C.A.R. REPORTS MEDIAN HOME PRICE INCREASED 12.8 PERCENT IN MAY

The median price of an existing, single-family detached home in California during May 2005 was $522,590, a 12.8 percent increase over the revised $463,320 median for May 2004, C.A.R. recently reported. The May 2005 median price increased 2.5 percent compared with April’s revised $509,630 median price.

“The California housing market passed an important threshold in April, when the median price rose above $500,000 for the first time,” said C.A.R. President Jim Hamilton. “This trend continued in May, with the median price approaching $525,000. At these prices, eroding affordability and concerns about rising interest rates are constraining sales.”

Closed escrow sales of existing, single-family detached homes in California totaled 618,920 in May at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 2.1 percent from the 632,380 sales pace recorded in May 2004.

REALTORS® must comply with existing rules!

The Federal Communications Commission (FCC) has delayed until January 9, 2006, the effective date of its rule prohibiting the sending of an advertising fax absent the recipient’s prior written consent. This rule was originally slated to go into effect on January 1, 2005, but was subsequently extended until June 30, 2005, and now extended until January 9, 2006.

Despite this extension, REALTORS® must comply with existing rules for sending faxes. Under the existing rule, you are generally prohibited from faxing a commercial advertisement, unless you have: (1) verbal or written permission to send that fax; or (2) you and the fax recipient have an established business relationship.

In announcing this decision yesterday, the FCC stated that the reasons for the extension were to “give companies time to secure the written permissions and to have time to consider any petitions for reconsideration of these rules.” Yet in a separate move today, the House of Representatives approved new legislation, called the Junk Fax Prevention Act (S. 714), which will allow businesses to continue sending faxes to their established customers. This new bill has already been approved by the Senate, but must now go to the President for his signature.

Last weeks Economic News Update!

Sales of existing homes slowed slightly in May but still came in at the second-highest level on record. Sales of previously owned homes and condominiums edged down 0.7% last month, the National Association of Realtors reported June 23. The small decline left sales at a seasonally adjusted annual rate of 7.13 million units, down only slightly from the 7.18 million sales pace in April, which had been an all-time high.

Even with the small drop in sales, home prices moved higher to an all-time record of $207,000 for the median price, the point where half the homes sold for more and half for less.

The New York-based Conference Board said its index of leading indicators fell to 114.1 in May, signaling a slower pace of U.S. economic growth in the third quarter. May’s drop of 0.5% was larger than the 0.3% decline Wall Street economists had expected. The U.S. index has declined at a 2.2% annual rate over the last six months and has dropped 1.9% over the past year.

This week look for updates on personal income on June 30 and construction spending on July 1.

Real Estate Connect 2005!

California Association of REALTORS® presents Real Estate Connect 2005 in San Francisco. For 10 years, this meeting has drawn an audience that comes to San Francisco to network with the decision makers, form new partnerships, cut deals and learn about the latest innovations in real estate.

At Connect, get hands-on demonstrations of practical new technology applications, new business models, new software, new hardware and innovative Internet services. Mingle with the entrepreneurs; find out what they are working on and how their applications can help your business now and in the future.

Be sure you don’t miss these important sessions: “Established Companies Doing New Things,” featuring C.A.R. Executive Vice President Joel Singer on Thursday, July 28; and “Going Digital — Case Studies of the Paperless Transaction” featuring Real Estate Business Technologies CEO Joshua D. J. Sharfman, Ph.D., on Friday, July 29.

GOVERNMENT’S POWER OF EMINENT DOMAIN EXPANDED

In a landmark decision yesterday, the United States Supreme Court held that the government’s power of eminent domain may be used to seize someone’s private property to turn over to a private developer. This case involved the seizure of 15 homes by the city of New London in Connecticut to use the land as part of a 90-acre redevelopment project by a private developer. Although the city was designated a “distressed municipality,” there were no allegations that any of these 15 homes were blighted or in poor condition.

The homeowners challenged the constitutionality of the seizure under the Fifth Amendment’s prohibition against the taking of private property for public use without just compensation. The homeowners argued that the government may take their homes against their will for public use, such as to build roads or railroads, but not just to give it to another private party who intends to make more productive use of the property. Whether the homeowners would receive just compensation for the taking was not directly at issue in this case.

In its 5-to-4 decision, the Supreme Court first clarified that, under the Fifth Amendment, the government cannot take someone’s private property for the sole benefit of another private party, but it can take private property for use by the public. The Court went on to uphold the government’s exercise of eminent domain in this case. The Court reasoned that the taking of private property to promote the city’s economic development, which includes creating new jobs and increasing tax revenues, is a public purpose that falls within the public use requirement of the Fifth Amendment.

The name of this case is Kelo, et al. v. City of New London, Connecticut, et al. (2005 WL 1469529). For more information, C.A.R. members may contact C.A.R.’s Member Legal Hotline at 213.739.8282, or for office managers, broker/owners, and designated REALTORS®, call 213.739.8350.

Realegal® is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 165,000 REALTORS® statewide.

MODEST INCREASE IN U.S. HOUSING STARTS LAST MONTH

After a sharp increase in April, the seasonally adjusted annual rate for privately owned housing starts remained nearly unchanged in May, increasing 0.2 percent from April to 2.01 million units, according to a report released by the U.S. Dept. of Housing and Urban Development. Privately owned housing starts were 1.8 percent above the May 2004 rate of 1.97 million units. Single-family housing starts climbed 4.7 percent to a rate of 1.7 million units, while starts for buildings with five or more units reached 266,000. The number of building permits issued, which can be an indicator of future building activity, decreased 4.6 percent to a seasonally adjusted annual rate of 2.05 million permits.

Regionally, the Midwest posted the largest increase in housing starts when compared with one year earlier, rising 6.1 percent, while the construction pace in the South and Northeast increased 4.8 percent and 2.8 percent, respectively. The rate for privately owned housing starts declined 5.8 percent in the West.

San Diego Padre’s give Bochy a Two Year Extension!

As the Downtown San Diego Real Estate Continues to heat up with the completion of the new Petco Ball Park! Bruce Bochy, the longest-tenured manager in Padres history, will continue to lead the club well into a second decade. The Padres announced a two-year extension on Bochy’s contract Wednesday night. The extension runs through the 2007 season, which would be his 13th season in charge of the club.

During Bochy’s managerial tenure, the Padres have won two NL West titles, reaching the World Series in 1998. Bochy passed the 800-win milestone in May, becoming one of only 33 managers in Major League history to reach that plateau with one team. Only Atlanta’s Bobby Cox has been with his current club longer than Bochy, who came on as manager in 1995 and is in his 23rd season in the Padres organization, serving as a player, coach and manager.

Last weeks Economic News Update!

Construction of new homes rose 0.2% in May, the Commerce Department reported June 16. Although the increase to a seasonally adjusted annual total of 2.009 units, up from 2.005 million units in April, was the fifth in sixth months, it was slightly lower than the 0.6% predicted.

Applications for U.S. home mortgages increased sharply for the week ending June 10, as Americans continued to take advantage of historically low long-term interest rates for purchases and refinances, the Mortgage Bankers Association said June 15. The MBA’s seasonally adjusted index of refinancing applications climbed 25.6%.

Meanwhile, U.S. wholesale prices plunged 0.6% in May, the biggest decline in more than two years, the Labor Department reported June 14. The decline in the Producer Price Index followed gains of 0.6% in April and 0.7% in March, hefty increases that had raised inflation fears.

Consumer prices also fell a modest 0.1% in May, the first decline in 10 months, the Labor Department said June 15. The retreat of energy prices, after a rapid run-up the previous three months, was the major factor cited for the decline.

Claims of Americans seeking first-time unemployment aid nudged up 1,000 to 333,000 for the week ending June 11, according to the Labor Department on June 16.

Next week, look for updates on durable good orders and new home sales on June 24.

FOUR CALIFORNIA CITIES AMONG THE NATION’S CLEANEST METROPOLITAN AREAS

Four of California’s metropolitan areas rank within the top 20 of America’s cleanest large cities, according to a recent study by “Reader’s Digest.” Based on an analysis of air and water pollution, toxic emissions, hazardous waste and sanitation within the 50 most populous areas of the U.S., the report lists San Jose as the second cleanest city in the nation, preceded by Portland, Ore., at number one. Other metropolitan areas in California ranked in the top 20 cleanest cities are San Francisco (5), San Diego (10) and Sacramento (12). Riverside and Los Angeles fell outside of the top 20, listed at 24 and 42, respectively.