Leonard, California director for the Center for Responsible Lending. "But, you know, you look at the overall data and see a disproportionate share of short sales, which is disappointing." HUD Secretary Donovan told reporters that the settlement was exceeding its goals. The accord has kept people from losing their homes and contributed to the housing recovery, he said. Under the settlement, banks are required to give homeowners aid in the form of principal reduction, short sales and other modifications. The banks get credit for both principal reductions and short sales under the agreement, but must give 60% of the relief nationally by forgiving principal for families who keep their homes. Of the $45.8 billion in aid dispensed nationally, homeowners have received about $10.9 billion in firstmortgage principal reduction relief, including trial modifications that are expected to become permanent. Meanwhile, about $20 billion of the total national aid came from short sales. The rest has gone to reducing and forgiving second mortgages, as well as other programs. According to numbers provided by California's monitor, a total of $16.9 billion worth of aid has gone to homeowners. About $5 billion of that total is first-mortgage principal reduction. About $8.8 billion has been through short sales. Although short sales remain a big part of the equation, borrowers are getting more principal relief in California than in other states in part because of the state's tough new foreclosure laws, the state attorney

general's office said. So far only Ally Financial, which has provided $257 million in relief, has met its obligation under the national settlement. The other four banks had much larger obligations.
Source: Los Angeles Times

LUNASTAR NEWS
With a housing market as frustrating as this, real estate agents very often do a lot of work without knowing if they will ever get paid. Clients can sometimes have a sudden change of heart and strategy, and very often even the best agents are to blame for frustrating markets that are nowhere near their control. However, the termination of an agency relationship is not always the decision of the client. Case in point: We recently represented a very motivated couple who were first time homebuyers. We put in several offers for them and a few were countered. But before we received a full acceptance for any of their offers, our clients stopped by an open house one weekend and met the owner, who was also a real estate agent. He was selling his house as a FSBO (For Sale By Owner). Our clients loved the house so much that they immediately wrote an offer with the owner/listing agent. This situation is most unfortunate for several reasons. Because our clients did not realize that by writing the offer with this owner/listing agent, they were suddenly without representation for this transaction. Our clients were no longer our clients. Since we did not write their offer, then we were contractually not their agent for this transaction. The Seller was also unwilling to pay a commission for the Buyers Agent and therefore unwilling to accommodate the Buyers with their own representation. The Buyers are now completely at the mercy of the Seller. Even though the Seller promises to walk the Buyers through every step of the transaction, the reality is that the Seller has no legal obligation or fiduciary duty to assist the Buyers with anything. The Seller will never entirely have the Buyers best interests in mind. What makes this story even more unfortunate is that the Buyers asked us for help with the contracts, the negotiations, and the physical inspection. Essentially, the Buyers were asking us to still be their agent. They were good people and we had established a good rapport with them. But even if we wanted to help them, even out of the goodness of our hearts, even the slightest implication that we were their agent in this already very volatile transaction would have opened a door to litigation from any lawsuit that could very easily result. Did you know that nearly 73 percent of real estate attorneys surveyed by the National Association of Realtors in 2011 identified agency issues as one of the top three sources of disputes involving real estate professionals that result in litigation, complaints to state real estate commissions, arbitration or mediation? So the lesson here for anyone looking to buy or sell real estate: Get a Realtor! Get representation! Get a licensed real estate agent to represent you through the creation, submission, and execution of a contract, the disclosures, instructions and addendums, any and all inspections, further negotiations, and the close.

And Sellers should never refuse to pay a commission to a Buyers agent. And Buyers need to know when to walk away, sometimes run away, from an opportunity should that opportunity not be the opportunity that they initially imagined it to be. Its baffling that after the recent collapse in the real estate market, which was due mostly to unethical and often times illegal behavior, that there are still people, companies, and organizations that almost blatantly continue to practice unethical and illegal behavior. And through no fault of our own, good and ethical agents can get tangled up in lawsuits and be accused of things that we had no explicit part in. Its best to just avoid these situations even when the threat of litigation seems minute. The following is a list of services that LunaStar provides: We will list, market, and sell your home for the best possible price that the market will bear. We will find you a new home to buy or lease in the area that best suits your needs and your budget. We will find you the best financing available for your individual situation for you to comfortably purchase or refinance your home. We will assist you and your friends or family avoid foreclosure of your home. Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact the real estate market in your area. Talk to your LunaStar associate for assistance interpreting the conditions in your local market. LunaStar associates are equipped with all the knowledge and information to help you navigate through the process of buying or selling a home in this challenging market.

ERIC D. WALTON REAL ESTATE & MORTGAGE BROKER 818-437-1877 EWalton@LunaStarFinancial.com

CATALINA R. DORKA SENIOR LOAN SPECIALIST 213-351-0414 CDorka@LunaStarFinancial.com

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. LunaStar does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. LunaStar will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.