Ah, the joys of summer!  I am combining these two issues, as the past month for me has included a mini-vacation, visit from my daughter & grandkids for two weeks, our family reunion and a visit to my mother in Kansas for her 88th birthday.   NATIONAL   Listing Inventory The number of homes listed for sale in many U.S. cities continued to fall in April in what some analysts see as a sign that the market may be nearing a bottom.  But the picture is clouded by uncertainty over how many foreclosed properties and homes to sell from pent up desire will hit the market.   Foreclosures Many banks have been holding their REO (real estate owned) properties, called shadow inventory, until the market improves.  Barclays Capital estimates that banks and loan investors owned 765,500 foreclosed homes as of April 1, up from 629,100 a year earlier.  The inventory is expected to peak at about 1.3 million homes in mid- to late 2010.  Source: Wall Street Journal 5/20/09.   Foreclosure activity is up 32% from last year, with one in every 374 US housing units receiving a foreclosure filing in April.  Source: Realty Trac 5/09.   Although government-sponsored entities increased their foreclosure prevention actions by 9% in February, completed foreclosure sales surged nearly 900% from January.  View the Moratoriums graph here.  Source: Federal Housing Finance Agency 5/09.   Why are the loan modification programs not as effective as expected?  The biggest problem is the confusing paperwork.  That has limited the number of distressed homeowners enrolled to about 55,000 instead of millions.  The second issue is angry investors who are suing to prevent changes that will cost them significant amounts of money.  The third problem is unemployment.  No loan modification program can help when a borrower doesn't have a job.  Source: CNNMoney.com 5/18/09.   The subprime mortgage default peak is past.  The second wave was the option ARMs and now the prime loans.  These are expected to be at their peak from now to 2012.  View the Next Wave of US Mortgage Defaults graph here.  Source: Credit Suisse 5/09.   The prime loan defaults are the effect of unemployment.  They now constitute 56% of mortgages in the foreclosure process.  Source: Housing Wire 5/28/09.  View the Map of Unemployment Rates here to see the unemployment rates by state for May.   Pent Up sales Zillow, in their Q1 2009 Homeowner Confidence Survey, estimates that 32% of homeowners would be likely to put their home on the market if it shows signs of turnaround.  This could translate into as many as 20 million homes.  View the See Q1 2009 Survey Chart #1 here and Survey Chart #2 here.   Why Buy Now? Affordability Housing affordability has been surging.  In Q4 2007, 46.6% of people could afford the average priced home; Q4 2008 - 62.4%; Q1 2009 - 72.8%.  Source: Nat. Assoc. of Home Builders/Wells Fargo & Co. Housing Opportunity Index.  The Q1 2009 percentage is the highest percentage ever reported by the 18-year-old, quarterly Housing Opportunity Index.  To be considered affordable, a family making the national median household income of $64,000 must be able to devote no more than 28% of their income toward housing costs.   Interest Rates & Loans Conventional and FHA mortgage rates have dropped 2% from October to April.  View the Conventional & FHA graph here.  Historically, interest rates jump up dramatically after a decline.  If the rate increases by more than 1%, the monthly cost would go up, even with a price decrease of 10%.   It has been difficult to get jumbo loans, which has hurt the upper end of the market.  But, they are beginning to come back.  Bank of America, Wells Fargo and JPMorgan Chase & Co. are cutting rates somewhat, buying jumbo loans made by other lenders and purchasing them from brokers.  One factor is that jumbo loans are not subject to new appraisal rules that are slowing much of the lending market.  Source: Daily Real Estate News 7/6/096.  View the Conventional Mortgage Activity graph here.  To see the states with a high percentage of jumbo loans, view the % of Jumbo Loans map here.   The appraisal part of the loan process has been suffering from inappropriate appraisals due to HVCC.  The Home Valuation Code of Conduct bars loan officers, mortgage brokers or real estate agents from any role in selecting appraisers.  This has encouraged lenders to outsource the selection to appraisal-management companies (AMCs), which take a sizeable cut of the appraisal fee.  As a result, appraisers are under pressure to do it faster and cheaper.  Some appraisers said AMCs settle for appraisers who have little experience or live far from the homes they evaluate.  Source: Wall Street Journal 6/9/09.   Price Declines House price declines were broad based from 2007Q4 to 2008Q4.  To see the percentage decline by state, view the House Price Appreciation map here.   A Trulia survey found that nearly one in four US homes for sale today have had at least one price reduction.  The percent reduction for all listings was 10.6%; for those over $2M ? 9.7% and for those under $2M ? 14.3%.  Source: Housing Wire 6/5/09.   If You are Selling The 10-City Composite Index was up 2.2% during April and 3.3% for the most recent three month period.  This represents the first time the index has shown three months of sequential listing price increases since January 2008.  It also illustrates the effect of seasonality.  Source: Altos Research & Real IQ 5/4/09.   However, now is not the time to increase list prices.  The inventory is still significantly high and more foreclosures will be coming to the market in competition.  Also, the more interest rates go up, the more the need for home prices to go down to equalize consumer's payments.   Market Watch 5/15/09 offers the following suggestions to help sell your home: 1.      Maintain and stage 2.      Help pay closing costs 3.      Offer a home warranty 4.      Don't snub low offers ? use as a starting point for negotiations.   Trends & Forecast April shows the number of buyers looking at homes has increased 14% from a year ago.  This is not just the spring seasonal increase, but year over year.  April also showed that first-time home buyers declined to 40% of transactions from 53% in March, implying more second-time buyers are entering the spring season.  Source: NAR 5/27/09.   The Federal Housing Finance Agency Price Decline Study suggests that the time from peak to trough tends to be about 3 3/4 years, whereas the median recovery period (from trough to prior peak) was 6 2/3 years.  Source: FHFA 6/09.   The following sources offer their opinions on the market decline: -          "Housing analysts say that while sales are picking up, home prices are likely to continue dropping through mid-2010, and some prognosticators say until 2013."  Source: Fortune 6/19/09. -          "The housing market may not stabilize until the first quarter of 2011, the Mortgage Bankers Association said today, upon release of its National Delinquency Survey."  Source: Housing Wire 5/28/09. -          "With any luck, three years should be long enough for the U.S. economy to recover and for the nation's housing inventory to shrink to more normal levels."  Source: Business Week 6/09. -          "I think that once prices bottom out, they're going to stay flat for several years."  Source: Fortune 6/19/09 John Burns, President of John Burns Real Estate Consulting. -          The economy will bottom out in Q42009 and then begin a slow climb, predicts Mark Zandi, senior economist at Moody's Economy.com.  "The economy won't come roaring back as the sectors that generally lead us out of a recession ? housing and vehicles ? are flat on their back and won't revive rapidly.  The economy will kick into high gear in 2011 and 2012."   Source: Daily Real Estate News 5/22/09.   GREATER WILMINGTON   Listing Inventory: There are 5,435 single-family homes for sale, a decrease of 54 units from May and 561 units from June 2008. Monthly Average Sold Price: The monthly average sold price is down by 1.8% from May and down 6.3% from June 2008.  The June average sold price ($251,621) shows a decrease of just  1.9% from year end 2008. Monthly Sold Units: The number of sold homes is up 9.7% from last month, the highest total of monthly sold homes since September 2008.  However, the monthly sold units continue to be behind the last couple of years by as much as 25.2% Average Sold Price: In the last rolling 12 months (July 2008-June 2009), the average sold price is down 9.5%. Median Sold Price: The median sold price is up .07% from last month and is slightly ahead of the National Median. Market Absorption Rate: The number of homes sold in June, 409, divided by the current listing inventory, 5,435, gives us a 13.2 month supply of single-family homes. List to Sold Price Ratio: The average list price of the sold properties is $268,587 and the average sold price is $251,621 for June, which gives us a 93.7% list to sold ratio. Days on Market: The average days on market for the sold properties is at 139 for June.   CAROLINA & KURE BEACH   There are 559 single-family homes for sale, a 17 unit decrease over June. The average list price is $463,901, a slight decrease over June. In June, there were 29 homes sold, divided by the inventory, yields a 19.2 month supply.  This is six months lower than last month. The average sold price for June was $$284,010 and $414,407 a year ago.  The average sold price for the first six months of 2008 was $393,340 compared to $310,047 for the first six months of 2009, a decrease of 21.2%.  Source: June 2009 MLS Report David Flory 7/12/09.