Mortgage Applications Climb 1% in Week

The Mortgage Bankers Association reports its overall index of home-loan applications rose to 566.8 during the week ended July 7, led by a gain in its index of residential purchase loans.
Investor's Business Daily: REALTOR® Magazine Online
The Mortgage Bankers Association reports that its overall index of home-loan applications rose to 566.8 during the week ended July 7, led by a 2.6-percent gain in its index of residential purchase loans.

A week ago, 30-year, fixed-rate mortgages averaged 6.81 percent, rising one basis point from the previous week to approach highs that have not been seen in about four years.
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The Weekend Guide! July 13 - July 16, 2006

The Weekend Guide for July 13 - July 16, 2006.
Full Article:
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California disbursing $2 billion housing bond

Aims to provide housing for more than 11,000 families
Inman News
In California, state housing officials this week announced $211 million in awards to help provide housing for more than 11,000 families in 42 counties.

The awards, part of a $2.1 billion housing bond approved by voters in 2002, include $129.9 million for low-interest loans for the construction of new affordable apartment homes and rehabilitation of existing affordable units; $23.1 million for down-payment assistance loans to low- and moderate-income first-time buyers of 769 homes in cities and counties that have reduced regulatory barriers to affordable housing; and $23 million for a Workforce Housing Reward Program that provides incentives to cities and counties for issuance of building permits for 6,894 new homes affordable to lower-income households.

Housing affordability continues to be a problem in California, with the median price of an existing home in the state at $564,430 in May, up 8 percent from a year ago, according to the California Association of Realtors.

The real estate trade group also produces an affordability index, which measures the percentage of households that can afford to purchase a median-priced home in California. The percentage of households in California able to afford a median-priced home stood at 14 percent in December, compared with 19 percent for the same period the prior year, according to the latest statistics available at C.A.R.'s Web site.
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Economists say housing market cooling, not crashing

More interest-rate hikes could temper optimism
By: Matt Carter: Inman News
Housing sales and starts are down from last year's peaks, and will continue to decline in 2007 and perhaps into 2008, economists at Fannie Mae, Freddie Mac and the National Association of Home Builders predicted today.

Although the housing market is slowing down with the economy, there are no signs of recession or a bursting bubble. A slowdown in the economy could cushion the decline in the housing market by bringing an end to a series of 17 quarter-point, short-term interest-rate hikes by the Federal Reserve, the economists said.

While housing prices aren't expected to appreciate as rapidly as they did at the height of the 2002-2005 boom, overall, they're not expected to decline, either.

"Though the direction of housing activity is unambiguously heading cooler, we remain confident that the climate is still temperate and that 2006 will finish as the third strongest year ever for the national housing market," Freddie Mac's office of the chief economist concludes in its July 2006 Economic Outlook.

David Seiders, chief economist at the National Association of Home Builders (NAHB), echoed that sentiment in a conference call today.

"We're going from unsustainable heat in 2005 ... to a more sustainable pace of economic growth," Seiders said.

Freddie Mac's chief economist, Frank Nothaft, said that while some homeowners with adjustable-rate mortgages could be vulnerable to rising interest rates, mortgage debt is largely protected by the value of housing stock, and homeowners continue to build equity.

Economists at Freddie Mac predict rising mortgage interest rates and waning demand for housing will slow the appreciation of home values to an annual rate of 7 percent in 2006, and 6.2 percent in 2007. That's a sharp drop from the second quarter of 2005, when the rate of appreciation during the 2002-2005 boom peaked at 15.4 percent.

At the time, interest rates on 30-year fixed-rate mortgages were still averaging a relatively low 5.7 percent. The top economists at Freddie Mac, Freddie Mae and the NAHB all expect interest rates on the same loan will average 6.8 percent for the rest of the year.

Those rates are driven by the Federal funds short-term interest rate, which stands at 5.25 percent.

"My hope and expectation is (the Federal Reserve has) gone far enough, and will stop at 5.25, and perhaps even feel the need to ease back a bit to 5 percent by the end of the year," Seiders predicted.

Fannie Mae's chief economist, Dave Berson, was less optimistic, forecasting that the short-term rate could go to 5.5 percent before the Fed pauses. Berson said his relatively optimistic projections for the housing market could be proven wrong if interest rates go higher.

The high cost of housing is also a factor in cooling demand, with the National Association of Realtors' Affordability Index reaching its lowest level in more than 15 years. Freddie Mac forecasts 6.96 million homes will change hands this year - a 7 percent decline from 2005, but still the third-strongest year on record. Total home sales could fall to 6.49 million units in 2007, roughly the same as 2003 levels.

The National Association of Home Builders also reports that home builder optimism is at its lowest level since April 1995. Freddie Mac predicts a slowdown in new construction, with housing starts down 7 percent to 1.92 million units in 2006 and another 9 percent decline next year.
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Assessed Property Values Jump in L.A.

Assessed property values in Los Angeles County have jumped 11 percent over the last year to a record $950 billion, led by sales of single-family homes.
By: HOWARD FINE: Los Angeles Business Journal Online
Assessed property values in Los Angeles County have jumped 11 percent over the last year to a record $950 billion, led by sales of single-family homes, County Assessor Rick Auerbach reported Tuesday.

“We’re a long way from the two-to-three percent value gains of the 1990s and are approaching a trillion-dollar (assessment) roll next year, even with the likelihood of a continuing slowdown in the real estate market,” Auerbach said.

Sales of properties requiring reassessment under Proposition 13 – mostly single-family homes – added $65 billion in assessed property values to the county roll, one of the largest gains ever. Each property that changed ownership resulted in an average increase of $332,000 in assessed value, compared to $262,000 last year.

Auerbach said low interest rates and a short supply of low- to medium-priced housing were key factors driving the demand for single-family homes.

Another factor was the automatic two percent increase in assessed value for all properties that did not change ownership; that added $16 billion to the roll. New construction added $7 billion to the assessment roll, up from $6 billion last year.

Auerbach said that the slowdown in the housing market has shown up in the number of changes of ownership recorded at his office this year: 504,300 changes in ownership compared with 521,700 in 2005. Construction permits were virtually flat at around $109,000.

The growth in assessed values over the last 12 months was greatest in the Antelope Valley cities of Lancaster and Palmdale, with increases of 29 percent and 21 percent, respectively.

Just a few years ago, homes in these bedroom High Desert communities were selling at a fraction of homes in the L.A. basin. Now they are closing the gap, thanks to droves of people seeking refuge from stratospheric home prices in the rest of the county and a healthy dose of commercial and industrial construction.

Other communities posting major gains in assessed values over the last 12 months included Azusa (18 percent), Signal Hill (15 percent), and Malibu and West Hollywood (both at 14 percent).

In his report, Auerbach cited the sale of a 550-acre former nursery site in Azusa for future residential development as the key factor for that community’s huge gain. The increases in Signal Hill and Malibu were largely driven by the desirability of land in those cities, while West Hollywood’s gain was attributed to an acute shortage of housing.

The city of Los Angeles remained the highest valued municipality, with a total assessed value of $349 billion, up 10.9 percent from 2005. Long Beach was second at $39 billion, up 12.6 percent from 2005.

For the first time in several years, no city in L.A. County posted a drop in assessed value; the smallest gain of 2.8 percent was recorded in Carson.
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Home sales stabilizing

NAR: Modest decline seen for rest of 2006
Inman News
Home sales are expected to decline modestly throughout the rest of the year as the market continues to show signs of stabilizing, the National Association of Realtors said today.

Existing-home sales are expected to decline 6.7 percent to 6.6 million in 2006 from 7.08 million last year, and new-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.

David Lereah, NAR's chief economist, said the market is showing signs of stabilizing.

"The major housing indicators have been moving up and down within a reasonable range, which means the market should even-out just below present levels," said David Lereah, NAR's chief economist. "At the same time, housing inventory levels are balanced in much of the country, so overall price appreciation will be at a normal rate. We should see home sales rise and fall month to month, but don't look for any big shifts one way or the other."

The 30-year fixed-rate mortgage is likely to reach 7 percent by the end of the year, the trade group said.

"The uptick in interest rates has been slowing home sales," Lereah said. "We remain concerned about the potential impact of higher interest rates in some of the more expensive areas of the country."

The national median existing-home price for all housing types is expected to rise 5.3 percent to $231,300 in 2006. With more construction in lower-cost regions, as well as price incentives that are helping to clear unsold inventory, the median new-home price should increase 1 percent this year to $243,300, according to NAR.

The unemployment rate is projected to average 4.7 percent in 2006, while inflation, as measured by the Consumer Price Index, is forecast at 3.4 percent. Growth in the U.S. gross domestic product is expected to be 3.4 percent this year, and inflation-adjusted disposable personal income is likely to grow 3.1 percent.
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Overnight real estate rates down

30-year fixed rate at 6.36%; 10-year Treasury yield at 5.13%
Inman News
Long-term mortgage interest rates were lower Monday, and the benchmark 10-year Treasury bond yield held at 5.13 percent.

The 30-year fixed-rate average dropped to 6.36 percent, and the 15-year fixed-rate slipped to 6.06 percent. The 1-year adjustable was up at 5.51 percent.

The 30-year Treasury bond yield stayed at 5.17 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average rose 12.88 points, or 0.12 percent, finishing at 11,103.55. The Nasdaq fell 13.13 points, or 0.62 percent, closing at 2,116.93.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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High-End Home Prices Squeezed By Interest Rates

Some sectors of Southern California’s housing market are starting to feel the pinch from rising interest rates, particularly in such upscale communities as Bel-Air, Westwood and Pasadena.
By: KATE BERRY: Los Angeles Business Journal Online
Some areas of Southern California’s housing market are starting to feel the pinch from rising interest rates, particularly in such upscale communities as Bel-Air, Westwood and Pasadena, where median home prices in some ZIP codes have dropped 15 percent to 20 percent from a year ago.

Many real estate agents and brokers have long predicted that a slowdown in the housing market would first hit homes that sell for between $2 million to $3 million – a sweet spot in the market for well-heeled families trading up from existing homes. And the June numbers show that trend popping up in some locales, although it’s not widespread.

“The slowdown in sales appears to be most noticeable in the move-up category,” said Marshall Prentice, president of DataQuick Information Systems. “Prices are flattening out in that market. Entry-level and mid-market homes are not seeing as much of a sales slowdown, and prices are still going up, though at a slower pace.”

Indeed, brokers and mortgage lenders tend to dismiss any suggestion that Los Angeles’ housing market is slowing dramatically. Instead, they say that after four years in which sellers have had the advantage, prices are readjusting to normal levels.

“There’s a much more even playing field now for buyers and sellers,” said Jerry Jolton, estates director of the Beverly Hills office of Coldwell Banker. “The market is adjusting and usually sellers are about six months behind the curve because they look at their neighbor who may have sold last year at a higher price.”

The housing data, provided to the Business Journal by HomeData Corp., a Melville, N.Y.-company that tracks housing prices nationwide, indicates that rising interest rates appear to be having a modest impact.

The median price of an existing home that sold in June in Los Angeles County was $555,000, which is 11 percent greater than a year ago in June. Prices rose less than 1 percent from the previous month, however. The median price in May was $550,000.

Indeed, homes are appreciating in value at their slowest pace in almost six years. The slower pace has been expected for months because last year home prices in Southern California were appreciating 20 percent or more every month, a level that was clearly unsustainable.

Beyond the price, housing experts pay attention to the number of homes sold – that is, the volume – as a good indicator of whether the housing market still has momentum. In a decelerating environment, the volume tends to drop before prices drop.

There were 7,019 homes that sold in June in the county. That’s down 17 percent from the number of homes that sold in June 2005, and down 22 percent from May 2006, according to HomeData. Sales volumes have been down in seven of the last eight months.

Three-quarters of the cities in Los Angeles County showed a deceleration in the volume of home sales last month compared with a year ago, further evidence of a slackening in the market.

Normal market
David Soleymani, managing director of First Capital Corp., a mortgage originator in Santa Monica that is owned by Cendant Corp., said he doesn’t see a bubble in the housing market. Rather he expects prices to decline 10 percent to 20 percent from the outlandish prices commanded last year.

“Houses that are priced right are getting a lot of activity early on in the process,” he said. “The sellers who overprice their homes are not getting much action, so they have to reduce the price. Sellers have been spoiled because they think they should have five offers the first day they put their houses on the market. That’s not happening.”

At the same time, Los Angeles’ low default and foreclosure rates suggest that this market is holding up better than several markets around the country including Las Vegas and Miami, where overdevelopment is causing prices to fall dramatically.
“Our market is surprisingly resilient,” Soleymani said. “There’s clearly been a transition and the statistics show that there’s more inventory, houses are being listed for sale longer and we’re seeing a more normal market.”

The California Association of Realtors’ Unsold Inventory Index, which measures how many months it would take to sell the inventory of existing single-family homes in Los Angeles, continues to rise. That means buyers are gaining ground on sellers.

There is currently a backlog of 6.2 months of inventory, up from just 2.2 months a year ago. Six months is considered a balanced market.

“We’re off from the insanity of last year,” said Steve White, president of the Southland Regional Association of Realtors, who is also co-owner and operating principal of Keller Williams VIP Properties in Santa Clarita.

White said some of the housing statistics are hard to understand because they point in many directions. In April, he said there was a strong surge in lower-priced condo sales, which generally portends a rise in sales of single-family homes.

Many brokers dismiss the housing statistics because they lag the market by two to three months. The data that tracks home sales and prices also is somewhat skewed because some ZIP codes only have a handful of sales in a given month, which may not accurately portray the entire market.

Still, one striking trend appears to be that more of Los Angeles’ wealthiest move-up communities are seeing home prices drop, while several affordable communities are finally seeing double or triple-digit price increases.

Some brokers consider the bifurcation of the market to be a normal part of the adjustment to a more rational market.

In Westwood’s 90024 ZIP code, for example, the median price of a new home fell 19 percent in June to $1.6 million, down from $1.97 million a year ago, but the data was based on just five homes that sold in the area. Median home prices in Bel-Air’s 90077 ZIP code have been knocked down 13 percent to a median of $1.44 million last month for 10 homes that sold. In Pasadena’s 91105 ZIP code, prices have dropped 16 percent to a median of $785,000, which tracked 15 home sales.

Just as different sectors of the stock market are affected as interest rates rise, much the same happens with different sectors of the housing market.

Last month, several of the more affordable communities witnessed big home price increases, such as Inglewood’s 90305 ZIP code, where housing prices jumped 72 percent from a year earlier to a median of $594,000. In City Terrace, median home prices were up 44 percent from a year earlier to $455,000. And in South Los Angeles’ 90003 ZIP code, prices rose 41 percent to a median of $494,000.

Brokers said that instead of the bottom of the market finally coming to the top, the available pool of potential buyers is simply larger for lower-priced homes because more people can afford them. Some new entrants who missed out on the housing boom are coming in to the market to take advantage of interest rates that are still fairly low by historic standards.
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Kitchens & Baths that Clear up Chaos

5 designs intended to keep family life sane.
BHG.com
New Designs in Kitchens and Baths.
What happens when editors from the five most-respected home magazines put their ideas into demonstration sets in collaboration with the National Kitchen and Bath Association? The result is an extravagant display of the 24-hour kitchen and bath at the Design Idea Center built for the Kitchen/Bath Industry Show. The editors who shared their expertise are from Kitchen and Bath Ideas, Better Homes and Gardens, Midwest Living, Country Home, and Traditional Home.

Visitors to the Design Idea Center wind their way through a day in the life of a family typical of each individual magazine's readership. Kitchen and Bath Ideas begins the day; Better Homes and Gardens focuses on after school; Midwest Living caters to dinner parties, Country Home accommodates any-time-of-the-day activities, and Traditional Home wraps its space in end-of-the-day indulgence.

BHG.com interviewed each of these project editors and videotaped their creations so you can learn the concepts behind the designs, familiarize yourself with the ideas and materials employed, and see the result through streaming video on your computer screen. The clickable video links are listed at the end of each of the following story pages.

Greet the Day
Kitchen and Bath Ideas magazine presents a bath outfitted for two and a kitchen designed to cater to the needs of a busy family preparing for their day. Senior Editor Kit Seltzer drew her inspiration from her home, "where the alarm clock acts as a starters' gun, and the back door is the finish line. If the whole family can leave the house well groomed, well fed, and well equipped for the day, we claim victory!"

The master bath, designed for two, includes a walk-in shower with multiple showerheads. Matching closets obscure customized grooming centers, with a nearby juice bar with a sink and refrigerator drawers. The kitchen space divides morning tasks into two zones, which eases the morning rush. A unique design includes an L-shaped island that incorporates counter stools, as well as banquette seating.

Kit says, "We've incorporated a lot of ideas that will streamline the routine so that it's more efficient, more functional for the morning, but it's also about offering opportunities for more family connection."

After-School Kitchen
The Better Homes and Gardens kitchen, inspired by the after-school time period, is designed to host every activity from making snacks to science projects. Design highlights include a mudroom that serves a double function as a family work zone; a roll-out crafts cart that is handily stored in a cabinet; and a milk-and-cookies bar for after-school snacks. The central island encourages gathering with a curved bar counter. Adjacent to the island is a window-seat area that serves as a cozy room within a room, where kids can nap, read, or enjoy their own mini movie theater.

Senior Deputy Home Design Editor Oma Blaise Ford says this space is a "welcoming area that seamlessly incorporates everything from cooking and snacking to homework, school projects, crafts, games, TV watching, music practice, and family meetings...the hub of family life."

Anytime Entertaining
The Midwest Living team brought the outdoors inside an imagined third-floor, rooftop kitchen during dinner hour. Senior Home Editor Carol Schalla said, "The objective was to design a city kitchen and to simplify food preparation. This gives one the time to fully savor and experience a meal with people close to us with the soothing and spectacular benefits of nature and city views."

Various work stations accommodate and facilitate the cook's passion. In addition to efficiency, design highlights include contrasting glossy white and rich brown cabinetry and white Corian and dark Zodiaq countertops. Painted white brick walls, part of the original building, provide urban texture to this contemporary kitchen and example of vibrant city living.

Personal Pursuits
The Country Home kitchen isn't just a place to cook; it's "the go-to place for informal, end-of-of-the-day wind-downs," said Senior Building/Design Editor Meredith Ladik. The circular floor plan may take its architectural inspiration from the tradition of the knitting circle, but this modern space incorporates state-of-the-art appliances and a cozy fireplace fronted by a circle of cushy chairs.

Connected to the kitchen is a sky-lighted dining room/greenhouse for growing organic herbs and year-round vegetables. The kitchen features a long table that doubles as a workplace, with lots of room to spread out knitting projects and enjoy a meal. The space is accentuated with artisan-made pieces that will definitely satisfy any woman's craving for a creative family space.

Elegant Indulgence
Traditional Home's master bath, bedroom, and outdoor lanai are designed according to one underlying theme: relaxation. Senior Interior Design/Projects Editor Robert Young said the Traditional Home team was "inspired by Japanese, Chinese, and Balinese architecture and design along with the ambience found in a relaxing spa setting. Its products and amenities suggest things tropical, exotic, ethnic, organic, and handcrafted."

Design highlights consist of open entryways linking the bedroom, bath, and lanai, and connecting the indoors and outdoors. The bed's tall headboard doubles as a room divider and attractive storage unit, and the bath walls are like no other with custom leather tiles and a mosaic glass-tile wall mural. On the lanai, a "whirlpool tub patterned after a traditional Japanese soaking tub promises instant relaxation at any time of day," said Young.
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Pros and cons of joint-tenancy home ownership

Surprising things can happen in dire circumstances
By: Robert J. Bruss: Inman News
"How would you like to take title to your new home, Mr. and Mrs. Buyer?" the attorney or title closing settlement officer asks.

Thinking fast, you wisely ask, "Well, how do most married couples take title?"

The reply is usually something like: "Most couples take title in joint tenancy."

Not wanting to appear stupid or uninformed, you reply, "That's fine with us." But do you fully understand the pros and cons of holding joint-tenancy title?

THE PRIMARY JOINT-TENANCY ADVANTAGES. To be legally correct, joint-tenancy real estate ownership means "joint tenancy with right of survivorship." A few states require use of those exact words on the deed. But in most states, "joint tenancy" is sufficient.

Survivorship means the joint tenant who outlives the joint tenant co-owner(s) automatically receives the deceased's share of the property without probate court costs or delays. Probate court avoidance is considered the major joint-tenancy advantage.

All that is usually necessary to clear the title of a deceased joint tenant's name is to record a certified copy of the death certificate and an affidavit of survivorship with the local recorder of deeds.

The will of a deceased joint tenant has no effect on their joint-tenancy property. However, joint tenants still need a written will. In the event of simultaneous death of all the joint tenants, such as in a plane crash, the will of each deceased joint tenant determines who receives their share of the property.

Or, in the unlikely event one joint tenant kills another joint tenant, the wrongdoer cannot receive the deceased joint tenant's share by survivorship so the deceased joint tenant's will then becomes important.

Although joint tenancy usually involves two co-owners, such as husband and wife, there can be an unlimited number of joint tenants. But they all must take title at the same time by the same deed, and they all own equal shares.

For example, suppose John and Mary Buyer purchase their home as joint tenants. Each therefore owns a 50 percent share. However, when their daughter, Suzy, becomes 18 they decide to add her as an additional joint tenant.

To add Suzy to the title, John and Mary sign and record a quitclaim deed from themselves to John, Mary and Suzy as joint tenants with right of survivorship. The result is each of the three joint tenants now own a one-third interest in the home.

TENANCY BY THE ENTIRETIES FOR MARRIED COUPLES. In 24 states, a husband and wife can hold title as tenants by the entireties, which is very similar to joint tenancy. However, neither spouse can convey their tenancy by entirety share without the other spouse's signature.

This ownership form overcomes the joint-tenancy disadvantage that one joint tenant can transfer his/her share without approval of the other joint tenant(s), thus breaking up the joint tenancy and creating a tenancy in common.

Tenancy by the entireties for husband and wife is allowed in Alaska, Arkansas, Delaware, Florida, Hawaii, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, Wyoming, and the District of Columbia.

SEVEN PROS AND CONS OF JOINT TENANCY. Before consulting your attorney or other trusted adviser to determine if joint tenancy with right of survivorship (JTWRS) is right for your situation, it pays to know the pros and cons:

1. A JOINT TENANT'S WILL DOES NOT AFFECT JTWRS PROPERTY. Except for joint-tenancy simultaneous death or murder situations, a written will has no effect on JTWRS property. Especially in second marriages, where each spouse often wants to leave their half of the property to children of their first marriage, better alternatives might be holding title in a revocable living trust or as tenants in common.

2. PROBATE COSTS AND DELAYS ARE AVOIDED. When a joint tenant dies, his or her share automatically passes to the surviving joint tenant(s) without probate court interference. This is considered the major joint-tenancy advantage.

3. JOINT TENANT'S SHARE CAN BE ATTACHED BY JUDGMENT CREDITORS. Unknown to most joint tenants, judgment creditors of one joint tenant can attach that person's share of the property. Or, if a joint tenant files bankruptcy and there is sufficient equity in the property, the bankruptcy court can order the property sold with the proceeds divided among the co-owners.

However, after a joint tenant dies, creditors cannot attach the deceased's share, which automatically passed to the surviving joint tenants.

4. IN A PARTITION LAWSUIT, ONE JOINT TENANT CAN FORCE A SALE OF THE PROPERTY. In most states, one joint tenant co-owner can bring a partition lawsuit to force a sale of the property. The same result applies to tenants in common.

5. ALL JOINT TENANTS CAN OCCUPY AND MANAGE THE PROPERTY. Although each joint tenant has the right to occupy and manage the property, this can become a problem if one joint tenant refuses to pay his or her share of the property expenses.

However, if one joint tenant pays all the expenses, there is a right of reimbursement for necessary costs, such as property taxes.

If a joint tenant is under 18, a minor cannot convey title or pay their share of the property expenses unless represented by a court-appointed guardian. For this reason, minors should usually not be added to the title as joint tenants.

Similarly, if a joint tenant becomes incapacitated, such as with Alzheimer's disease or a severe stroke, a court-appointed conservator might be necessary to represent the incapacitated joint tenant. However, this problem can be avoided if title is held in a revocable living trust instead of joint tenancy.

6. APPROVAL OF CO-OWNERS IS NOT NEEDED TO BREAK UP A JOINT TENANCY. Except for tenancy by the entireties between husband and wife, one joint tenant can secretly convey his/her share to a third party, thus breaking up the joint tenancy and creating a tenancy in common.

The most famous court decision on this issue is the 1980 decision in Riddle v. Harmon (162 Cal.Rptr. 530). Shortly before her death, the wife secretly conveyed by a quitclaim deed her joint-tenancy share to herself as a tenant in common. After her death, the surviving husband presumed he owned the entire property as the surviving joint tenant. But the court ruled the late wife's secret deed to herself as a tenant in common made her half of the property subject to her will, which left her assets to a third party. The widower husband retained his 50 percent share as a tenant in common.

7. NON-SIMULTANEOUS DEATH OF JOINT TENANTS CREATES UNINTENDED RESULTS. When all joint tenants die at the same time and the order of death cannot be determined, such as in a plane crash, the share of each deceased joint tenant then passes according to his/her written will (or by the state law of intestate succession if no will is found).

However, if one joint tenant survives the other for just a short time, his or her heirs receive the entire property. That happened a few years ago in Berkeley, Calif. Joint-tenant property owners Larry and his girlfriend Lana were on an evening walk. A drive-by shooter's bullets hit both Larry and Lana.

They were rushed to a nearby hospital where Lana died at 2:58 a.m. Larry was kept alive on a ventilator until 4:55 a.m. when he died. Because Larry survived Lana, he was the surviving joint tenant of their properties. His heirs inherited all the joint-tenancy property under his will and Lana's relatives received nothing because she was not the surviving joint tenant.

CONCLUSION: Although holding title as joint tenants (or tenancy by the entireties between husband and wife where allowed) offers many benefits, it also provides possible disadvantages. Other co-ownership alternatives to be considered include tenants in common and revocable living trusts. Consultation with your attorney and tax adviser is recommended.
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New Study Details Importance of Homeownership Tax Preferences in All Congressional Districts

For those who deducted real estate taxes, the average amount of mortgage interest is more than $3,000.
RISMedia
Among the 35 million taxpayers who use the home mortgage deduction, the average amount of mortgage interest deducted among each tax filer is $9,650. For those who deducted real estate taxes, the average is more than $3,000, making these two of the most widely used and important preferences in the federal tax code, according to a new study released by the National Association of Home Builders (NAHB).

Using the most recent IRS data available from 2003, the report provides an in-depth analysis of the local use of the mortgage interest and real estate deductions in each of the 435 congressional districts across America.

It found that every state has at least one congressional district that had a minimum of $259 million of mortgage interest and $43 million of real estate taxes deducted.

“Because the mortgage interest and real estate deductions significantly reduce federal tax liabilities for home owners, they are important tools for promoting homeownership,” said Jerry Howard, executive vice president and CEO of NAHB. “The report shows that millions of working families across the nation use and depend upon these important tax incentives to help them maintain their current standard of living.”

According to the findings, the average congressional district contains roughly 80,000 taxpayers who use the mortgage interest deduction and 88,000 families who deduct real estate taxes, illustrating the widespread use of these important middle-class tax preferences.
On a national basis, 35 million taxpayers utilized the mortgage interest provision in 2003 and deducted a total of $338 billion, or an average of $9,650 per household.

There were 39 million taxpayers in 2003 who deducted an aggregate of $119 billion in real estate taxes, or an average deduction of more than $3,000 per tax filer.

Higher mortgage interest deductions occurred in areas with rapidly growing populations and high house prices. California posted the highest average among states at approximately $14,000 per taxpayer. The 14th district of California, which encompasses parts of San Mateo, Santa Clara and Santa Cruz counties, ranked first with an average of roughly $35,000 per household.

The top six congressional districts in terms of cumulative mortgage interest total more than $15.5 billion and are located in the Golden State. By contrast, the five congressional districts with the least mortgage interest deducted are located in the New York City metropolitan area, where renters exceed the number of home owners.

Not surprisingly, on a statewide basis, California had the most amount of mortgage deducted at $64.9 billion. Several other states across the country also registered at least $10 billion in mortgage interest deducted, including New York ($19.7 billion), Florida ($17.6 billion), Texas ($16 billion), Illinois ($15.9 billion), New Jersey ($12.9 billion), Michigan ($11.5 billion), Virginia ($11.3 billion), Ohio ($10.9 billion), Pennsylvania ($10.8 billion) and Georgia ($10.6 billion).

Higher real estate tax deductions were prevalent in areas with high home prices and real estate tax rates. New Jersey, with an average real estate tax deduction of $6,000, had the highest average among states. The Garden State was followed by New York ($5,181), New Hampshire ($4,830), Connecticut ($4,769), Texas ($4,501) and Illinois ($4,129).
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Mortgage Rates Dip Following Fed Announcement

Until now, rates rose for three consecutive weeks.
RISMedia
After rising for three consecutive weeks, fixed mortgage rates took a breather in the immediate aftermath of the Federal Reserve's June 29 interest rate hike. The average 30-year fixed rate mortgage slid to 6.91 percent from 6.93 percent the day before last week's Fed announcement. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.31 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing sank to 6.54 percent. On larger loans, the average jumbo 30-year fixed rate remains above the 7 percent threshold, at 7.06 percent. Adjustable rate mortgages were mixed. The average 5/1 adjustable rate mortgage fell to 6.55 percent, and the average one-year ARM increased to 6.11 percent. Mortgage rates backpedaled following the Fed's June 29 statement, which was initially perceived as carrying a much softer tone than in previous months.

As a result, yields on ten-year Treasury notes gave ground, with mortgage rates following suit. Mortgage rates are closely related to yields on long-term government bonds. But following the July 4 holiday, rates perked up on a rosy prediction of June job growth, though not enough to erase the decline late last week. Over the next couple of weeks, any combination of strong job growth and continued inflation worries will prime the pump or an August Fed hike - and push mortgage rates higher.

Fixed mortgage rates moved up notably in the first half of the year. As 2005 came to a close, the average 30-year fixed mortgage rate was 6.28 percent, meaning that the monthly payment on a loan of $165,000 was $1,019.16. With the average 30-year fixed rate now 6.91 percent, the same loan originated today would carry a payment of $1,087.79. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
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Falling interest rates fuel home-buying spree

Adjustable loans gain market share in latest MBA survey
Inman News
A drop in interest rates last week pushed overall mortgage applications up 5.9 percent on a seasonally adjusted basis from the previous week, the Mortgage Bankers Association reported today.

The MBA's seasonally adjusted purchase index increased by 6.5 percent to 414.2 from 389 the previous week, and the refinance index increased by 5 percent to 1,423.9 from 1,356 one week earlier.

The adjustable-rate mortgage share of activity increased to 29.5 percent of total applications from 29.1 percent the previous week, which pushed the refinance share of mortgage activity down to 35 percent of total applications from 35.3 percent the previous week, MBA reported.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.8 percent from 6.86 percent, while points including the origination fee increased to 1.13 from 1.10 for 80 percent loan-to-value ratio loans.

Points, which are fees charged by lenders for loan processing, are expressed as a percent of the total loan amount.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.41 percent from 6.49 percent, with points including the origination fee increasing to 1.12 from 1.04 for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year adjustable-rate mortgages increased to 6.39 percent from 6.36 percent, with points including the origination fee decreasing to 0.78 from 0.87 for 80 percent loan-to-value ratio loans. This is the highest that the one-year rate has been since February 2001, according to MBA.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry. The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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