FED CUTS INTEREST RATES BY HALF A POINT
The Federal Reserve today cut a key short-term interest rate by a half-percentage point, the second significant rate cut in just over a week, in an effort to stave off a growing risk of a national recession.

“Financial markets remain under considerable stress, and credit has tightened further for some businesses and households,” the Fed said in a prepared statement. “Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.”
C.A.R. REPORTS SALES DECREASE 33.4 PERCENT
Home sales decreased 33.4 percent in December in California compared with the same period a year ago, while the median price of an existing home fell 16.5 percent, C.A.R. reported yesterday.

“December is typically one of the slower months for sales, and the liquidity crunch continued to dampen sales beyond the normal seasonal decrease,” said C.A.R. President William E. Brown. “Even so, seasonally adjusted sales edged above 300,000 for the first time since August 2007. The liquidity crunch also contributed to the significant decline in the median price due to the lack of financing options for loans above the conforming loan limit of $417,000. It is imperative that the economic stimulus packaged approved by the House on Tuesday, which includes a proposal to temporarily increase the conforming loan limit, receive swift approval by the Senate.”

Closed escrow sales of existing, single-family detached homes in California totaled 301,040 in December at a seasonally adjusted annualized rate. Statewide home resale activity decreased 33.4 percent from the 452,060 sales pace recorded in December 2006. The median price of an existing, single-family detached home in California during December 2007 was $475,460, a 16.5 percent decrease from the revised $569,350 median for December 2006. The December 2007 median price fell 2.9 percent compared with November’s revised $489,570 median price.

INCREASING CONFORMING LOAN LIMITS PART OF STIMULUS PACKAGE
The U.S. House of Representatives unanimously approved a measure Tuesday that includes an increase in the conforming loan limits as part of a larger economic stimulus package. The measure would allow the Federal Housing Administration and Fannie Mae and Freddie Mac to issue mortgages above the current $417,000 level. Raising the conforming loan limits to more accurately reflect the cost of housing in California and other high-costs areas of the nation has long been an objective of C.A.R.

“While this measure is expected to face an uphill battle in the Senate, Tuesday’s action by the House represents a huge win for Californians and for C.A.R., which has fought aggressively for the increases for several years,” said C.A.R. President William E. Brown.

“For years, Chairman Barney Frank and I have worked to create affordable housing opportunities for families across the country by increasing the FHA and GSE conforming loan limits,” said Congressman Gary G. Miller, who has worked closely with C.A.R. to push for the reforms. “With the average home price in high-cost areas like California exceeding the current loan limit, homeowners and homebuyers in these areas have been unable to utilize these important federal housing programs. The loan limit increases included in the economic stimulus package will make safe, conforming mortgage loans available for homebuyers in all areas of the country.”

REFINANCING SPURS MORTGAGE APPLICATION ACTIVITY
Refinance applications fed an 8.3 percent increase in total mortgage loan activity for the week ending Jan. 18, according to the latest data from The Mortgage Bankers Association (MBA). The MBA reports that refinance applications have climbed 92 percent since the beginning of November, while purchase applications rose 7 percent.

“With tighter credit conditions we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40-80 basis point drop in rates we have seen since Nov. 2 across products,” said Jay Brinkmann, the MBA’s vice president of research and economics.

ANDERSON FORECAST PREDICTS RECESSION
Declining home sales and new construction, mounting job losses in the real estate sector, tighter lending practices, as well as a drop in consumer spending and confidence, will lead to a recession by the latter part of the year, according to a new report from the A. Gary Anderson Center for Economic Research.

The report predicts housing starts nationally to hit their lowest levels in 17 years and says the Fed’s interest rate cuts are simply coming too late to “significantly affect overall spending through the first half of 2008,” and unlikely to reverse other negative forces impacting the economy going forward.

“With the inventory of unsold homes increasing sharply and the confidence level of home

builders reaching an all-time low, housing starts are projected to decline for the third consecutive year to approximately 1.1 million in 2008,” the report says. “This would be the lowest level of housing starts since 1991.”

NEW HOME SALES DECLINE 4.7 PERCENT
Sales of new, single-family homes in December 2007 declined 4.7 percent nationally to 604,000, compared with 634,000 in November, down 40.7 percent from December 2006, according to new data from the U.S. Census Bureau and the Dept. of Housing and Urban Development. Nationally, the median sales price of new, single-family homes sold in December 2007 was $219,200; while the average sales price was $267,300. For more information, go directly to http://www.census.gov/const/newressales.pdf.

There was also a sharp decline in homeownership during the fourth quarter of 2007, according to a separate report by the Census Bureau. The report says homeowners accounted for only 67.8 percent of all occupied homes nationally, a 1.1 point decline from the same period in 2006. For more information, go directly to http://www.census.gov/hhes/www/housing/hvs/qtr406/q406press.pdf .

C.A.R. LAUNCHES “MARKET MATTERS” INITIATIVE FOR REALTORS®
In an effort to support REALTORS® and educate consumers about current opportunities in today’s challenging real estate market, C.A.R. has launched “Market Matters,” a multi-faceted campaign intended to provide the tools you need to navigate today’s real estate environment and enhance the image of REALTORS® in the media. The initiative includes a monthly newsletter, weekly e-media advisories, consumer fact sheets, and a host of other tools designed to help REALTORS® address their clients’ concerns about buying a home today.

“Without question, these are challenging times for REALTORS®, made more difficult by the barrage of negative stories about the home-buying process to which consumers are being exposed in print, on TV, the airwaves, and the Internet,” said C.A.R. President William E. Brown. “To that end, the Market Matters initiative will help make sense of what’s happening in today’s market, bolstered by clear, fact-based proof members can pass along to consumers about why now may be an opportune time to buy a home in California.”

For more information go directly to www.marketmatters.car.org.

NAR ISSUES CALL FOR ACTION ON ECONOMIC STIMULUS PACKAGE
NAR issued a call for action today via e-mail urging REALTORS® across the country to send letters to their U.S. Senators in an effort to ensure that the House’s version of an economic stimulus package approved Tuesday, which includes a proposal to raise the conforming loan limit, be left intact.

The Senate is expected to vote on the package Thursday, but there is speculation that the Senate’s version of the measure does not include a plan to raise the conforming loan limit. Both NAR and C.A.R. have waged a long campaign to raise the conforming loan limits for FHA and Fannie Mae and Freddie Mac issued loans. Under the terms of the House package, the conforming loan limit will be temporarily raised from $417,000 to as high as $729,750 in high-cost areas.

C.A.R. is urging all members to respond to this very important e-mail and call for action.

REBS LAUNCHES NEW RESOURCE FOR REALTORS®
C.A.R.’s Real Estate Business Services Inc. (REBS) subsidiary has announced the launch of Clarus™ REsource, a family of new products and services designed to enhance a REALTOR’s® real estate market insight using analysis, training and other comprehensive Web-based tools. The Clarus™ REsource line consists of several components, the first of which, Clarus™ Market Metrics, will be available Feb. 1. For more information, go directly to http://www.car.org/index.php?id=MzgyNDI=.

In addition, REBS has announced its intention to acquire REAL-Mentor, a family of highly effective computer-based solutions that guide real estate agents and their clients through the investment aspects of contemplated real estate transactions. Web-based versions of REAL-Mentor products are expected to be available from REBS beginning April 1. For more information, go directly to http://www.car.org/index.php?id=MzgyNDE= .

C.A.R. PUBLISHES NEW LEGAL ARTICLE ON PRIVATE TRANSFER FEES
Member Legal Services has published a new legal article, “Private Transfer Fees,” which deals with the issue of developer-imposed fees on new subdivisions and the impact of AB 980 on developers, sellers, and REALTORS®. This new article is available on the What’s New and Legal Articles pages of the Legal section on C.A.R. Online (www.car.org), or go directly to http://www.car.org/index.php?id=MzgyNDQ= .