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According to a report by the National Association of Realtors, inventory of available homes across the nation rose to a 16-year high in July and now stands at 3.85 million.  During the same month sales fell to a 5-year low.  Inventories of single-family unsold homes represented a 9.2-month supply at the July sales pace, the highest since October 1991. By region, sales fell by 2.2% in the Midwest, were unchanged in the South, rose 1% in the Northeast and fell 1.8% in the West.  To read the full story, see “Home inventories rise to 16-year high” at Market Watch.

Is this an unprecedented period of time or just another cycle in the real estate market?  Check out my latest article, “Perspectives in a Turbulent Market” which is part of my ongoing reality real…

The conservative guideline used by the mortgage industry is that housing expense should not be more than 28 percent of income.  This is called the housing-to-income ratio and compares the sum of monthly housing expenses to monthly gross income.

Monthly housing expense include payments such as principal, interest, property taxes and hazard insurance and is often referred to as PITI (principal, interest, taxes and insurance).  It also can include private mortgage insurance, condo and homeowner fees.

If other factors are thought to compensate for higher risks, lenders may use a housing-to-income ratio above 28 percent.  For example if a borrower makes a large down payment a lender might use higher ratios. 

There is a good home affordability calculator at…

It has been two, maybe not so short, years since the hot Sacramento real estate freight train jumped the track of double digit growth and multiple “over asking” sales prices and “stated income” loans.  Our market peaked in the summer of 2005 and the ride has been downhill ever since.  Take a look at the peak and compare it to where we are today in my most recent real estate news article, “Looking Back.” 

Today was very exciting around our house as school started for our son, Mikie.  He is very proud to be a second grader with his very own desk and a new teacher who calls him Michael. 

Borrowers with good credit but without 5 or 10 percent to put down are likely to be shocked at the rate they're offered, if they're offered a mortgage at all.  Lenders are eliminating certain products altogether as well as requiring higher credit scores and down payments, more extensive appraisals, larger savings accounts, and additional income verification.

"We thought the dust was going to settle, but instead, it just blew up," says Mitchell Reiner, president of Mortgage Associates, a Los Angeles-based lender that does business in 48 states. "Everyone is being affected."

Source: The Wall Street Journal, Jonathan Karp (08/14/2007)

More on Lending:  There are many borrowers struggling with their current loans and since most of these loans were sold…

I love helping my clients buy and sell homes.  This summer I have heard myself, on more than one occasion saying, “It shouldn’t be this hard.”  Part of why I have been saying this is the changing market place.  Not only in real estate with the move from a seller’s to buyer’s market being so dramatic but also the significant changes in the home mortgage industry and the current subprime loan crisis. 

Traditionally, the last two weeks in August are slow in my business as families get ready for the new school year and squeeze in a last minute vacation.  I thought this was a perfect time to get away myself for a few days to clear my mind.  What better place to leave “real estate” behind than one of the natural wonders of the world, Yosemite National Park.

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If you have been following my reality real estate series, MyForSaleSign, take a look at the latest article, “New Times, Loans and Lenders.”  The transaction we have been tracking, Randi and Tony selling their condo and buying a new home is moving into the final few episodes and they are now working on securing their financing during a difficult time in the mortgage loan industry. 

It seems to have happened sooner than I anticipated!  I thought we would see two more weeks of growing inventory or available homes and condos on the market before the record numbers started their seasonal decline.  According to HousingTracker, as of the week ending August 6th the number of homes on the market declined from the previous week.  From the July 30 record high of 18,454 homes on the market we saw a decline of 162 to 18,292.  Compared to a year ago at this time, current inventory is 2.7 percent higher.  As you can see from the attached chart, the build-up last year was more rapid and the decline happened almost as quickly.  This year, although the market exceeded the maximum number of homes on the market in August 2005, the build-up was a bit…

I just finished some web surfing of a few blogs and other real estate related sites I read.  I can’t find much out there that indicates the Sacramento real estate market is anything other than gloomy.  Sales continue to be in the dumps.  Sales are way down.  In June of this year we had just over half of the sales we had in June 2006 and July will not be any better.  Inventory of available homes continues to grow in almost every area around Sacramento and we are already at record highs.

There is little doubt we are in a “buyer’s market.”  The best homes go first and anything left over that is less than perfect is expected to go for a big discount.  Sellers who do not want to price aggressively (price below the last sale) can expect to be on the market…