San Jose metro area Economy: housing supply and demand

One of the news services I subscribe to, Housing Trends E-Newsletter, had some wonderful graphics to share with you in this morning’s e-mail.   The data comes from the National Association of REALTORs, and shows which sectors are hiring.    California’s economy is growing a bit faster than the U.S. at large. 

On February 21, Fannie Mae stated that in 2012 the housing market will make a positive contribution to GDP growth for the first time in seven years.

Silicon Valley: Economy + Employment => Housing Demand

Banks settle Robo Signing Charges for $25 Billion

Landmark settlement announced against banks for robo signing foreclosures: $12 Billion for California mortgage principal reductions

After months of negotiations, 5 major banks settled charges of fraudulently signing foreclosure documents by agreeing to pay $25 Billion dollars out to homeowners and people who lost their homes to foreclosure over the next 3 years.     Further lawsuits and actions from investors and the federal government still loom against many lenders.

Under this agreement, $12 Billion is guaranteed to go to California.

Nationwide, $17 Billion is allocated towards homeowners who are currently behind on their payments in the form of loan modifications and principal reductions.

Another $3 Billion is allocated to homeowners who are underwater and have been unable to refinance their homes,

Sadly, only $1.5 Billion has been allocated to help the people who lost their homes to foreclosure between 2008 and 2011.     $2,000 is expected to be paid out to some 750,000 borrowers.    In my opinion this is a pittance and poorly addresses the point of the charges made against the banks.   The banks admitted there were situations where uninformed people signed hundreds of thousands of false documents to accomplish foreclosure when the original loan documents had been lost.

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Read the original article at Reuters:

Although there are financial incentives for them to accomplish more during the 1st year, the actual terms of the settlement allow the banks 3 years to pay out the money.


Bright signs in the economy

Unemployment falls to 2008 level

As more people find jobs, consumer confidence will increase.    Employment, in my opinion, is one of the key factors that can lend strength to the housing market, so I’ve been watching this closely.   While I don’t see any point in talking about weekly numbers announced, the four week moving average looks good when the new claims for unemployment insurance fall to the lowest level seen since April 2008.

The US has created more than 200,000 new jobs for the last 2 months in a row – and our unemployment rate in January fell to a 3 year low of 8.3%.

During the last quarter of 2011, the economy grew overall at a 2.8% pace, which is respectable.    We’re not out of the woods – there are still a staggering 23 million people without work.   Read more at Reuters:

Meanwhile, the stock market is up about 7% so far this year.    Since about 20% of home buyers in this market are investors; this is indirectly another good sign for housing.

Amazingly, the weekly average 30 year mortgage interest rate last week was below 3.75%!

Finally, 2/3 of Californians have an optimistic outlook – believing their own financial situation will improve during 2012.    Since  our state is equivalent to the 8th largest country in the world, this is significant.     The San Francisco Bay Area and Silicon Valley Areas are the most optimistic about the future (versus southern Californians where economic conditions are worse.)

Traditionally, the Santa Cruz real estate market follows the Silicon Valley.Image