Fueled by high demand and tight inventory, California home sales and prices both experienced strong
increases in April, with the median price surpassing the $400,000-mark for the first time in five years, the
CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

 The statewide median price of an existing, single-family detached home climbed 6.3 percent from
March’s revised median price of $378,960 to $402,760 in April, signaling the first time since
April 2008 that the statewide median price has exceeded the $400,000 mark (and was the highest
since then).

 Sales in April were up 1.3 percent from a revised 417,880 in March but down 3.7 percent from a
revised 439,770 in April 2012. The statewide sales figure represents what would be the total
number of homes sold during 2013 if sales maintained the April pace throughout the year. It is
adjusted to account for seasonal factors that typically influence home sales.

 The available supply of homes for sale was essentially unchanged from March, but was down
markedly from a year ago. The April Unsold Inventory Index for existing, single-family detached
homes was 2.8 months in April, down from 2.9 months in March, and down from 4.2 months in
April 2012. The index indicates the number of months needed to sell the supply of homes on the
market at the current sales rate. A six- to seven-month supply is considered normal.

 Increased market competition has significantly driven down the time on market compared with a
year ago. Homes sold more quickly in April, with the median number of days it took to sell a
single-family home decreasing to 27.9 days in April, down from 29.4 days in March and down
from a revised 48 days for the same period a year ago.

A borrower opting for a 30-year, fixed-rate mortgage who puts down 5 percent or more
will now pay an annual insurance premium of 1.3 percent of their outstanding balance.
Someone who puts down less than 5 percent will pay a premium of 1.35 percent.

The FHA said it also will raise premiums for borrowers with jumbo loans – loans of
$625,000 or more – by 5 basis points, and increase the minimum down payment
requirement on these loans to 5 percent from 3.5 percent.

Additionally, the FHA said it will require most buyers to pay insurance premiums for the
life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel
premium payments once their debt fell below 78 percent of the principal balance. One
exception will be for borrowers who put more than 10 percent down at the time of
purchase.

Other new policies include a requirement that any mortgage for an applicant with less
than a 620 credit score and debt-to-income ratio above 43 percent must be underwritten
manually. Lenders who want to issue loans to these applicants must be able to
adequately document why they decided to approve the loans.

The FHA also decided to put new restrictions on reverse mortgages, no longer
permitting retirees to take such large, upfront payments.

The bursting of the housing bubble plunged the economy into a recession from which it has yet to fully recover. But economists say this could finally be the year that housing lifts us out of the doldrums.

Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market.

The economists surveyed also forecast that there will be just under 1 million housing starts this year — roughly matching the 28% rise in home building in 2012. Moody’s Analytics is forecasting much stronger growth — a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs.

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Stricter quidelines include raising the bar regarding credit scores. FHA will soon require a minimum FICO of 620; currently FICO scores considered as low as 580.

Buyers that have had a previous foreclosure looking to utilize FHA financing will be required to wait 7 years and the FHA will require a larger down payment of 20% down. Current wait times for Fannie and Freddie are only 4 years.

In addition, they will reduce the maximum loan limit to $625,000, consistent with FHA’s mission to help low and moderate income individuals to purchase their first home.

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