Lake Tahoe
Real Estate News - March 21, 2005 |
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| REVERSE MORTGAGES
CONTINUE DRAMATIC GROWTH The number of reverse mortgages
endorsed by the Federal Housing Administration (FHA) during the fiscal
year 2004 was 37,829, more than double the fiscal year 2003 production
of 18,097. Reverse mortgages represented 3.8 percent of FHA's entire
single-family volume during 2004. With 10,045 endorsements, California
was the state with the greatest number of reverse mortgages, followed
by Florida and Texas. FHA's Home Equity Conversion Mortgage (HECM)
program, created by Congress in 1987, allows homeowners over the age
of 62 to tap into the equity in their homes without having to repay
the loan until they move out. FED RAISES TARGET FOR FEDERAL FUNDS RATE TO 2 PERCENT The Federal Reserve's Open Market Committee raised the target for the federal funds rate by 25 basis points to 2 percent last week. This is the fourth increase in five months, starting with a 25 basis point increase in June. The federal funds target rate is the interest rate charged by banks when they borrow funds "overnight" from each other. "Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved. Inflation and longer-term inflation expectations remain well contained," the Fed said in a prepared statement. While the federal funds rate has no direct impact on other rates, such as those for mortgages, it can alter them indirectly. The Mortgage Bankers Association is predicting mortgage interest rates will reach about 5.9 percent by the end of 2004. REAL ESTATE CONSTRUCTION REMAINS STRONG IN CALIFORNIA California home production continued to boom in September as both single-family and multifamily construction showed strong, year-over-year increases, the California Building Industry Association recently reported. A total of 17,118 housing permits were issued in September, a 6.7 percent decline from the previous month but up 15.6 percent from September 2003. Single-family construction was down 7 percent from August but up 9.7 percent from last year, with 12,450 permits issued. Multifamily units totaled 4,668 in September, down 5.8 percent from August but up 34.8 percent from September 2003. For the first nine months of 2004, total housing starts in California, as measured by permits issued, totaled 156,788, an increase of 7.4 percent from last year. Sixteen of the state's 28 metropolitan areas recorded an increase in the total number of housing permits issued, and 16 of the 28 areas posted gains in single-family permits as compared with 2003. Information provided by - C.A.R. Newsline is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 135,000 REALTORS® statewide |
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