San Diego Mortgage Rates Update 02/24/2010

Standard and Poor’s released the Case Shiller home price index today leaving San Diego mortgage rates unchanged initially.  The index started with a base price of 100 in January 200 so an index value of 150 would mean  homes prices appreciated 50% since January 2000.

In last month’s release, which reported on home price changes in November, both the 20 city index and 10 city index fell 0.2% on a month over month seasonally unadjusted basis. Year over year, home prices were down 4.5% while the 10 city index fell 5.3%. Seasonal influences were again obvious in last month’s release. On an adjusted basis both the 10 city and 20 city were up 0.2% in November. Fall and Winter is a slow time of the year for housing, generally home prices have less support during this time of year.  December’s report had no change for the 20 city index compared to November and prices were down 3.2% for the year.

SEASONALLY ADJUSTED:

When adjusting the data for seasonal factors, which is how most economic data is published, home prices in 20 cities rose 0.3% in December. The table below summarizes.

On a seasonally adjusted basis, 15 cities grew or stayed the same in December.  On a non-seasonally adjusted basis, 5 cities improved or stayed the same.

Comments from David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:

“As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained,”

“In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data.

“We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December.”

Housing is going through a seasonally slow time, so unadjusted price declines are not necessarily setting off alarm bells. What does increase skepticism about the health of housing is the fact that home buyer demand has really failed to react to outlooks for rising interest rates and the soon to expire home buyer tax credit (which might be extended again).

My wholesale lenders have issued rate sheets showing the 30 year mortgage rate to be in a range of 4.875-5% for well qualified borrowers. Well qualified assumes a minimum 740 FICO, 80% loan to value and the borrower paying all closing costs including 1 point discount. Check back frequently for news affecting San Diego mortgage rates!